ASSIGNMENT ONE

114735 : Competitive Advantage and HRM Strategy

How can HR Managers try to improve organizational performance, and what difficulties

might they face?

Sania Shueb

22012856
Ans. HRM began in the 1980s as a tool for the personal management of employees but grad-

ually assumed a dynamism that sought to find the right people with the right competencies

for an organization. This is well evident in the founding models (Armstrong et al., 2019) of

the discipline. The Michigan model focused on fitting in HRM. Within the space left over af-

ter prioritizing financial returns. This short-term approach was met with a challenge by the

Harvard Model that put a greater emphasis on soft management of the stakeholders. While

the aim of HRM still was to ensure that the workplace conduct and productive capabilities of

the employees, the strategies to materialize these became drastically different. This essay thus

seeks to assess two things: one, the theoretical underpinning of such HRM and two, the po-

tential strategies that can be implemented to facilitate better performance. It would further-

more analyse the hurdles HR could face in their way. Both these elements would bring focus

to how modern-day HR aspires to work as a strategic partner, human capital developer, func-

tional expert, and employee advocate (Ulrich & Broackbank, 2005).

This section of the assignment would investigate the theoretical aspects of contemporary

HRM goals that would help identify the goals an ideal policy would try to achieve. Atkin-

son’s (2006), study on psychological contract highlights the importance of trust as the foun-

dation of this agreement. For HR it is imperative to assess the source of its true and build

upon it to create a relationship facilitated by integrity, openness, benevolence and the ability

to fulfil such an association.

There are multiple obligations at play that are implied in this relationship. The contract in-

cludes a transactional obligations involving a monetizable exchange characteristic of any

wage-labour agreement. However, Atkinson challenges Rousseau’s argument that views it as

an entity entirely separate from a relational contract. Furthermore, the emphasis is on how the
violation of the latter creates a stronger breach impact. It thus becomes the job of HR to en-

sure that the psychological contract remains intact in order to maintain an ideal employer-em-

ployee relationship.

According to Dr Alannah Rafferty, Associate Professor at UNSW Business School’s School

of Management (Bruce, 2016), poor behaviour from bosses - an extremely evident form of

infringement of the relationship contract – has a severely negative impact on the productivity

and general well-being of the employees. The true cost of negative leadership not only affects

the performance of the workers but demotivates them to perform better in the long run by cre-

ating actively hostile environment. Therefore, it becomes the responsibility of HR to inter-

vene on behalf of the employees and the organization at large to protect it against lower out-

put and even potential lawsuits. The Hr in this manner has to deal with the constant dilemma

of negotiating on behalf of the worker while advocating for the organization. An effective

HRM strategy deals with these questions in an efficient way.

The responsibilities of HR stem directly from the fact that employment is both a mutually de-

pendent relationship and an indeterminate contract. As a multidimensional relationship, it in-

volves economic, legal, social, and psychological aspects, the fulfilment of which is neces-

sary to create an ideal working environment. From the perspective of the HR, it is necessary

to locate these elements in the psychological work contract that is implied in any employee-

employer relationship besides the provisions of a written contract. The Psychological work

contract formation emerges from a nuanced process that results from everyday practices and

workplace interaction. It sets in expectations for commitments and reciprocity on behalf of

the worker who then gets a yardstick to measure the fairness of his workplace. It evolves and
adapts to an employee’s place in stages of career development. The HR needs to assess the

psychological work contract to facilitate an optimal production response to a certain form of

leadership that guarantees benefits, including respecting the norms of formal employee cul-

ture. The strategies of HRM should be oriented to maintain this contract that would ensure

both the active involvement of workers in the production process and a sense of belonging to

their organisation.

This strategy marks a direct shift from the simplistic understanding of HRM as a sum of con-

trol and motivation. In contemporary times, the HR needs to move beyond Taylorism which

perceived man as a machine needing close supervision and constant surveillance. A soft and

human HR is thus required to improve organizational performance.

