CH1 Introduction: Strategic Human
Resource Management in the Twenty-first
Century
Introduction
Employees are generally considered the 'organization's most valuable assets'. You can create:
• Higher productivity levels
• Improve service quality towards customers
• Expand sales
• Make more profits when you manage your workers
This is what the theory suggests, it is not proven that these claims are true in practise.
It is concluded in both theory and practise that employees matter and that HRM is a potential source
for achieving organizational goals (Boxall and Purcell, 2011).
SHRM is a relatively young discipline - approximately 25 years old. SHRM has a growing importance
for organizations operation in a dynamic and continuous changing environment. The changes also
effect employees. Successful change highly depends on changing people in their attitudes, behaviour
and cognition. This asks for flexibility and good people management.
The new economy
In the 1990's it changed from a manufacturing and production economy into a service sector asset-
based economy; the new economy (Porter).
Work in the old economy was characterized by;
• Physical tasks
• Job design
• Work design based on mass production
• Many relatively low-skilled workers
• High degrees of unionization
• Face to face contacts
The new economy is dominated by;
• Emerging branches of the industry (including the Itsector)
• Assets are less tangible and are embedded in reputation, brands and knowledge of employees.
• High knowledge industry
• Web-based organizing
• Contacts through intranet or internet
• Centres on the other side of the world (outsourcing and offshoring)
• Integration of work design, technology and services delivered.
• Organizational change has become a common practise in the new economy
The old economy still exists in developing countries and countries with relatively cheap labour
conditions.
,Organizational change and competitive advantage
The relevance of optimal coping with change is embedded in the concept of competitive advantage.
Competitive advantage is important for organizational survival and is at least partly manageable by
HRM. Competitive advantage represents an organization's position in comparison to its direct
competitors. Competitive advantage might be reflected in financial performance and non-financial
performance.
The changing role of work in modern organizations
Opportunities to work at home can be a source for a better work-life balance and/or family-friendly
employment. Flexible working arrangements are becoming more important for dual-career couples
with children.
The ageing population in many Western countries is also affecting work in modern organizations.
This brings the next issues; potential loss of valuable knowledge, skills and abilities. It also causes
personnel planning issues in the future and the risk of ever-increasing labour costs related to older
workers in terms of higher salaries.
MHRM, IHRM and SHRM
HRM involves management decisions related to policies and practises that together shape the
employment relationship and are aimed at achieving individual, organizational and societal goals.
This definition acknowledges the relevance of different stakeholders and the goals linked to them.
SHRM builds on this definition and in addition pays extra attention to the organizational context,
reflected in special attention to potential alignment of the business strategy an HRM, the alignment
of the institutional context and HRM, the linkage between business systems and HRM and the fit
between HR practices.
HRM is 'the management of work and people towards desired ends' (Boxall 2007). They argue this is
a fundamental activity in any organization with employees. They identify three sub-fields:
• MHRM covers the sub-functions of HR policy and practice. MHRM is closely related to the
studies in organizational behaviour and occupational psychology that focus on the impact of
single HR practices on employee attitudes and behaviours.
• IHRM is concerned with HRM in MNCs and HRM across borders.
• SHRM focuses on issues of linking HRM to the business strategy. The concept of 'fit' plays a
central role within SHRM.
Three perspectives
The multidimensional strategic HR model in this book includes the following key characteristics:
• A multi actor perspective (by stakeholders)
• A broad societal view (with an emphasis on different institutional contexts, for example on the
level of branches of industry, regions and countries)
• A multi-level perspective (including the individual employee perspective and the strategic
organizational perspective)
Paauwe (2004) argues that:
• Human resources are something more than just 'resources'
• HRM is not concerned solely with financial performance
• HRM focuses on the exchange relationship between employee and organization
• The shaping of the employment relationship takes place in an era of continuous tension
between the added value and moral values.
,Human resources are people with feelings, emotions, interests, norms and values. Their behaviour
inside and outside the organization is not solely determined by economic rationality.
HRM;
• Can contribute to the organization's success in terms of increased financial performance
• Needs to manage stakeholders
• Is involved in the administration related to legislation
• Has to do with relationship management with crucial social partners
HRM focuses on the exchange relationship between the employee and the organization. The concept
that best captures the exchange relationship is the concept of the employment relationship. The
employment relationship contains different contract types:
• Legal contract
• Economic or transactional contract
• Psychological contract
• Sociological contract
Tensions
HRM operates in an area of continuous tension between added value and moral values (Paauwe,
2004). Legge (1995) discusses the distinction between 'hard' HRM that mainly focuses on the
economics (added value) and 'soft' HRM that mainly focuses on the human side of organizing (moral
value). She observes a dominance of attention to 'hard' HRM in both theory and practise.
