Personnel management - The renewed emphasis on the importance of human resources in the 1980s and 90s drew attention to the way in which people management was organized. Specifically, this meant a critical review of the functions of personnel management.
Personnel management has been a recognized function in the USA since NCR opened a personnel
office in the 1890s. In other countries the function arrived more slowly and came through a variety of routes. This excerpt from Human Resource Management
in a Business Context looks at Personnel management from a historical perspective.
Further notes: Traditional Personnel Functions
• Recruitment - advertising for new employees and liaising with employment agencies.
• Selection - determining the best candidates from those who apply, arranging interviews, tests, references.
• Promotion - running similar selection procedures to determine progression within the organization.
• Pay - a minor or major role in pay negotiation, determination and administration.
• Performance assessment - co-ordinating staff appraisal and counselling systems to evaluate individual employee performance
• Grading structures - as a basis for pay or development, comparing the relative difficulty and importance of functions.
• Training and development - co-ordinating or delivering programmes to fit people for the roles required by the organisation now and in the future.
• Welfare - providing or liaising with specialists in a staff care or counselling role for people with personal or domestic problems affecting their work.
• Communication - providing internal information service, perhaps in the form of staff newspapers or magazines, handouts, booklets, videos.
• Employee Relations - handling disputes, grievances and industrial action, often dealing with unions or staff representatives.
• Dismissal - on an individual basis as a result of failure to meet requirements or as part of a redundancy, downsizing or closure exercise, perhaps involving large numbers of people.
• Personnel administration - record-keeping and monitoring of legislative requirements related to equal opportunities and possibly pensions and tax.
Personnel management has been a recognised function in the USA since NCR opened a personnel office in the 1890s. American personnel managers worked within a unitarist tradition, identifying closely with the objectives of their organization (key concept 1.3). It was natural for HRM to emerge comparatively smoothly from this perspective.
In other countries, notably Australia, South Africa and the UK, the personnel management function arrived more slowly and came from a number of routes. Moreover, its orientation was not entirely managerial. In Britain its origins can be traced to the 'welfare officers' employed by Quaker-owned companies such as Cadburys. At an early stage it became evident that there was an inherent conflict between their activities and those of line managers. They were not seen to have a philosophy compatible with the worldview of senior managers. The welfare officer orientation placed personnel management as a buffer between the business and its employees. In terms of organizational politics this was not a politically viable position for individuals wishing to further their careers, increase their status and earn high salaries.
Key concept 1.3
A managerialist stance which assumes that everyone in an organization is a member of a team with a common purpose. It embodies a central concern of HRM, - that an organization's people, whether managers or lower-level employees, should share the same objectives and work together harmoniously. From this perspective, conflicting objectives are seen as negative and disfunctional. By definition it is the opposite of pluralism: the acceptance of several alternative approaches, interests or goals within the samr organization or society. Arguably, in the field of HRM, unitarism represents a US tradition, whereas pluralism is more typical of European attitudes towards people management.
(...) The second tradition - industrial relations - further compounded this distinction between personnel and other managers. In the acrimonious industrial relations climate which prevailed in the UK throughout much of the 20th century, personnel/industrial relations managers played an intermediary role between unions and line management. Their function was legitimized by their role as 'honest brokers'.
But from the 1980s onwards governments with a neo-liberal or free market orientation such as Margaret Thatcher's administration in the UK reined in union freedom severely. Overall, there was a marked reduction in the importance of collective worker representation in many English-speaking countries. The perceived importance of collective bargaining reduced as managerial power increased. Trade union membership declined along with centralized pay bargaining and other forms of collective negotiation - and with them, the importance of the personnel manager with negotiating experience. The focus switched from the collective to the relationship between the employer and the individual employee. To support this change, a variety of essentially individualistic HR techniques were applied to achieve business goals. These include performance measurement, objective-setting, and skills development related to personal reward.
By the 1980s, personnel had become a well-defined but low status area of management (see table 1.1). Associations such as the British Institute of Personnel Management (now the Institute of Personnel and Development) recruited members in increasing numbers, developed a qualification structure and attempted to define 'best practice'. Although the knowledge and practices they encouraged drew on psychology and sociology, they were largely pragmatic and commonsensical and did not present a particularly coherent approach to people management. Moreover, in some instances training and industrial relations were considered to be specialist fields outside mainstream personnel management. Traditional personnel managers were accused of having a narrow, functional outlook. Storey (1989: 5) commented that personnel management: '...has long been dogged by problems of credibility, marginality, ambiguity and a 'trash-can' labelling which has relegated it to a relatively disconnected set of duties - many of them tainted with a low-status 'welfare' connotation'.
In practice, the background and training of many personnel managers left them speaking a different language from other managers and unable to comprehend wider business issues such as business strategy, market competition, labour economics, the roles of other organizational functions - let alone balance sheets (Giles and Williams, 1991). The scene was set for a reintegration of personnel management with wider trends in management thinking.
