What is HRM and does it really matter?

Background

Human Resource Management as defined by Beer et al., (1984), is designed to

ensure organizational integration, employee commitment, flexibility and
quality of work. Guest (1998) goes further to contrast HRM with a production
model approach of personnel management: citing that the Ford model was
based on tough, consistent industrial relations practice focused on maintaining
efficient continuity of production, while human resource management has
assumed prominence due to the internationalization of technology and
productivity of labour.

Henderson, I. (2011) goes further to suggest that a major characteristic of HRM

is the devolution of many aspects of people management from specialists
directly to line managers. Mckenna&Beech, (2002) posit that HRM can be
viewed as an approach which considers people as the key resource which
seeks to maximise organisational performance through the adoption of best
practice in managing people. Betcherman et al. (1994) highlight that in order
to harness the full potential of employees; three aspects of managerial control
to change should be considered: organizational design, culture, and HR
policies. The current growth of interest in HRM reflects past failings of
personnel management in innovating on personnel policies and contributing to
the pursuit of competitive advantage. John Storey (2007) generated the first
wave of debate on the significance of the progressive HRM model. This debate
on the shift from personnel management to HRM was countered by the
second wave of debate which emerged in the late 1990’s and focused on four
main themes: the significance of the social context in shaping HRM, the links
between HRM and performance: the new organizational forms, and the
importance of knowledge management(Mabey et al.,1998)
Storey, J., (1995) sums it up by defining Human resource management as a
distinctive approach to employment which seeks to achieve competitive
advantage through the deployment of a highly committed workforce and
personnel techniques. This essay sets out to understand the nature of HRM, its
basic theories and assumptions of HRM and why it matters.

Key words: HRM, SHRM, Human resource development

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Historical development

The concept of personnel welfare emerged in the latter part of the 1800s as a
result of the humane concerns of families involved in business like Cadbury
and Rowntree (Mckeena&Beech, 2008).Welfare personnel was concerned with
dealing with unemployment and the provision of schemes. The next phase in
the development of welfare focused on an emphasis on personnel
administration which was concerned on supporting management on
recruitment, keeping personnel records, and training. The war increased the
demand for personnel specialists and the establishment of Personnel
Management (IPM).Bratton &Gold,(2003) citing Coates,(1975) posit that in the
1960’s employment laws were passed which encouraged growth in the
personnel function hinged on the need to focus on the intense political
controversies over the allegedly intolerable level of strikes.

The 1970’s saw new legislations promoting sexual equality and new standards
in employment based on recommendations from the Donovan Commission
report of (1968).This went further in boosting the status of personnel function.

The Human resource management phenomenon

The 80’s and 90’s saw a period of radical changes in the contents of people
management. Beer et al., (1984) argue that the HRM model fit the new
economic order in providing a distinctive approach to managing employment
relationships, while Bratton&Gold,(2003) citing Keenoy&Anthony(1992) argue
that the HRM model was characterized by a culture concerned with moulding
employees to corporate values.

The IPD was formed after a merger of the Institute of Training and
Development and the IPD, while recognition of HRM’s strategic importance
came in 2000 when the IPD was accorded a chartered status and became
Chartered Institute of personnel and Development (CIPD).(A professional
association specialised in the management and development of people for the
united kingdom and Ireland)

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Development of Human Resource Management

Henderson, I.(2011) posits that remarkable success of Japanese manufacturing

firms in the 70’s and 80’s in capturing Western Markets brought major
concerns about the relevance of the Fordist/Talorist models of work
organisations. These models he further argued were characterised by semi
skilled work or low work, pay being linked to quantity of output, and assembly
line technologies where the pace of work was machine controlled. Henderson,
I., (2011) citing Beer et al, (1984) posits that critically, it had become important
to note that these traditional models of work organisation were unable to
produce the quality of output required to compete globally.