Rebalancing the approaches towards economic and moral aspects in theory and practice is one of
the major challenges in the field of HRM.
Bocall and Purcell (2003) argue that;
• HRM covers all workforce groups, including core employees, peripheral employees and
contingent workers
• HRM involves line and specialist managers
• HRM is all about managing work and people, collectively and individually
• HRM is embedded in industries and societies.
A distinction is made between the Anglo-Saxon or Anglo-American models and the Rhineland
models. The Anglo-American approaches in IR and HRM mainly focus on creating shareholder value
in terms of profits and market value with little or no attention to other stakeholders including trade
unions and works councils. In contrast, the Rhineland models, labelled edge multiple stakeholders
and their interest explicitly taking into account employee interests in terms of well-being and societal
interests. However, we should be careful to use this dichotomy because the Rhineland countries do
have major differences.
The balanced approach
In times of globalization and increased competition there is a growing awareness that sustained
competitive advantage depends on balancing market demands and institutional pressures. In the
strategic balance model, organizational success can only be achieved when financial performance
and societal performance of an organization are above average in the particular population in which
the organization is operating (Deephouse, 1999).
The definition of 'good' and 'bad' people management can be linked to the balanced approach. A
more narrow view is likely to result in 'bad' people management. The recent financial and global
economic crisis in 2008/2009 has proved the risk of shareholder dominance.
Framing HRM
, Bolman and Deal (2008) present four different perspectives or frames for studying organizations.
Applying different frames can contribute to a better territory understanding and rapid cognition of
organization and HRM realities.
• Structural frame (1960-1970) (rational)
• HR frame (psychological)
• Political frame
• Symbolic frame (1980-1990)
Mainstream SHRM is mostly studied from the structural frame. The political and the symbolic frame
are largely neglected in SHRM.
Aantekeningen slides
The relevance of optimal coping with change is embedded in the concept of competitive
advantage.
PAAUWE
• Human resources are something more than just ‘resources’;
• Human resource management is not concerned solely with financial performance;
• Human resource management focuses on the exchange relationship between
employee and organization;
• And the shaping of the employment relationship takes place in an era of continuous
tension between the added value and moral values.
CH2 Strategic Human Resource Management and Context
Introduction
There is a 'strategic fit' when a company its strategy aligns with the HR strategy and policies. There is
a 'organizational fit' when the practices fit within HR.
'The more HR fit the better.' (Boon 2008)
Resource Management in the Twenty-first
Century
Introduction
Employees are generally considered the 'organization's most valuable assets'. You can create:
• Higher productivity levels
• Improve service quality towards customers
• Expand sales
• Make more profits when you manage your workers
This is what the theory suggests, it is not proven that these claims are true in practise.
It is concluded in both theory and practise that employees matter and that HRM is a potential source
for achieving organizational goals (Boxall and Purcell, 2011).
SHRM is a relatively young discipline - approximately 25 years old. SHRM has a growing importance
for organizations operation in a dynamic and continuous changing environment. The changes also
effect employees. Successful change highly depends on changing people in their attitudes, behaviour
and cognition. This asks for flexibility and good people management.
The new economy
In the 1990's it changed from a manufacturing and production economy into a service sector asset-
based economy; the new economy (Porter).
Work in the old economy was characterized by;
• Physical tasks
• Job design
• Work design based on mass production
• Many relatively low-skilled workers
• High degrees of unionization
• Face to face contacts
The new economy is dominated by;
• Emerging branches of the industry (including the Itsector)
• Assets are less tangible and are embedded in reputation, brands and knowledge of employees.
• High knowledge industry
• Web-based organizing
• Contacts through intranet or internet
• Centres on the other side of the world (outsourcing and offshoring)
• Integration of work design, technology and services delivered.
• Organizational change has become a common practise in the new economy
The old economy still exists in developing countries and countries with relatively cheap labour
conditions.
,Organizational change and competitive advantage
The relevance of optimal coping with change is embedded in the concept of competitive advantage.
Competitive advantage is important for organizational survival and is at least partly manageable by
HRM. Competitive advantage represents an organization's position in comparison to its direct
competitors. Competitive advantage might be reflected in financial performance and non-financial
performance.
The changing role of work in modern organizations
Opportunities to work at home can be a source for a better work-life balance and/or family-friendly
employment. Flexible working arrangements are becoming more important for dual-career couples
with children.
The ageing population in many Western countries is also affecting work in modern organizations.
This brings the next issues; potential loss of valuable knowledge, skills and abilities. It also causes
personnel planning issues in the future and the risk of ever-increasing labour costs related to older
workers in terms of higher salaries.
MHRM, IHRM and SHRM
HRM involves management decisions related to policies and practises that together shape the
employment relationship and are aimed at achieving individual, organizational and societal goals.