Excerpt from chapter 1 - Human Resource Management in a Business Context, Thomson Learning. Copyright A. J. Price - this excerpt may be copied for personal use only and must be credited to the author if quoted in any text.
Excerpts from Chapter 1 of Human Resource Management in a Business Context (2nd Edition, 2004) by Alan Price - published by Thomson Learning
The human relations and human factors approaches were absorbed into a broad behavioural science movement in the 1950's and 1960's. This period produced some influential theories on the motivation of human performance. For example, Maslow's hierarchy of needs provided an individual focus on the reasons why people work. He argued that people satisfied an ascending series of needs from survival, through security to eventual 'self-actualization'.
In the same period, concepts of job design such as job enrichment and job enlargement were investigated. It was felt that people would give more to an organization if they gained satisfaction from their jobs. Jobs should be designed to be interesting and challenging to gain the commitment of workers - a central theme of HRM.
Classic theories were produced in the 1950s and 1960s within the human relations framework. By the 1970s most managers participating in formal management training were aware of: Theory X and Theory Y (McGregor, 1960); of Maslow and Herzberg's motivation theories; and knew where they should be in terms of the managerial grid (Blake and Mouton, 1964). These theorists advocated participative, 'soft' approaches to management. However, only a minority of managers in the USA received such training, with even fewer in other countries. Most operational managers - concerned with production, engineering, or distribution - had worked their way up from low-level jobs: they were probably closer in spirit to F.W. Taylor than the theorists of the 1950s and 1960s. This contrasted with personnel departments with a higher proportion of people who had received academic training; additionally, 'personnel' was an area where women were prevalent - as opposed to production which was male dominated. Were women naturally more open to human relations concepts than men?
Pages 16-18 summarize other key management theories, including management by objectives, contingency, organizattional development, strategic management, leadership and corporate culture.
Development of the personnel specialism
Personnel management has been a recognized function in the USA since NCR opened a personnel office in the 1890s. American personnel managers worked within a unitarist tradition, identifying closely with the objectives of their organization (key concept 1.3). It was natural for HRM to emerge comparatively smoothly from this perspective.
In other countries, notably Australia, South Africa and the UK, the personnel management function arrived more slowly and came from a number of routes. Moreover, its orientation was not entirely managerial. In Britain its origins can be traced to the 'welfare officers' employed by Quaker-owned companies such as Cadburys. At an early stage it became evident that there was an inherent conflict between their activities and those of line managers. They were not seen to have a philosophy compatible with the worldview of senior managers. The welfare officer orientation placed personnel management as a buffer between the business and its employees. In terms of 'organizational politics' this was not a politically viable position for individuals wishing to further their careers, increase their status and earn high salaries.
This excerpt from Human Resource Management in a Business Context looks at Personnel management from a historical perspective.
Pages 18-20 go on to consider the development of personnel management into the 20th century, including Tyson's typology and a list of 'traditional' personnel tasks.
Like fashions in hairstyle and clothing, management ideas come and go. Today's best-selling management concept will not survive long before being overtaken by the next 'big idea'. Significantly, however, a consistent theme has prevailed for more than two decades: the most successful organizations make the most effective use of their people - their human resources.
The emergence of HRM was part of a major shift in the nature and meaning of management towards the end of the twentieth century. This happened for a number of reasons. Perhaps most significantly, as we will see in Part 2 of this book, major developments in the structure and intensity of international competition forced companies to make radical changes in their working practices (Goss 1994: 1).
From the 1970s onwards, managers in the industrialized countries felt themselves to be on a roller-coaster of change, expected to deliver improved business performance by whatever means they could muster. Their own careers and rewards were increasingly tied to those improvements and many were despatched to the ranks of the unemployed for not acting quickly and imaginatively enough. Caught between the need to manage decisively and fear of failure, managers sought credible new ideas as a potential route for survival.
Pages 20-22 continue with a discussion of the Japanese role model and its effects on western management thinking.
Excerpts from Chapter 1 of Human Resource Management in a Business Context (2nd Edition, 2004) by Alan Price – published by Thomson Learning
Arguably, HRM has become the dominant approach to people management in English-speaking countries. But it is important to stress that HRM has not 'come out of nowhere'. There is a long history of attempts to achieve an understanding of human behavior in the workplace. Throughout the 20th century and earlier, practitioners and academics developed theories and practices to explain and influence human behavior at work. HRM has absorbed ideas and techniques from a wide range of these theories and practical tools. In effect, HRM is a synthesis of themes and concepts drawn from a long history of work, more recent management theories and social science research. (...)
Background and origins of people management
The roots of people management (and, therefore, of HRM) lie deep in the past. Just as the tasks that have to be carried out in modern organizations are allocated to different jobs and the people who perform those jobs, humans in ancient societies divided work between themselves (...)
Pages 4-8 of Human Resource Management in a Business Context 2/e discuss the division of labour, the evolution of a managerial class, the Industrial Revolution and the concept of alienation.