Drawing from the work of Kenney and Florida,(1193),Henderson, I.(2011)

stated that the perceived superiority of the Japanese model signalled that the
Fordist model would be replaced in the automobile Industry by the lean
production model(typified by Toyota).This model combines efficient features
of mass production and employee commitment to ensure flexibility and
quality. Technology played a major role too in the shift towards human
resources, due to the rapid development of new technologies in competitive
markets, and further implied the need for continuous improvements on the
part of employees. This new approach became very relevant in every part of
the economy, in contrast to the ineffectiveness of the Taylorist/Fordist model.
(Henderson,I.,2011)

PERSPECTIVES IN MANAGEMENT OF PEOPLE

Henderson, I. (2011) citing Fox,(1966) states that there are three major
perspectives in managing people; the ‘pluralist’, the ‘unitarist’ and the ‘radical’
perspectives.

Pluralist Perspective

In the pluralist view, conflict at work is inevitable because employees and

management have differing interests. The pluralist view does not seek to
eliminate the conflict, but goes further to ensure how these conflicts should be
handled. However, State Agencies can play the role of third party

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interventionists when these conflicts cannot be resolved at work or Industry

levels.

UNITARIST PERSPECTIVE

Henderson, I. (2011) suggests that from this perspective, the Organisation has
a purpose which is common to the owners, managers and its workers, and
hence there should be no conflict between any of these groups. This view
perceives conflict within the organisation as a form of failure and must be
eliminated, and collective bargaining as unnecessary.

RADICAL/CRITICAL PERSPECTIVE

Derived from the Marxist view of Industrial capitalism, Henderson, I. (2011)

suggests that this perspective saw work as being exploitative of workers, and
the conflict between management and labour was unavoidable. Modern work
place scenarios still reflect the unfair structures of organisations, for example,
to radical feminists, they reflect the patriarchal picture of the society.
(Henderson,I.2011)

Human Resource Management Function

HRM encompasses a set of practices which shape the nature of work in

organizations and also regulates employment relationships. Drawing on
Ulrich’s (1997) work, Bratton and Gold, (2003) cited eight functions which
contain alternatives form which managers can choose from. They are:

 Planning: This includes preparing forecasts for the strategies, objectives

and mission of an organization
 Staffing: Includes sourcing for employees with the appropriate skills,
abilities and expertise to fill the jobs in an organization.
 Developing: This involves analysing learning requirements to ensure
employees possess the prerequisite skills to perform their jobs
satisfactorily.

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 Motivating: This involves the design of reward systems, which includes

job evaluation, performance and benefits.

 Managing relationships: This includes negotiating contracts and

collective agreements.

 Managing Change: This involves communicating the vision and setting

clear expectations for performance delivery.

 Evaluation: Designing measures to evaluate and communicate best HR

practices to promote performance within the organization.

Personnel management versus HRM

McKenna & Beech (2008) state that although HRM and personnel
management, share a few similarities, such as the natural concern for people
and their needs, finding the best means to select, appraise, develop and
reward them, personnel management however strives to influence line
managers, while HRM is integrated into the role of line managers. HRM makes
an effort to bring people issues in line with business issues, with a problem
seeking orientation which promotes employee development. McKenna
&Beech,(2008) go further to argue that with HRM, the role of management
focuses on change and development, leadership, vision, and a commitment to
building and sustaining a strong culture. In contrast to personnel management
which has a history of placing emphasis on bureaucracy in a reactive way.

McKenna & Beech, (2008) citing Ulrich (1998) and Ulrich &Brockbank (2005) go
further to state that HRM plays a critical part in the success of the organization
while HRM professionals grow to learn to acquire competencies needed to
perform HRM tasks to ensure the viability of the organisation. They conclude
by stating that HRM promotes a congruity between individual and
organisational goals while personnel management is concerned with a system
which in most cases is applied to collectivism.