Elton May’s study at the Hawthorne Plant (Sonnenfeld, 1985) reveals how important motiva-

tion is to employees. Mayo initially set out to study the effects of physical factors like better

quality lighting on the productivity of workers but it yielded interesting results. The perfor-

mance of workers were attuned to their social environment. Motivation theory thus provides

HR a framework to work on the socio-psychological facet of managerial strategy. By placing

an individual in a social context it becomes easy to understand what brings him job satisfac-

tion since he is found to be more responsive to social factors than purely physical ones.

Herzberg’s Two-Factory workplace model helps understand the elements of motivation that

bring satisfaction to the worker. The model theorizes how two distinct factors contribute to

the employee’s opinion of their workplace making it possible to assess their contentment with

their jobs. It helps demarcate the goals HR should be concerned with to maximize the poten-
tial of the workforce. Here, the first set of factors are the hygiene factors. These are dissatis-

fiers or maintenance factors that relate directly to the dissatisfaction related to one’s job.

These include pay, administrative policies, fringe benefits, status, job security etc. HR’s inter-

vention in these factors is aimed to decrease dissatisfaction. The second set of factors at play

are the motivational factors that yield positive satisfaction towards the job and are inherent to

the work itself. Recognition, a sense of achievement, growth opportunities, and responsibility

towards worker welfare increase the motivation of the employees when they are present at the

workplace. Job enrichment can be ensured if management works on these factors in an inte-

grated manner to elevate the quality of work itself.

Meaningful work is non-negotiable element (O’Connell, 2019) to guarantee an increase in or-

ganizational output. To a worker, a sense of engaging in work that serves a higher purpose

and adds value to the world, increases their motivation by extension their sensibilities of pur-

pose, achievement and collegiality. A survey conducted by BetterUp Labs revealed the 9 in

10 people were willing to sacrifice 23% of their pay (Wokers Value Meaning at Work, 2019)

in favour of doing meaningful work. It is imperative to note that while this feeling is unique

to each individual, it is also determined by their social and cultural contexts. The HR thus

needs to closely assess the needs of the worker as a part of the system they are located in.

providing helpful feedback, having an increased sense of control over work, and getting op-

portunities to realize one’s complete potential. In particular, efforts have to be made to pre-

vent burnout. It is essential to undertake policies that create an environment where workers

are able to work with a. mission that gets them invested in what they do. Maslow’s hierarchy

of needs privileges self-actualization (Jerome, 2013) over other needs. Hr should focus on fa-

cilitating growth, achievement, and creativity in a way that would enable the workers to view

their job as a positive challenge.

Before analysing the possible strategies HR managers can implement to increase performance

quality it is imperative to lay down the theoretical confines of strategy that this assignment

would follow and the problems it seeks to address.

The classic view regarding strategy was a unilateral top-down approach – a response to a

need once it had arrived. In this sense, it was highly reactive, and administrative and disem-

bedded the employees from their context due to its mechanical nature.

Mintzberg unveiled a radically different approach towards management strategies that was

proactive and dynamic. In this view, planning was a craft (Mintzberg, 1989) that did not limit

itself to analytics and “rationality” but combined intuition and analysis. Mintzberg’s Five P’s

for strategy provide an insight into the complexities of planning that a HR needs to adhere to.

It involves planning; ploy: gaining the upper hand over competitors; pattern: building on ex-

isting organizational tendencies; position: locating the organization in the industry and mar-

ketplace for an edge; perspective: perception of the self-informing perception of an ideal

strategy. 

In order to create a holistic strategy, both internal and external factors need to be assessed

alongside means and means. With the rise of the Processualist view of strategy, it was no

more about a simple top-down approach.

It is vital to put stakeholders – owners, shareholders, employees, suppliers, and communities

– in focus while coming up with an effective strategy. With this open strategy (Stadler et al.,
2021), stakeholders outside the executive team are able to provide their input for decision-

making. This contributes to the organization keeping up with trends in a constantly evolving

market, finding disruptive trends and effectively executing new policies. Growing beyond the

discomfort of opening up with the strategy-making process can yield significant positive re-

sults.