By 1900 the USA had undergone several decades of rapid, large-scale industrialization. Large American companies such as Heinz and Singer Sewing Machines had the characteristics of modern, highly structured organizations. They produced standardized consumer durables for the mass market. These organizations required a supply of trained managers. Notionally selected on the basis of ability and expertise - rather than family connections - they needed to know how to organize, reward and motivate their staff. In the USA, state and private universities were opened to cater for this new professional need.
The first companies of equivalent size and organization did not arise in Britain and the Commonwealth until the 1920s and management education was similarly late in developing. Like most European or Asian companies they still tended to employ relatives or to promote long-standing workers to management roles. (...)
Pages 9-13 of Human Resource Management in a Business Context 2/e discuss the continued influence of F.W. Taylor ('Scientific' Management). the Gilbreths, and Henry Ford and the doctrine of 'Fordism'.
The human factor
The 'science' in scientific management was doubtful. (...) Initially the work of occupational psychologists bordered on physiology as they investigated fatigue and monotony. (...)
Their work directly countered the myth that working longer hours produced greater output. In their research on monotony they took a deliberate anti-Taylorist perspective. They confirmed Taylor's views on the value of rest-pauses but argued against the notion of 'one best way by a first-class man'. The simple truth was that individual tasks could be done equally effectively in a variety of ways by a diverse range of people. (...)
The US human relations movement dominated management thinking until the 1950s and was a significant influence on the development of modern HRM. The movement gained most of its inspiration from the famous Hawthorne studies at the Western Electric Company plant of that name in Chicago from the 1920s to the early 1940s. The plant employed 40,000 people and was regarded as progressive. The studies were organized by the company, with some assistance from the Harvard Business School. The intention was to find out how productivity might be affected if working conditions such as lighting, heating and rest-pauses were varied. Elton Mayo, an Australian professor at Harvard, picked up these studies and publicized a new approach in American management philosophy that spread to many other countries.
Pages 14-16 of Human Resource Management in a Business Context 2/e consider the significance of the Hawthorne studies.
From personnel to human resource management
HRM-type themes, including 'human capital theory' (discussed in Part 2) and 'human asset accounting' can be found in literature dating as far back as the 1970s. But the modern view of human resource management first gained prominence in 1981 with its introduction on the prestigious MBA course at Harvard Business School. The Harvard MBA provided a blueprint for many other courses throughout North America and the rest of the world, making its interpretation of HRM particularly influential (Beer et al, 1984; Guest, 1987; Poole, 1990). Simultaneously, other interpretations were being developed in Michigan and New York.
These ideas spread to other countries in the 1980s and 1990s, particularly Australia, New Zealand, parts of northern Europe - especially the UK, Ireland and Scandinavia - and also South and South-East Asia and South Africa. Today, the HRM approach is influential in many parts of the world.
Pages 22-25 provide a discussion on why HRM seemed to be different - and preferable - to personnel management but also examine some common prejudices against the notion of HRM.
The new managerialism
Schuler (1990) emphasized that the HR function had an opportunity to shift from being an 'employee advocate' (associated with personnel management) to a 'member of the management team'. Schuler's view was that this required HR professionals to be concerned with the bottom line, profits, organizational effectiveness and business survival. In other words, human resource issues should be addressed as business issues.
In fact, line and general managers have been instrumental in the adoption of HRM - often pushing changes through despite the resistance of personnel specialists (Storey, 2001: 7). Radical changes in business structures and supportive - largely right-wing - governments encouraged a renewed confidence in the power of managers to manage. The balance of power moved away from workers and their representatives with the collapse of traditional heavy industries. High levels of unemployment allowed managers to pick and choose new recruits. Existing employees felt under pressure to be more flexible under the threat of losing their jobs. As a result, managers were able to design more competitive organizations with new forms of employment relationships.
Case Study - George Cadbury
The George Cadbury case (largely a Victorian eulogy) is intended to illustrate the commonality of people management problems throughout the ages - and the value of good corporate PR. The case can be viewed at a number of levels, therefore, and may serve to illustrate a variety of points. One point is that some (many?) management theories can be considered to be little more than commonsense dressed up with fancy terminology. That terminology may have been absent in days when people management problems were being tackled from 'first principles'. But remember that problems have always been dealt with in the context of their time, and the solutions came about within the prevailing social and ethical framework?
Defining Human Resource Management
Brief excerpts from Chapter 2 of Human Resource Management in a Business Context (2nd Edition, 2004) by Alan Price - published by Thomson Learning
Many people find HRM to be a vague and elusive concept - not least because it seems to have a variety of meanings. Pinning down an acceptable definition can seem like trying to hit a moving target in a fog. This confusion reflects the different interpretations found in articles and books about human resource management. HRM is an elastic term (...). It covers a range of applications that vary from book to book and organization to organization. (...)