This definition acknowledges the relevance of different stakeholders and the goals linked to them.
SHRM builds on this definition and in addition pays extra attention to the organizational context,
reflected in special attention to potential alignment of the business strategy an HRM, the alignment
of the institutional context and HRM, the linkage between business systems and HRM and the fit
between HR practices.
HRM is 'the management of work and people towards desired ends' (Boxall 2007). They argue this is
a fundamental activity in any organization with employees. They identify three sub-fields:
• MHRM covers the sub-functions of HR policy and practice. MHRM is closely related to the
studies in organizational behaviour and occupational psychology that focus on the impact of
single HR practices on employee attitudes and behaviours.
• IHRM is concerned with HRM in MNCs and HRM across borders.
• SHRM focuses on issues of linking HRM to the business strategy. The concept of 'fit' plays a
central role within SHRM.
Three perspectives
The multidimensional strategic HR model in this book includes the following key characteristics:
• A multi actor perspective (by stakeholders)
• A broad societal view (with an emphasis on different institutional contexts, for example on the
level of branches of industry, regions and countries)
• A multi-level perspective (including the individual employee perspective and the strategic
organizational perspective)
Paauwe (2004) argues that:
• Human resources are something more than just 'resources'
• HRM is not concerned solely with financial performance
• HRM focuses on the exchange relationship between employee and organization
• The shaping of the employment relationship takes place in an era of continuous tension
between the added value and moral values.
,Human resources are people with feelings, emotions, interests, norms and values. Their behaviour
inside and outside the organization is not solely determined by economic rationality.
HRM;
• Can contribute to the organization's success in terms of increased financial performance
• Needs to manage stakeholders
• Is involved in the administration related to legislation
• Has to do with relationship management with crucial social partners
HRM focuses on the exchange relationship between the employee and the organization. The concept
that best captures the exchange relationship is the concept of the employment relationship. The
employment relationship contains different contract types:
• Legal contract
• Economic or transactional contract
• Psychological contract
• Sociological contract
Tensions
HRM operates in an area of continuous tension between added value and moral values (Paauwe,
2004). Legge (1995) discusses the distinction between 'hard' HRM that mainly focuses on the
economics (added value) and 'soft' HRM that mainly focuses on the human side of organizing (moral
value). She observes a dominance of attention to 'hard' HRM in both theory and practise.
Rebalancing the approaches towards economic and moral aspects in theory and practice is one of
the major challenges in the field of HRM.
Bocall and Purcell (2003) argue that;
• HRM covers all workforce groups, including core employees, peripheral employees and
contingent workers
• HRM involves line and specialist managers
• HRM is all about managing work and people, collectively and individually
• HRM is embedded in industries and societies.
A distinction is made between the Anglo-Saxon or Anglo-American models and the Rhineland
models. The Anglo-American approaches in IR and HRM mainly focus on creating shareholder value
in terms of profits and market value with little or no attention to other stakeholders including trade
unions and works councils. In contrast, the Rhineland models, labelled edge multiple stakeholders
and their interest explicitly taking into account employee interests in terms of well-being and societal
interests. However, we should be careful to use this dichotomy because the Rhineland countries do
have major differences.
The balanced approach
In times of globalization and increased competition there is a growing awareness that sustained
competitive advantage depends on balancing market demands and institutional pressures. In the
strategic balance model, organizational success can only be achieved when financial performance
and societal performance of an organization are above average in the particular population in which
the organization is operating (Deephouse, 1999).
The definition of 'good' and 'bad' people management can be linked to the balanced approach. A
more narrow view is likely to result in 'bad' people management. The recent financial and global
economic crisis in 2008/2009 has proved the risk of shareholder dominance.
Framing HRM
, Bolman and Deal (2008) present four different perspectives or frames for studying organizations.
Applying different frames can contribute to a better territory understanding and rapid cognition of
organization and HRM realities.
• Structural frame (1960-1970) (rational)
• HR frame (psychological)
• Political frame
• Symbolic frame (1980-1990)
Mainstream SHRM is mostly studied from the structural frame. The political and the symbolic frame
are largely neglected in SHRM.
Aantekeningen slides
The relevance of optimal coping with change is embedded in the concept of competitive
advantage.
PAAUWE
• Human resources are something more than just ‘resources’;
• Human resource management is not concerned solely with financial performance;
• Human resource management focuses on the exchange relationship between
employee and organization;
• And the shaping of the employment relationship takes place in an era of continuous
tension between the added value and moral values.
CH2 Strategic Human Resource Management and Context
Introduction
There is a 'strategic fit' when a company its strategy aligns with the HR strategy and policies. There is
a 'organizational fit' when the practices fit within HR.
'The more HR fit the better.' (Boon 2008)