The below table represents key aspects of the ideal types of Personnel
Management and Human resource management:
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Characteristics Personnel Management(PM) Human Resource

Management
Strategic Nature  Ad hoc  Pro-active
strategic
Psychological  Based on compliance  Based on
Contract seeking willing
commitment
Job design  Typically  Typically team
Taylorist/Fordist based
Organizational  Hierarchical  Flexible
structure
Remuneration  Collectivised  Individualised
 Pay by position Pay for contribution
Recruitment  Sophisticated  Sophisticated
recruitment practices recruitment for
for senior staff only all employees
 Strong internal
labour market
for core
employees
Training/developme  Limited  A learning and
nt development
philosophy for
all core
employees
Employee relations  Pluralist  Unitarist
perspective  Collectivist, low trust  Individualistic,
high trust
Organization of the  Specialist/professional  Largely
function  Bureaucratic and integrated into
centralized line
management
for day to day
HR issues
 Specialist HR
group to advise
HR policies

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Welfare role  Residual expectations  No explicit

welfare roles
Criteria for success of  Minimizing cost of  Control of HR
the function human resources costs, but also
maximum
utilization of
human
resources over
the long term.
Source: Guest Model (1987) developed by Henderson, I(2011)

The above table considers the differences in the characteristics and key aspects
of the ideal types of personnel management and human resource
management. Henderson, I.,(2011) citing Weber(1949) suggests that an ideal
type is formed by simplifying the descriptions of complex realities to
accentuate its key features while ignoring the irrelevant ones.

Theoretical Perspectives on Human resource management

There are five major HRM models which try seek to analytically show the
differences between personnel management and HRM. This includes models;
propounded by Beer et al., Fombrun et al, Hendry&pettigrew, and
Storey(Bratton&Gold,2003).While McKenna & Beech,(2008), argue that there
are two models of HRM: called the ‘Hard’ and the ‘Soft’ models. The hard
approach which is associated with the ‘Michigan School ‘ propounded by
Fombrun et al.,1984 tends to be associated with the unitarist view(explained
above) which stresses that the goals of employees and the organisation must
converge. Bratton&Gold, (2003) posit that this early model emphasizes the
interrelatedness of HRM. This model includes four key components:
selection,appraisal,development and rewards which aims to increasse
organizational performance. Gilmore&Williams(2009) go further to suggest
that the Michigan model of HRM proposes that long term competitive
advantage is hinged on the need to align corporate goals, Hr strategy and

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people management. This is represented diagrammatically:

The Michigan model of HRM. Source: http://www.managea2z.com

The weakness of the Michigan Model lies in the fact that it ignores situational
factors, various stakeholder interests, and its prescriptive nature. While its
strength is hinged on its coherence of internal HR policies in relation to the
organization’s business strategy. (Bratton&Gold, 2003)

The Harvard Model

The Harvard Model propounded by Beer et al.(1984) consists of the following

factors: Situational factors, stakeholder interests, HRM policies, HR outcomes,
long term consequences and a feedback channel through which output flows
to stakeholders.(Bratton&Gold,2003).McKeena&Beech (2008) highlights that
the soft model which is similar to the ‘Harvard School’ of HRM states that
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individual needs and organisational needs will always not be the same(i.e.
pluralist view),and organisations would endeavour to balance these needs.

The Harvard model argues that the uniqueness of HR must not be treated like
any other resources and must be recognised. It goes further to focus on the
creativity of employees and the benefits to be gained from a participative
management process. It suggests that employee commitment is nurtured
when values and mission statements are communicated to them, while there
is recognition of the role of trade unions in representing the collective interests
of employees.(McKeena&Beech,2008).

Bratton&Gold,(2003) citing Guest,(1997) go further to posit that a major

weakness, however of this HRM model is the lack of a coherent basis for
measuring the relationship between HR inputs, outcomes and performance.

The Harvard model of HRM (1984) is diagrammatically represented below:

Stakeholder
Interests

Shareholders
Management
Employee Groups
Government
Community
Unions
HRM Policy Choices HR Outcomes Long-term
Consequences
Employee influence Commitment
Human resource flow Competence Individual well being
Reward systems Congruence Organisational
Work systems Cost effectiveness effectiveness
Societal well-being

Situational Factors

Work force characteristics

Business strategy and
conditions
Management philosophy
Labour market
Unions
Task technology
Laws and societal values

Figure 1.1: A ‘map of the HRM territory’: the ‘Harvard Model’ from Beer et al.(1984, p. 16).

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Best Practice vs. Best Fit

Adherents of the best practice perspective of HRM, argue that there are HR
approaches and practices which would help an organisation achieve
competitive advantage. Torrington et al.,(2005) suggest that there is a clear
relationship between HR activities and business performance but this would
only be maximised if the right ‘HR’ practices are adopted. The best practice
school suggest the use of a more advanced method of selection, commitments
to employee involvements, investment in training and development, and
harmonised terms and conditions.