Pages 32-35 of Human Resource Management in a Business Context 2/e discuss the use and meaning of the term 'human resource management', consider a number of textbook definitions and provide a working definition for the book:
'A philosophy of people management based on the belief that human resources are uniquely important in sustained business success. An organization gains competitive advantage by using its people effectively, drawing on their expertise and ingenuity to meet clearly defined objectives. HRM is aimed at recruiting capable, flexible and committed people, managing and rewarding their performance and developing key competencies.'
In today’s intensely competitive and global marketplace, maintaining a competitive advantage by becoming a low cost leader or a differentiator puts a heavy premium on having a highly committed or competent workforce. Competitive advantage lies not just in differentiating a product or service or in becoming the low cost leader but in also being able to tap the company’s special skills or core competencies and rapidly respond to customer’s needs and competitor’s moves. In other words competitive advantage lies in management’s ability to consolidate corporate-wide technologies and production skills into competencies that empower individual businesses to adapt quickly to changing opportunities.
In a growing number of organizations human resources are now viewed as a source of competitive advantage. There is greater recognition that distinctive competencies are obtained through highly developed employee skills, distinctive organizational cultures, management processes and systems. This is in contrast to the traditional emphasis on transferable resources such as equipment. Increasingly it is being recognized that competitive advantage can be obtained with a high quality workforce that enables organizations to compete on the basis of market responsiveness, product and service quality, differentiated products and technological innovation.
Strategic human resource management has been defined as ‘ the linking of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that foster innovation and flexibility ‘. Strategic HR means accepting the HR function as a strategic partner in the formulation of the company’s strategies as well as in the implementation of those strategies through HR activities such as recruiting, selecting, training and rewarding personnel. Whereas strategic HR recognizes HR’s partnership role in the strategizing process, the term HR Strategies refers to specific HR courses of action the company plans to pursue to achieve it’s aims.
HR management can play a role in environmental scanning i.e. identifying and analyzing external opportunities and threats that may be crucial to the company’s success. Similarly HR management is in a unique position to supply competitive intelligence that may be useful in the strategic planning process. HR also participates in the strategy formulation process by supplying information regarding the company’s internal strengths and weaknesses. The strengths and weaknesses of a company’s human resources can have a determining effect on the viability of the firm’s strategic options.
By design the perspective demands that HR managers become strategic partners in business operations playing prospective roles rather than being passive administrators reacting to the requirements of other business functions. Strategic HR managers need a change in their mindset from seeing themselves as relationship managers to resource managers knowing how to utilize the full potential of their human resources.
The new breed of HR managers need to understand and know how to measure the monetary impact of their actions, so as to be able to demonstrate the value added contributions of their functions. HR professionals become strategic partners when they participate in the process of defining business strategy, when they ask questions that move strategy to action and when they design HR practices that align with the business strategy. By fulfilling this role, HR professionals increase the capacity of a business to execute its strategies.
The primary actions of the strategic human resource manager translate business strategies into HR priorities. In any business setting, whether corporate, functional, business unit or product line a strategy exists either explicitly in the formal process or document or implicitly through a shared agenda on priorities. As strategic partners, HR professionals should be to identify the HR practices that make the strategy happen. The process of identifying these HR priorities is called organizational diagnosis, a process through which an organization is audited to determine its strengths and weaknesses.
Translating business strategies into HR practices helps a business in three ways. First, the business can adapt to change because the time from the conception to the execution of a strategy is shortened. Second, the business can better meet customer demands because its customer service strategies have been translated into specific policies and practices. Third, the business can achieve financial performance through its more effective execution of strategy.
In brief, a strategic perspective of HRM that requires simultaneous consideration of both external (business strategy) and internal (consistency) requirement leads to superior performance of the firm. This performance advantage is achieved by:
Marshalling resources that support the business strategy and implementing the chosen strategy, efficiently and effectively.
Utilizing the full potential of the human resources to the firm’s advantage.
Leveraging other resources such as physical assets and capital to complement and augment the human resources based advantage
The Role of Strategy Education in Strategic Human Resource Management Courses
Web page: www.ilir.uiuc.edu/faculty/chadwick.html
In the same way that students with little or no background in Human Resource Manage-ment will struggle to understand and practice Strategic Human Resource Management (SHRM), students without a sophisticated understanding of Strategy will be disadvantaged practitioners. For SHRM courses to produce effective practitioners of the more complex forms of SHRM that are coming into their own as the field matures, Strategy education must become a central com-ponent of SHRM courses on an equal footing with HRM
Strategic Human Resource Management (SHRM) has received a great deal of attention in recent years, most notably in the fields of Human Resource Management (HRM), Organizational Behavior, and Industrial Relations. SHRM research is distinguished from traditional HRM by two key characteristics: 1) an organizational system approach to HRM, and 2) a concern with the effects of HRM on organizational performance. The organizational strategy construct is of-ten though not necessarily included in SHRM research, as well (Chadwick & Cappelli, 1999). For example, the turnaround effort at Sears has involved careful evaluation of the firm’s HR sys-tem to ensure that Sears’ HR policies and practices are not contradictory and that as an inte-grated system they support the firm’s strategic positioning. Sears has made extensive use of metrics and causal modeling to explicitly link its system of HRM policies and practices with bot-tom line performance (Rucci, Kirn, & Quinn, 1998).