While there are many possible policies to improve organizational performance, this assign-

ment would focus on dealing with ineffective management, creating safeguards against work-

place hostility, increasing diversity and implementing development programs. 

When it comes to dealing with ineffective and insufficient leadership, middle managers re-

main a key problem (Australian Institute of Management (AIM), 2021) for HRs. They play a

pivotal role in steering the organization in the right direction but in the absence of proper

training can have a totally opposite effect. Middle managers are supposed to be a bridge be-

tween top management and lower level workers but studies have shown that this great chasm

remains. In a study conducted by the Australian Institute of Management and Monash Uni-

versity, their subordinates and colleagues have criticized their supervision skills and accused

them of chronic underperformance. There is a critical need to upskill middle managers and

create circumstances to utilize their potential. 

As for managers in general, improper management training, particularly when it comes to

soft skills, works as a primary push factor (Allen, 2019) affecting human resources nega-

tively. 15 out of 20 drivers of an individual's engagement relate directly to their immediate

supervisor. As a result, a poorly trained superior disengages the employee from their work.
There is also a detrimental effect on the psychology of workers under bad managers causing

them mental illnesses like stress and anxiety disorders. It is thus important that HR treats

managerial positions as any other and properly vet the potential candidates. Not only should

they tick off all qualities necessary to be a good manager but also have set aspirations for

themselves, their team and the organization.

At Least once, 99% of Fortune 500 companies have paid settlements in discrimination law-

suits (Sweeney, 2021). This fact brings out the urgent need for HRs to tackle workplace hos-

tility. 

It is different from an undesirable environment and usually involves attacks on protected at-

tributes of an individual like race, ethnicity, gender, sexuality, caste etc. Social identity, sense

of belongingness set by cultural norms and relative deprivation contribute to an employee’s

vulnerability to such actions. Workplace bullying involves harassment and social exclusion in

a negative way (Samnani & Singh, 2016) over a period of time. Previously, victim precipita-

tion theory was commonly used to explain such targeted attacks emphasizing on the presence

of some provoking behaviour on the victim’s behalf. The focus has now shifted towards how

such aggression is a result of specific tendencies on behalf of the harasser and the power dy-

namics that make an easy victim. For instance, favouritism-directed bullying is very prevalent

in family firms (Arasli & Arici, 2019) where accountability is considerably less. Such behav-

iour results in low esteem and high job insecurity besides the feeling of being in danger. The

HR when creating and implementing anti-harassment policies need to focus on addressing the

underlying work culture itself that could be an impediment to creating safe spaces. These

policies should target a depersonalized environment, lack of teamwork, inflexibility, manage-

rial environment and unhealthy competitiveness at the workplace. Avenues to create safe
channels of communication and seek redressal should be established. The HR should have the

right to discipline when required. 

It has been shown that increasing diversity positively affects the perspective of the work-

place, leading to better productivity levels. When executed not merely as simple token repre-

sentation but as active inclusion that takes a step ahead of affirmative action, diversity at all

levels of the organization can aid HR in a myriad of ways. It facilitates innovation, appeals to

a larger mass of consumers who are able to relate to the organization better, increases cultural

sensitivities, fosters adaptability and leads to stronger workplace relationships. HRs can un-

dertake policy changes that focus on open communication, staff training, strengthening orga-

nizational values and promoting an environment of accountability. A Mckinsey report reveals

how organisations that perform high on diversity indicators get 35% more returns (Why Di-

versity Matters, 2015) over desired mediums.

Abita Ollapally and Jyotsna Bhatnagar (Ollapally & Bhatnagar, 2009) have illustrated the

need for diversity management in a globalized, multicultural world. Celebrating diversity en-

ables workers to make positive associations with their workplace. Douglas hence mentions

how inclusion can become a systematic sharing of same elements where individuals can have

a say. Furthermore, motivating diversity ensures that there is a psychological contract. It

helps outmanoeuvre ingroup and outgroup of competitive advantage for both consumers an

potential employee seeking their trust.