Best fit school however advocates the need for a link between HRM practices
and competitive advantage. Torrington et al., (2005) suggest that the best fit
model does not believe in the existence of generic solutions, rather all
solutions are contingent on peculiar circumstances of each organisation. They
go further to suggest that HR policies and practices which fit are appropriate to
the situation of individual employers that is what may be appropriate for one
situation may not be necessarily right for another.

STRATEGY AND HUMAN RESOURCES

Ulrich, (1997) cited by Bratton & Gold,(2003) defined Strategic HRM as the
process of linking HR practices to business strategy. While McKenna&Beech
posit that SHRM is the process by which human, social and intellectual capital
are linked to the strategic needs of the firm. Human resource considerations
should inform the organisation’s corporate strategy and also affect what is
included in it (CIPD, 2009).Foot & Hook,(2011) further suggest that Human
resource strategies should reflect the philosophies of senior management with
regards to human resources and the various activities related to its
management. These philosophies and policies must address various aspects of
people management such as recruitment, diversity, development and
employees rewards.

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The CIPD (2005) cited by Foot &Hook, (2011) pose a few questions which are
imperative to be considered by HR strategists when formulating, and
implementing HR strategies. These are: Will line managers support strategy
initiatives? Do they have the necessary skills to implement them?

HRM strategies &the role of the practitioner

Foot & Hook, (2011) posit that the relation between HRM and HR strategies
emphasises the role of the HR practioner as a business partner. Strategic HR
practitioners must incorporate line management views into Human resource
strategy planning process and ensure that line managers are actively engaged
with people management strategy while going further to nurture the
relationship between these line managers and the HR function. However citing
Smethurst, (2005) they argue that the achievement of this mutual
understanding between line managers and HR strategist has always been
identified as problematic.

Developing & Implementing Human resource Strategies

In developing human resource management strategies and action plans, it is

very necessary to identify the following areas:

 Resourcing: Organisations would have to acquire more skilled labour in

order to meet organizational goals and objectives. This would involve
recruitment activities, career succession plans for existing employees
and in some cases consider subcontracting work.
 Reward: Foot & Hook, (2011) state that restructuring the reward system
enables an organisation to retain the required and most competent
employees. Hence organisations should re-examine their pay levels and
its attractiveness to the achievement of corporate goals.
 Development: This suggests that when competencies are not present in
an organisation’s workforce, plans should be put in place to develop the
required skills through performance management and training.
(CIPD,2009b cited by Foot&Hook,2011)

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 Employment relations: With better employment relations,

improvements in employee contribution would be achieved. This can be
achieved through consultations, communications, employee
involvement and development of a partnership approach.

Furthermore, organisations need to focus on aligning human resource policies

to supporting and the accomplishing the organisation’s goals and strategies.
These goals sit at the heart of any HR strategy and in order to align business
practices and human resources, a key question needs to be answered: "Can
the organisation's internal capability deliver the organisation’s business goals?"

Source: www.workinfo.com

Human resource planning

Foot & hook(2011) state that human resource planning responds to changing
situations of employment relationships, changing work methods, planning the
workforce, generating the required human resources, setting the strategic
directions, and investing in human resource development Organisations must
be able to determine their strategic direction and objectives, and this can only
be accomplished through planning.

Planning however, should be more agile, more proactive, and no longer top
down. This creates more employee involvement and ownership because
innovative ideas could also come from junior employees. While the process of
strategic planning should be less reactive and driven by line leadership. Hence

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for strategic planning to become more effective, processes must be put in

place by the organisation to align HRM policies and practices to providing
organisational success. Sarah & Gilmore, (2009) points that scenario planning
through the generation of multiple scenarios helps in developing business
strategies. The diagram below serves as guide to strategic human resource
planning:

Source: www.workinfo.com

Recruitment &Selection

Recruitment and selection play critical roles in Human resource management.