As SHRM research has progressed, SHRM courses have become part of many under-graduate and graduate programs’ curricula. An extensive informal review of SHRM syllabi re-veals that the modal approach to designing these courses is for instructors to break them into two parts. The first part is an introduction to the new, strategic role of HRM in three to four initial sessions. The second part of these courses is a review of the various traditional Human Resource (HR) functions (e.g., training and development, selection, compensation, job analysis and de-sign), showing how each is practiced differently if it is approached from a strategic perspective. This approach serves the immediate purpose of invigorating traditional HR topics with Strategy concepts, but there are supplementary advantages to employing a broader approach to teaching SHRM, one that explicitly employs Strategy on its own terms rather than as an adjunct to Human Resource Management. This becomes more apparent when we consider the role that Strategy plays in SHRM generally.
1. The role of Strategy in SHRM research
As Chadwick and Cappelli (1999) have pointed out, there are a number of disparate roles that the Strategy construct can play in SHRM research (see Figure 1). First, Strategic HRM can refer to attempts to link Human Resource activities with bottom line, organization level perform-ance measures. This can be done either for an individual HR practice (e.g., utility analysis of a training program) or, more in keeping with the definition of SHRM given above, it can be done on the organization level, incorporating multiple traditional HR functions into an HR system (e.g., Huselid, 1995). This type of SHRM research does not utilize the Strategy construct, and it has dominated the early empirical SHRM literature.
Insert Figure 1 about here
A second approach to SHRM focuses on identifying how Strategy influences the compo-sition of organizations’ HR systems (e.g., Jackson, Shuler, & Rivero, 1989). Empirical SHRM research in this area has been hampered by a general lack of significant results linking Strategy and HRM. Consequently, most of the published literature on this topic is theoretic in nature. In a third approach, SHRM can address how the interactions between Strategy and HR systems in-fluence organizational performance. Both of these latter types of SHRM explicitly require the Strategy construct.
Most existing SHRM courses emphasize the first two of these points of view. That is, while Strategy theories like the Resource-based view of the firm (RBV) are part of the curricu-lum, they serve chiefly as a rationale for examining HRM’s bottom line effects rather than as specific components of an integrated model of firm performance. The other common use of
Strategy in these courses is in prescriptive, theoretic configurations of generic strategies and HR practices (e.g., Miles and Snow’s well-known typology). In both roles, simple summaries of Strategy have been more than sufficient.
However, emerging SHRM research is increasingly pushing toward more detailed causal models that explain when, where, and why specific types of employee knowledge, skills, abili-ties, and activities influence firm performance (e.g., Lepak & Snell, 1999). Since, according to one definition, strategy constitutes a firm’s theoretic model about what drives firm performance (Drucker, 1994), adequately answering these questions about HRM’s impact increasingly re-quires sophisticated forms of Strategy to assume more prominent roles, placing current research more and more within the third stream of SHRM discussed above. This growing sophistication may also lend greater specificity and complexity to research within SHRM’s second stream, as well. Consequently, the opportunities for SHRM courses to deepen and expand their treatments of Strategy is growing, as are the benefits from doing so.
2. The nature of Strategy education
This is no easy task, however. Strategy education is shaped by the field’s inherent com-plexity, and there are few shortcuts. Strategists tend to be eclectic in practice, drawing from multiple theoretic schools of thought (Mintzberg, 1990) and customizing solutions to the specif-ics of various contingencies. Indeed, the Strategy field’s emphasis on firm differences is directly contrary to the universalistic, “single recipe” viewpoint epitomized by the best practices ap-proach (Nelson 1991; Porter, 1996). This makes prescriptions of common solutions that apply to standard strategic challenges nearly impossible to achieve. While this circumstance is by no means unique in the managerial sciences, perhaps nowhere is there a greater lack of easily de-termined prescriptions for action than in Strategy. Instead, consensus in the Strategy field re-volves
around a set of basic questions concerning firm differences (cf. Rumelt, Schendel, & Teece, 1994), such as the following: Why do we see variations in firm characteristics, and how do they matter for organizational performance? What determines the behavior of firms? and How do managerial choices help determine organizational performance?
In other words, there is little received wisdom in Strategy that can be neatly packaged for and directly applied by someone who has not internalized the Strategy paradigm. In fact, in business schools, Strategy courses have traditionally been seen as integrative courses where various business functions are brought together in a holistic examination of the roots of organiza-tional performance. For these reasons, Strategy instructors spend great amounts of time in hon-ing students’ analytic capabilities and in moving students down Bloom’s learning taxonomy (Bloom, 1956) toward complex analysis, synthesis, and evaluation skills. Training in this kind of tacit knowledge must necessarily include large amounts of practice, which is one reason why Strategy courses in business schools tend to use case studies and activities extensively.