On an individual level, Hr should have enough confidence in themselves (Middlemiss, 2016)

to demonstrate credibility, take up responsibility, and constructively contribute to general

workplace culture.
There however remain many impediments to implementing such policies. These can be split

into institutional factors and professional facts.

Within institutional factors, elements at the structural level come into play as hurdles to an ef-

fective HRM. Here, business short-termism in the form of uncertainty regarding the organisa-

tion’s future can lead to cost-cutting in HRM as it is usually one of the first departments to

bear the brunt of financial insecurity. Often, businesses tend to prioritize cost over workers

and their skills. Since the organization’s posture is towards maximizing profits instead of de-

veloping the skills of workers, it views them as disposable and it is willing to let them go.

In the case of path dependency, any major change is difficult to implement due to associated

risks, large costs and familiarity with the existing way of functioning. Corporate memory

ends up reinforcing existing mechanisms, policies and values in a way that is inescapable.

Since it is undemanding to synchronize with the existing system as opposed to changing it,

similar methods of functioning end up being used constantly. A study of New Public Man-

agement (NPM) introduced with the state sector act aimed at reforming the public sector in

New Zealand (Plimme & Parkinson, 2014) reveals how path dependence is a trap that HRs

often find difficult to evade. Data points out that even though public sector employees per-

form decently, they are under significant pressure from their managers, feel like they have a

menial voice in decisions concerning them and face frequent bullying. In such a situation,

bullying is seen as an evil necessary to get things done. This form of behavior is socially

learnt and not only normalized but rewarded. Any efforts of HR to do away with such a work

culture are likely to lead to no change. 

In terms of professional factors, certain perceptions around HR as a practice in itself can con-

tribute to its ineffectiveness. At times, there is a clash in the values of HR and that of the

business. Furthermore, it is seen as a strictly professional part to the organization that is dis-

connected from its business functions and hence having no real relevance to its functioning.

They are also characterized as experts managing solely personal matters. The attitude of line

managers (Boxall & Purcell, 2000) towards the initiatives of the HR has a significant influ-

ence on their effectiveness. Their cooperation is essential to gain tangible results out of policy

since they have more influence on the daily lives of workers owing to their constant interac-

tion. Thus, their reaction to a certain HRM policy becomes a key element in achieving its vi-

sion. If the line managers find it unworkable, against their personal interest or feel like they

did not get a fair part in the deliberation. Even if the policy does get introduced, senior man-

agers completely abandon their responsibility over line managers. This results in an incom-

plete feedback mechanism loop. Whilst HRM is not an isolated department, operating man-

agers rarely take an active interest in it, making it impossible for its policies to reach their

complete potential.

HRs also find it difficult to quantify their success as compared to other elements of business.

They often do not get board representation or access to influential positions, giving them little

agency over independent decision-making. 

The image of HRM as an effeminized profession makes many ignore it or see it as not as im-

portant. This is particularly evident in the case of HR implementing affirmative action poli-

cies. This negative view stems from their negative stereotypes and prejudices related to

marginalized identities. For instance, men still prefer men’s work (Nieva & Gutek, 1980)

over that of equally or more competent women. Diversity management can even become di-

visive as individuals with privileged identities might interpret policies advocating for justice

as hostile towards them. 

Therefore, any HR is constantly faced with apprehensions about the legitimacy of their posi-

tion in the organization and hurdles to the proper execution of new policies. It is evident that

when it comes to the policies HR managers can introduce to maximise worker motivation,

engagement and commitment to their organization and eventually increase their productivity,

emphasis should be laid on the multi-dimensional aspects of employment. A sharp move from

the simplistic interpretation of HRM reveals that employees require avenues of motivation,

proper recognition, and aid development programmes where they can evolve with and within

the organization.
 References

Allen, M., PhD. (2019, March 15). The Real Costs of Bad Management-And What You Can

Do About It. Graziadio Business Review | Graziadio School of Business and Management |

Pepperdine University. https://gbr.pepperdine.edu/2019/03/the-real-costs-of-bad-manage-

ment-and-what-you-can-do-about-it/

Arasli, H., & Arici, N. C. (2019). Workplace favouritism, psychological contract violation

and turnover intention: Moderating roles of authentic leadership and job insecurity climate.

