Strategic Human Resource Management
Week 1: Chapters 1 & 2
Chapter 1: Introduction: SHRM in the 21st century
Employees are seen as ‘the organization’s most valuable assets’ according to the HRM theory,
can create several benefits by managing workers following the HRM principles;
- Higher productivity levels
- Improvement of service quality towards customers
- Expansion of sales
- Higher profits
In this book, a multiple-stakeholder perspective is used; meaning that the strategy of business
must be in line with the strategy of an employee.
The new economy
1990s the new economy: a concept mainly focused on the shift from a manufacturing and
production economy into a service sector asset-based economy.
- Outsourcing and offshoring business activities to developing countries is a
characteristic of the new economy.
Outsourcing means that the business activities are done by another company.
Offshoring means moving business activities to another country, but it still belongs to the
same company.
Organizational change and competitive advantage
Organizational change: represents the changes in the nowadays working life which has an
impact on organizations and employees; f.e. global crisis, aging of the population.
Competitive advantage: the relatively stronger position of an organization in comparison to
other organizations in the same region or branch of industry financial and non-financial
performance.
- Business has advantage if employees and all different stakeholders know how to cope
with organizational change.
- Human resources determine at least partly the competitive advantage of a business.
,MHRM, IHRM & SHRM
3 types of HRM:
1. Micro HRM/MHRM: sub-field aimed at studying the shaping of the employment
relationship at the individual employee level. This includes recruitment and selection:
induction and socialization; training and development. MHRM deals with all flows of
employees.
2. International HRM/IHRM: studying the shaping of the employment relationship in an
international context with special attention to HRM for expatriates in large MNCs.
3. Strategic HRM/SHRM: studying the shaping of the employment relationship taking
into account the internal and external organizational context in an attempt to gain
sustainable competitive advantage. Special attention to alignment between business
and HRM strategy.
Perspectives SHRM
1. A multi-actor perspective: multiple stakeholders including for example employees,
managers, top management, and shareholders.
2. A broad societal view: with an emphasis on different institutional contexts for
example, on the level of industry, regions, and country branches.
3. A multi-level perspective: including the individual and the strategic organizational
perspective.
Stakeholders are internal and external groups that affect the strategic decision-making of an
organization, including its SHRM.
Paauwe (2004)
- Human resources are more than just resources: people have feelings, emotions etc.
- HRM is not concerned solely with financial performance, but there is a broader
responsibility covering stakeholder management, like well-being and happiness.
- HRM focuses on the exchange relationship (psychological contract) between
employee and organization.
- Soft HRM: focused on the human side.
- Hard HRM: focused on economics.
There are 4 contract types in the exchange relationship
1. Legal contract: rights and obligations of both parties (vacation days).
2. Economic/transactional contract: salary and working hours.
3. Psychological contract: unwritten expectations, from both actors.
4. Sociological contract: social aspects in relations bond with colleagues.
USA focuses on hard HRM, Europe on soft HRM.
,Boxall and Purcell (2003)
- HRM covers all workforce groups
- HRM not solely aimed at employees but also involves managers
- All about managing work and people, collectively and individually
- HRM is embedded in industries and societies
Peripheral employees and contingent workers (cleaning team) are often neglected, decreasing
motivation.
HRM practices are:
- Recruitment and selection
- Training and development
- Appraisal and rewards
- Promotion etc.
Traditional HRM model focuses only on valuable employees, new one focuses on everyone.
Balanced approach
Balanced approach blends the insights from an economic and institutional perspective to
create balance and sustainability within the organization.
- Organizational success can only be achieved when financial performance and societal
performance are above average where the organization is operating.
- Goals of individual employee, organizational goals, and the societal goals have to be
in line.
Bolman & Deal (2008)
4 perspectives for studying organizations that can contribute to a better understanding of
organizations and HRM realities:
1. Structural frame: seeks an understanding of the structural parts of an organization
(rules, goals, policies, technology, environment).
2. HR frame: psychological background for needs, skills, and relationships of those who
are involved.