3. Why Strategy Matters in SHRM education
Of course, for SHRM courses that are primarily oriented toward determining HR’s bot-tom line effects per the first type of SHRM discussed above, these issues are not particularly im-portant. However, Strategy’s characteristics pose a significant challenge for SHRM education that follows the shift of research and practice into the third type of SHRM, where interactions with Strategy profoundly affect the relationships that HR systems have with firm performance. This type of SHRM employs Strategy in increasingly sophisticated ways, and given Strategy’s inherent characteristics, greater emphasis on this type of SHRM will also demand that Strategy assume a bigger role in SHRM courses.
In an interdisciplinary topic, a thorough grounding in the foundational fields is a prereq-uisite for effective knowledge and application. Thus, in the same way that students with little or no background in Human Resource Management will struggle to understand and practice Strate-gic Human Resource Management, students with an insufficient understanding of Strategy will be disadvantaged as practitioners of the newer, more complex forms of SHRM that are evolving. For students, the shortcomings of limited treatments of Strategy in SHRM courses take at least three specific forms: 1) limited ability to link HR activities with a firm’s business model, 2) a reduced ability to communicate about SHRM with other strategic actors, and 3) unnecessarily narrow conceptions of SHRM.
3.1 Linking HRM with Business Models
The most important reason for Strategy to be included in SHRM courses is that training in Strategy helps students to better understand how firms create value for customers in a particu-lar business, a precondition for successfully applying the management of human resources to achieving firms’ competitive goals. (Here, I am using the Strategy label to denote a firm’s gen-eral approach to achieving competitive advantage.) To illustrate how greater attention to Strat-egy can enhance students’ capabilities in SHRM, note the differences in students’ training in this knowledge in Table 1, which compares a list of topics covered in a typical SHRM course sylla-bus to one where Strategy is covered in detail along with other SHRM topics. The typical SHRM course moves fairly quickly into applying strategic thinking to traditional HR topics, while the Strategy-infused course spends a great deal more time on foundational concepts con-cerning the acquisition and perpetuation of competitive advantage.
For example, in Week Two, students in the typical SHRM course are exploring a specific kind of internally-oriented strategy, the RBV. Week Three in this course concerns HR systems’ fit with key external factors, particularly firm strategy. Also, students are introduced to generic typologies and to the specific configurations of strategies and HR systems that the authors of these typologies suggest. The remaining sessions of this SHRM course address how SHRM con-cepts are applied to traditionally-defined HR functions, taken one at a time (an ironic contrast to the SHRM orientation toward treating HR systems holistically).
On the other hand, in the Strategy-infused course students explore key Strategy topics in depth and then link these topics to HRM, enhancing students’ understanding of HRM’s role in creating competitive advantage. For example, the topic in Week Two of the Strategy-infused course is managerial discretion, the ability of organizational actors to shape organizational char-acteristics and actions. This sets the stage for considering how much organizational actors can influence firm performance through their decisions about HRM, and contrasts with the hyper-rational, high discretion bias that has suffused SHRM teaching and research to date (Boxall, 1992). In Weeks Three through Five, students are given training in the strengths and weaknesses of numerous strategy approaches in roughly the chronological order of their development in this field. Only then is a theoretic case for the strategic value of HRM advanced to students.
Thus, this latter course is more likely to produce students capable of analyzing organiza-tions’ value-creation structures and molding HR systems to complement them because these stu-dents have received specific training in both areas. Subsequently, the application of these con-cepts to various traditional HRM functions will be something that students can begin to work out for themselves as part of their efforts to strategically optimize an HR system as a whole. More-
over, the approach in the Strategy-infused SHRM course reduces the risk that the typical SHRM course runs of becoming a survey of traditional HR topics. Instead, the focus here is clearly on the strategic form of HRM.
3.2 Communicating about SHRM
Secondly, on a directly practical level, it behooves SHRM instructors to ensure that their students are well versed in various forms of Strategy so that the SHRM practitioners that they train will speak a common language about organizational performance with the firm’s other stra-tegic actors. If HR managers wish to convince line managers, for example, to embrace a SHRM initiative, they will need to be well acquainted with the strengths and weaknesses of the strategy approaches that these managers employ, even if those approaches, such as the Boston Consulting Group’s growth-share matrix, have fallen out of favor among most Strategy academics. Without a thorough grounding in different strategic approaches, the SHRM practitioners being produced in today’s courses may not have the ability to persuasively articulate a case for a SHRM inter-vention because they will not be equipped to contrast their recommendations against alternatives drawing on other types of Strategy with which they are not familiar.