Zeitschrift Fur Personalforschung, 33(3), 197–222. https://doi.org/

10.1177/2397002219839896

Armstrong, M., Brown, D., & Institue of Employment Studies. (2019). Strategic Human Re-

source  Management: Back to the future? IES Report, Report Number 517.

Atkinson, C. (2006). Trust and the Psychological Contract. Employee Relations, 29, 227-246.

https://doi.org/10.1108/01425450710741720

Australian Institute of Management (AIM). (2021, October 6). Australia’s Middle Manage-

ment Crisis. AIM Education & Training. https://www.aim.com.au/blog/australias-middle-ma-

nagement-crisis
Boxall, P. C., & Purcell, J. (2000). Strategic human resource management: where have we

come from and where should we be going? International Journal of Management Reviews,

2(2), 183–203.  https://doi.org/10.1111/1468-2370.00037

Bruce, V. (2016). Bosses behaving badly – what is HR to do? www.hcamag.com. https://

www.hcamag.com/au/news/general/bosses-behaving-badly-what-is-hr-to-do/144864

Jerome, N. (2013). Application of the Maslow’s hierarchy of need theory; impacts and impli-

cations on organizational culture, human resource and employee’s performance. Interna-

tional Journal of Business and Management Invention, 2(3), 39–45.

Middlemiss, N. (2016). How to silence HR cynics. HRD Asia. https://www.hcamag.com/

asia/news/general/how-to-silence-hr-cynics/146932

Mintzberg, H. (1989). Mintzberg on Management: Inside Our Strange World of Organiza-

tions. United Kingdom: Free Press.

Nieva, V., & Gutek, B. A. (1980). Sex Effects on Evaluation. Academy of Management Re-

view, 5(2), 267. https://doi.org/10.2307/257436

O’Connell, B. (2021, July 6). The Search for Meaning. SHRM. https://www.shrm.org/hr-to-

day/news/all-things-work/pages/the-search-for-meaning.aspx
Ollapally, A., & Bhatnagar, J. (2009). The Holistic Approach to Diversity Management: HR

Implications. The Indian Journal of Industrial Relations, 44(3), 454. https://www.jstor.org/

stable/27768218

Plimme, G., & Parkinson, A. (2014). Path dependency and the role of HR. Research Forum.

https://researcharchive.vuw.ac.nz/xmlui/bitstream/handle/10063/4385/Path-dependency-and-

the-role-of-HR.pdf?sequence=1

Samnani, A., & Singh, P. (2016). Workplace Bullying: Considering the Interaction Between

Individual and Work Environment. Journal of Business Ethics, 139(3), 537–549. https://

doi.org/10.1007/s10551-015-2653-x

Sonnenfeld, J. A. (1985). Shedding Light on the Hawthorne Studies. Journal of Occupational

Behaviour, 6(2), 111–130. http://www.jstor.org/stable/3000246

Stadler, C., Hautz, J., Matzler, K., & Von Den Eichen, S. F. (2021). Open Strategy: Master-

ing Disruption from Outside the C-Suite. MIT Press.

Sweeney, S. (2021). Hostile work environment: Is your HR advisor qualified to manage this

potential crisis? NEMR HR | HR, Payroll, Benefits. https://nemrhr.com/hostile-work-environ-

ment/
Ulrich, D., & Brockbank, W. (2005). The HR Value Proposition.

http://ci.nii.ac.jp/ncid/BA72032957

Why diversity matters. (2015, January 1). McKinsey & Company. https://www.mckinsey.-

com/capabilities/people-and-organizational-performance/our-insights/why-diversity-matters?

ref=blog.vantagecircle.com

Workers Value Meaning at Work; New Research from BetterUp Shows Just How Much

They’re Willing to Pay for It | BetterUp. (n.d.). https://www.betterup.com/press/workers-

value-meaning-at-work-new-research-from-betterup-shows-just-how-much-theyre-willing-to-

pay-for-it