3. Political frame: examination of use of power.
4. Symbolic frame: meaning and identity of individuals and organization.
SHRM is mostly studied for the structural and HR frame. A balanced approach will be a
combination of all these perspectives.
Chapter 2: SHRM and context & Guest lecture Leeuwendaal
Leeuwendaal
Leeuwendaal is a consultancy firm focused on HR practices:
- Organizations’ performances rely on human input
- Based on 3 areas: Developing, Organizing & Reinforcing
, Best fit vs best practice
Debate about the relevance of fit between HRM and other aspects of an organization, 2
sides:
1. The best-fit school: argues that HRM is more effective when aligned with the
internal- and external context (context-dependent).
2. The best practice school: one best way of doing things for every company
(universalistic perspective).
Best-practice proposition (Pfeffer): states that specific HR practices are universally applicable
and successful when all 7 are used:
- Strength: simplicity and clarity
- Criticism: lack of attention to contextual factors like national differences
Best-fit proposition: states that specific HR practices are not universally applicable and
successful when used, but can only be successful when there’s a fit between HRM and context
- Context: represents the internal (history, culture) and external (outside mechanisms)
organization environment.
- Institutional mechanisms: mechanisms that stem from legislation, protocols,
routines, professional norms etc. (Paauwe SCL, social, cultural, legal).
- Market mechanisms: mechanisms that stem from the markets in which an
organization operates (Paauwe PMT, people, markets, technology).
Illustrations of Pfeffer’s 7 best practices
1. Selective recruitment and selection: the focus is on the selective part, where you are
trying to recruit and select the best person for the job and organization.
2. Extensive training: employee development through training programs.
3. Performance-related pay (PRP): reward that is linked to the profits of an organization.
4. Teamworking: decentralizing responsibility with autonomy and self-responsibility in
work design and planning for a group of employees.
5. Information sharing and communication: through the internet and other media. The
top management’s support and involvement in communication is crucial for the
changing process of an organization.
6. Reduction of status differences: no status symbols linked to hierarchical positions, for
example, no executive parking spaces.
7. Employment security: providing insurance for unemployment, disability, and death for
employees and their families.
Week 1: Chapters 1 & 2
Chapter 1: Introduction: SHRM in the 21st century
Employees are seen as ‘the organization’s most valuable assets’ according to the HRM theory,
can create several benefits by managing workers following the HRM principles;
- Higher productivity levels
- Improvement of service quality towards customers
- Expansion of sales
- Higher profits
In this book, a multiple-stakeholder perspective is used; meaning that the strategy of business
must be in line with the strategy of an employee.
The new economy
1990s the new economy: a concept mainly focused on the shift from a manufacturing and
production economy into a service sector asset-based economy.
- Outsourcing and offshoring business activities to developing countries is a
characteristic of the new economy.
Outsourcing means that the business activities are done by another company.
Offshoring means moving business activities to another country, but it still belongs to the
same company.
Organizational change and competitive advantage
Organizational change: represents the changes in the nowadays working life which has an
impact on organizations and employees; f.e. global crisis, aging of the population.
Competitive advantage: the relatively stronger position of an organization in comparison to
other organizations in the same region or branch of industry financial and non-financial
performance.
- Business has advantage if employees and all different stakeholders know how to cope
with organizational change.
- Human resources determine at least partly the competitive advantage of a business.
,MHRM, IHRM & SHRM
3 types of HRM:
1. Micro HRM/MHRM: sub-field aimed at studying the shaping of the employment
relationship at the individual employee level. This includes recruitment and selection:
induction and socialization; training and development. MHRM deals with all flows of
employees.
2. International HRM/IHRM: studying the shaping of the employment relationship in an
international context with special attention to HRM for expatriates in large MNCs.
3. Strategic HRM/SHRM: studying the shaping of the employment relationship taking
into account the internal and external organizational context in an attempt to gain
sustainable competitive advantage. Special attention to alignment between business
and HRM strategy.
Perspectives SHRM
1. A multi-actor perspective: multiple stakeholders including for example employees,
managers, top management, and shareholders.
2. A broad societal view: with an emphasis on different institutional contexts for
example, on the level of industry, regions, and country branches.