3.3 Conceptions of SHRM
Third, training in Strategy can open students to broader conceptions of SHRM that can be applied in a greater variety of contexts. Many SHRM courses to date have emphasized just a few forms of strategy, primarily the Resource-based view of the firm (RBV) and the generic ty-pologies of Miles and Snow and of Michael Porter because these forms of Strategy have received the lion’s share of attention in the published research. This can give rise to unnecessarily narrow descriptions of SHRM. Consider, for example, the limited way in which a restricted definition of SHRM as commitment-based or “high performance” work systems (a view that is coming un-
der increasing criticism in SHRM research), could illuminate how Human Resource activities impact organizational performance in an industry such as investment banking, where individual-level productivity is regularly measured and rewarded, key clients have more allegiance to bank-ers than to firms, and industry norms place a low premium on employee loyalty to the firm, characteristics that are directly at odds with commitment-based HRM. On the other hand, a broader definition of SHRM that encompasses other forms of Strategy might suggest more applicable forms of SHRM for this context. Game theory, for instance, could begin to explain the complex patterns of competition and cooperation that evolve between investment banks and individual bankers as they create value for customers and bargain over the distribution of rents (Brandenburger & Nalebuff, 1995). Real options theory (Bhattacharya & Doty, 2001) might begin to explain how strategic concerns shape investment banks’ recruiting and retention activities by describing where and how firms could hedge the risk of key bankers being lured away by competitors.
In short, limited views of Strategy lead to constricted definitions of SHRM, which in turn generate constrained views of SHRM’s applicability. To illustrate this point, Table 2 presents summaries of the various Strategy “schools of thought” that Mintzberg described in a 1990 re-view. The forms of Strategy that are included in a typical SHRM course as described above are bolded in the table, which shows that descriptive forms of Strategy have rarely had a place in SHRM education. Descriptive forms of Strategy are particularly aimed at generating the more complex causal models predicting firm performance that SHRM researchers and practitioners are striving for.
Insert Table 2 about here
These different strategic perspectives and others not listed in Table 2 will only enter into SHRM courses, however, if Strategy is treated as a co-equal foundation for SHRM rather than as a subsidiary influence that can be encapsulated in one or two simple ways. If Strategy were eas-ily codified, then SHRM students could be quickly brought up to speed on Strategy and most course time could be devoted to SHRM applications. However, this is unlikely to be the case: Strategy is a broadly inclusive label that is more indicative of a general approach to defining or-ganizational performance dilemmas than it is a neatly packaged set of prescriptions for manage-rial practice. Consequently, thorough treatment of Strategy on its own terms is assuming greater importance in developing students’ abilities to effectively understand and practice the more com-plex forms of SHRM that are emerging from both academics and practitioners.
4. Why We Don’t Teach Strategy More Often in SHRM Courses
Why then, is formal Strategy neither taught in nor required as a prerequisite for many SHRM courses? There are at least two related explanations. First, because SHRM has been em-braced primarily by Human Resource, Industrial Relations, and Organizational Behavior schol-ars, the majority of SHRM course instructors to date have had little formal training in Strategy (Chadwick & Cappelli, 1999). Thus, Strategy may have been omitted from SHRM courses be-cause instructors either did not see a bigger role for Strategy concepts or because they have not felt experienced enough to teach them. Both issues suggest gaps in the knowledge bases of SHRM instructors that can be amended by helping them to acquire greater knowledge of Strat-egy or by creatively complementing SHRM instructors’ knowledge, skills, and abilities with those of Strategy scholars. For example, SHRM courses that are taught jointly by Strategy and HRM faculty would probably give greater weight to the Strategy side of SHRM education.
Secondly (and perhaps more importantly), the ways in which the Strategy construct is being used in SHRM research are still developing past a narrow set of topics such as participa-tive management and high performance work systems towards broader, more strategically minded definitions of SHRM. This has made it difficult for SHRM instructors to give their stu-dents a comprehensive view of how various Strategy schools of thought apply to SHRM because the majority of these perspectives have not yet found expression in the research. This problem will begin to resolve itself as SHRM research continues to mature and more concepts from vari-ous schools of thought in Strategy are brought to bear. Relatedly, the cases, articles, and texts that are available to SHRM instructors have customarily employed a constricted set of Strategy concepts embedded in limited definitions of SHRM. Thus, there may be instances where SHRM instructors who would like to bring Strategy more strongly into their courses are hampered by the lack of suitable materials (Mello, 2001). If demand for SHRM courses remains strong and SHRM research continues to develop in its use of the Strategy construct, this obstacle, too, should resolve itself over time.
5. Recommendations for SHRM education
However, in the meantime there is much that SHRM instructors can do to bring Strategy more strongly into their current courses. The best starting point may be for SHRM instructors to become more comfortable in teaching and applying Strategy concepts themselves. Because the practice of Strategy is eclectic and contains large shares of tacit skill—a paradigm as much as a body of knowledge—SHRM instructors will become effective at teaching the newer forms of SHRM only as quickly as they internalize Strategy themselves, independent of the quality of SHRM research and course materials. As they do so, their view of SHRM, along with their stu-dents’ views, should widen and deepen in ways that enhance the quality of SHRM education.