Bratton& Gold, (2003) citing Guest et al., (1998) state that the formation of a
positive psychological contract with employees goes further to providing the
basis of positive outcomes from employees in terms of organizational
commitment and motivation. Gilmore & Williams (2009) suggest that these
process looks at how decision making methods concerning the identification of
the best candidates and selecting them.

In making a distinction between them, recruitment aims to attract a pool of

suitably qualified employees, from which the most competent ones are
selected. While citing Pilbeam & Corbridge (2006) they suggest that selection is

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concerned with applying the best techniques and methods with the aim of
appointing or selecting the most competent persons.

The recruitment process involves putting in place the following:

 Job Description: This is a written statement listing all the elements of a

job. In most cases it includes information of how the job fits the
organisation as well as its purpose. Some job descriptions include the
values and culture of the organization.
 Person Specification: This is derived from the job description. Gilmore&
Williams,(2009) go further to cite Pilbeam & Corbridge (2006) six factor
formula for person specification which is necessary for effective
performance. This includes skills, personality, level of experience,
certified qualification, physical characteristics, and developmental
potentials of the candidate.
 The job analysis involves evaluating and examining the job
systematically. It involves asking the following questions: Is there an
opportunity for the job? Could the job be outsourced? Are the skills
required?

Source: www.labspace.open.ac.uk

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Recruitment methods

Organisations have the choice of recruiting internally or externally. Internal

recruitment has long term implications and in most cases is often seen as
problematic, because consistent internal recruitment, prevents the
recruitment of new talent or competent employees into the organisation.
Hence, decisions should also be made to hire externally from the labour
market. (Gilmore & Williams, 2009).

Hennes & Mauritz (H&M) an important player in the fashion retail market puts
emphasis on maintaining its corporate spirit. It focuses on recruiting the right
employees. Employees for central functions are recruited internally from its
stores in order to maintain the organization’s corporate culture. (EMCC case
study, 2004)

The objective of recruitment is to achieve the right balance between incurring

more costs and recruiting the best candidates. The most frequently used
recruitment methods are press advertising, electronic recruitment and
electronic notice boards.

Selection Process

The process of selection involves picking the right candidates and making
employment decisions. However, the selection process also has an impact on
the individual’s perception of the company, and in most cases, influences their
decisions as regards joining the organisation or not. Bratton & Gold, (2003) in
this regard state that the decisions made by the employers and potential
employees forms part of the psychological contract which strongly influences
the employees attitude towards the organisation.

Selection techniques include:

 Interviews: Which is the oldest most widely use, goes along with letters
of references and application forms also known as the classic trio. (Cook,
1994 cited by Bratton & Gold, 2003).
 Psychometric testing: The use of sophisticated selection techniques such
as psychometric tests over time has proven to have a good record of
validity and reliability. It refers to the operation of standardized

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procedures for measuring a potential employee’s aptitude and

personality.
 Assessment centres: Here selections of techniques are combined ton
provide a fuller picture of the applicant’s strengths and weaknesses.

Appraisal & performance management

Appraisal often takes place formally and involves an interview between an

employee and a manager. The aim and objective of an appraisal focuses on
making decisions relating to pay, promotion, career judgements, and the need
to improve performance by identifying training opportunities for development
purpose.(Bratton&Gold,2003).Gilmore&Williams,(2009) suggest that an
appraisal is a process which facilitates a review of performance against agreed
objectives in relation to future performance. The aims of appraisal they posit
can be summarised into three main areas:

 Communication: providing an opportunity for an open dialogue about

aspects of performance
 Development: Identifying opportunities which would help improve
employees career aspirations and development
 Motivation: To influence and empower people by encouraging them to
take responsibility of certain tasks in order to achieve set objectives.

Foot&Hook,(2011) citing Armstrong &Baron(2004) go further to state the

importance of Performance management to human resource management,
suggesting that performance management contributes to the management
of individuals in achieving high levels of organisational performance.
Drawing on CIPD’s (2009) definition, the concept of performance
management is strategic to human resource management. It is about
focusing on the culture for continuous improvement, improving quality of
relationships and communication, and a joint planning process to define
objectives.