3. A multi-level perspective: including the individual and the strategic organizational
perspective.
Stakeholders are internal and external groups that affect the strategic decision-making of an
organization, including its SHRM.
Paauwe (2004)
- Human resources are more than just resources: people have feelings, emotions etc.
- HRM is not concerned solely with financial performance, but there is a broader
responsibility covering stakeholder management, like well-being and happiness.
- HRM focuses on the exchange relationship (psychological contract) between
employee and organization.
- Soft HRM: focused on the human side.
- Hard HRM: focused on economics.
There are 4 contract types in the exchange relationship
1. Legal contract: rights and obligations of both parties (vacation days).
2. Economic/transactional contract: salary and working hours.
3. Psychological contract: unwritten expectations, from both actors.
4. Sociological contract: social aspects in relations bond with colleagues.
USA focuses on hard HRM, Europe on soft HRM.
,Boxall and Purcell (2003)
- HRM covers all workforce groups
- HRM not solely aimed at employees but also involves managers
- All about managing work and people, collectively and individually
- HRM is embedded in industries and societies
Peripheral employees and contingent workers (cleaning team) are often neglected, decreasing
motivation.
HRM practices are:
- Recruitment and selection
- Training and development
- Appraisal and rewards
- Promotion etc.
Traditional HRM model focuses only on valuable employees, new one focuses on everyone.
Balanced approach
Balanced approach blends the insights from an economic and institutional perspective to
create balance and sustainability within the organization.
- Organizational success can only be achieved when financial performance and societal
performance are above average where the organization is operating.
- Goals of individual employee, organizational goals, and the societal goals have to be
in line.
Bolman & Deal (2008)
4 perspectives for studying organizations that can contribute to a better understanding of
organizations and HRM realities:
1. Structural frame: seeks an understanding of the structural parts of an organization
(rules, goals, policies, technology, environment).
2. HR frame: psychological background for needs, skills, and relationships of those who
are involved.
3. Political frame: examination of use of power.
4. Symbolic frame: meaning and identity of individuals and organization.
SHRM is mostly studied for the structural and HR frame. A balanced approach will be a
combination of all these perspectives.
Chapter 2: SHRM and context & Guest lecture Leeuwendaal
Leeuwendaal
Leeuwendaal is a consultancy firm focused on HR practices:
- Organizations’ performances rely on human input
- Based on 3 areas: Developing, Organizing & Reinforcing
, Best fit vs best practice
Debate about the relevance of fit between HRM and other aspects of an organization, 2
sides:
1. The best-fit school: argues that HRM is more effective when aligned with the
internal- and external context (context-dependent).
2. The best practice school: one best way of doing things for every company
(universalistic perspective).
Best-practice proposition (Pfeffer): states that specific HR practices are universally applicable
and successful when all 7 are used:
- Strength: simplicity and clarity
- Criticism: lack of attention to contextual factors like national differences
Best-fit proposition: states that specific HR practices are not universally applicable and
successful when used, but can only be successful when there’s a fit between HRM and context
- Context: represents the internal (history, culture) and external (outside mechanisms)
organization environment.
- Institutional mechanisms: mechanisms that stem from legislation, protocols,
routines, professional norms etc. (Paauwe SCL, social, cultural, legal).
- Market mechanisms: mechanisms that stem from the markets in which an
organization operates (Paauwe PMT, people, markets, technology).
Illustrations of Pfeffer’s 7 best practices
1. Selective recruitment and selection: the focus is on the selective part, where you are
trying to recruit and select the best person for the job and organization.
2. Extensive training: employee development through training programs.
3. Performance-related pay (PRP): reward that is linked to the profits of an organization.
4. Teamworking: decentralizing responsibility with autonomy and self-responsibility in
work design and planning for a group of employees.
5. Information sharing and communication: through the internet and other media. The
top management’s support and involvement in communication is crucial for the
changing process of an organization.
6. Reduction of status differences: no status symbols linked to hierarchical positions, for
example, no executive parking spaces.
7. Employment security: providing insurance for unemployment, disability, and death for
employees and their families.