The following are elements of performance management identified by

CIPD, 2009:

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 Measurement: assessing performance as compared to set targets

 Feedback: Providing information to employees based on progress
and performance
 Exchange of views: coming to an understanding on how
improvements can be made.

Human Resource development

The importance of training and development forms a basic ingredient of
human resource management. Gilmore&Williams, (2009) urge the need for a
stress upon skills and knowledge as a source of competitive advantage. There
is believed to be a shift towards knowledge intensive industries which has
given a rise in demand for knowledge workers in support of Charles Handy’s
(1989) Shamrock model. Hence competitive advantage can be acquired using
employee skills and knowledge. While there is no clear cut procedure to follow
regarding training and development, the systematic training cycle id the most
cited approach. (Gilmore& Williams, 2009).

It focuses on the need to set and evaluate performance standards. It identifies

the training needs, designs and delivers the training, and evaluates the training
to allow improvements. This is represented diagrammatically below:

Source: www.snh.rg.uk

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Rewarding Employees

A challenging aspect of human resource management involves determining

how employees would be rewarded. In most cases pay and benefits
differentials is usually based on knowledge, skills and the expertise of the
employee.(Armstrong,M.2003).Gilmore&Williams,(2009) assert that
employees are often rewarded based on the nature of jobs they perform, and
what the organization can afford.

CIPD (2009) reports that organizations have developed a reward strategy

which is aligned to business needs. The principal aim is to ensure that these
strategies support the achievement of organizational goals.

DOES HRM REALLY MATTER?

The relevance and importance of HRM is an important feature of the survey by

Hoque &Noon (2001) cited by Bratton&Gold,(2003).Their findings suggest
employee development as relevant to the strategic planning of an
organisation in relation to the sophisticated processes of HRM such as
personality testing, off the job training, rewards and performance
management in achieving strategic goals. Bratton&Gold,(2003) go further to
suggest that the importance of a strategic connection and an integration of key
Human resource activities has been a distinguishing feature of HRM, which
demonstrates a positive relationship between strategic human resource
management and organizational performance.

Human resource management as an agent of change provides opportunities

for an organisation to improve or transform to a better state. One of the
greatest challenges facing human resource management is identifying and
convincing senior and middle management that Human resource management
contributes significantly to achieving organizational goals. It is important to
note that a highly skilled, learning workplace is a long term investment strategy
to any organization. Although Human resource management has been
criticised for not been effective, it still reflects trends which has an impact on
organisations through the need for flexibility, learning as a distinctive
competency, and the provision of quality services and performance through
employees

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In addition, it is important to note that the progression of knowledge

management through human resource management, adds to the stock of
intellectual capital. This as suggested by Bratton&Gold, (2003) highlights the
opportunities to be attained in respect to developing and measuring people’s
added value to work. However, citing Cunningham &Hyman, (1999) they state
that the role of outsourcing and its devolution to line managers, provide some
level of threat to human resource management specialists although even if
HRM does not play an important role in strategic management, people can still
be managed by others who are not in an HR role, because they would still be
recruited, motivated and managed. McKenna & Beech, (2008) state that
investing in training, development and producing a workforce which is
adaptable and knowledgeable highlights the relevance of Human resource
management to any organization. However, failure to put in place a culture of
development, commitment and a good reward system would see employees
being poached by rival organizations thus reducing its competitive advantage.

There might be no guarantees as regards the relevance of HRM practices to

gaining commitment and performance; however an effective reflective
treatment of employees in an organization, and taking into consideration
employee motivation, commitment and performance would help achieve
organizational goals and objectives.

Conclusion and future of HRM

Organizations face fundamental problems trying to secure and retain its
corporate viability. Human resource management focuses on the need to have
a viable organization which has an appropriate set of resources, relevant
employees, set goals, and also a system which would help ensure its survival. A
key example is Saatchi &Saatchi a famous advertising firm faced with strategic
problems of viability. (Gilmore&Williams,2009).However, it could be argued
that its strategic improvement was hinged upon the ability of its employees to
enact it, showing that the right strategy which would give the organization an
edge over its competitors was dependent on the acquisition and maintenance
of capable employees through HRM. This shows that for organizations to
remain relevant is dependant upon its key resource-its employees through
human resource management.

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