A similar argument can be made for thoroughly training instructors and students in the other SHRM knowledge base, traditional HRM. While a solid background in HRM is an essen-tial prerequisite to effectiveness in a SHRM course, this gap in all probability occurs less often because many SHRM courses are taught by HR-oriented faculty in programs that also offer tra-ditional HRM courses. In both cases, Strategy and HRM, the essential knowledge in these areas will need to be either a required prerequisite or included at length in SHRM courses themselves in order to be adequately addressed. However, to tap into the full power of this combination, students’ training in Strategy will need to address both general content knowledge and the spe-cific application of Strategy to the theory and practice of SHRM.
The broader inclusion of Strategy in SHRM courses may demand changes both in topics covered (e.g., see Table 1) and in the way those topics are taught, with an emphasis on experien-tial and action learning. Obvious examples of the latter are the extensive use of SHRM cases and activities. Another way to help students internalize the SHRM perspective is to explicitly contrast it with the approaches taken in its base disciplines, Strategy and HRM. For example, SHRM instructors could use a traditional HR case that was taught in a prerequisite HRM class and lead students through the case from a SHRM perspective. Another way to develop students’ knowledge of SHRM is to use a detailed case or project throughout the course, with course mate-rials and activities continuously referring back to and shedding new light on this overarching project. Of course, the epitome of active learning would be for student teams to deliver a SHRM consulting project to a corporate customer in the local community, perhaps as the second semes-ter in a two-semester SHRM sequence.
None of these suggestions are quick fixes, and in some cases they would require SHRM instructors as well as students to develop new competencies. The specific content of these
changes will be determined in classroom interactions with students and, perhaps, in professional development workshops, symposia, and debates at management associations’ annual confer-ences. Hopefully, in the latter forums Strategy and HRM academics will have an equal voice in addressing how SHRM research and education should progress. Like SHRM itself, these sug-gestions require a good understanding of two contrasting base disciplines, Human Resource Management and Strategy. The synergistic advantages of this combination will only come to SHRM when instructors, students, and practitioners are thoroughly established in each of these base areas of knowledge, and this starts in the classroom.
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This paper has benefited from the helpful comments of Ruth Aguilera, Brian Houska, Steve Malia, and Joseph Martocchio. I express my appreciation.
Comparing the topics addressed in two different SHRM courses
Typical SHRM Course Strategy-infused SHRM Course
Week 1 Does Human Resource Management Affect Organizational Performance? What does it mean to be Strategic about HRM?
Week 2 Human Capital, The Resource-based view of the Firm, and Organizational Performance Foundational concerns: Strategic adapta-bility, managerial discretion, and the de-terminants of HR systems
Week 3 Aligning HR with Business Strategy: External fit and generic strategy ty-pologies Traditional strategy tools: the strategy-structure-performance, Boston Consulting Group matrix, experience curve, portfolio analysis, formal strategic planning, SWOT, Porter's industry analysis, generic strategy typologies, resource dependence
Week 4 Change Management and SHRM Newer strategy tools I: Resource-based view, strategic capabilities, emergent strat-egy/logical incrementalism, enacted envi-ronments
Week 5 SHRM and Work Organization and Job Design Newer strategy tools II: game theory, real options, flexibility, innovation/knowledge-based view of the firm
Week 6 SHRM and Recruiting and Selection Why should we believe that human resources have strategic value?
Week 7 SHRM and Diversity in the Work-place The evidence for the strategic effectiveness of HR systems
Week 8 SHRM and Training & Development Internal and external fit in SHRM systems
Week 9 Legal Environment of SHRM Participative management
Week 10 SHRM and Collective Bargaining Strategic renewal: Downsizing, mergers and acquisitions, and restructuring
Week 11 SHRM and Socialization and Career Management International SHRM
Week 12 SHRM and Performance Appraisal The role of formal HRM under SHRM
Week 13 SHRM and Compensation and Bene-fits Crafting Strategic HR systems/SHRM measurement
Week 14 International SHRM Applying these perspectives to traditional HR functions
Strategy schools of thought
Strategy School View of the Strategy Process Central Actors Best situation
Design Conceptual “Architect” (usually CEO) Simple, stable, predictable, inte-grated
Planning Formal Planners Simple, stable, predictable, ideally controllable
Positioning Analytical Analysts Simple, stable, predictable and controllable, mature and struc-tured
Entrepreneurial Visionary Leader Dynamic but simple
Cognitive Mental Brain Individual
Learning Emergent Whoever can learn Complex, dynamic, unpredictable, ideally novel
Political Power Whoever has power Divisive, malevolent (micro), con-trollable (macro)
Cultural Ideological Collectivity Passive
Environmental Passive Environment When environment has strong ef-fects
Configurational Episodic Everyone Any
Note: Adapted from Mintzberg, 1990, pp. 192-197. Strategy schools that receive attention in a typical SHRM course are bolded.
Three streams of Strategic Human Resource Management
Stream 1: Strategic = HRM’s bottom line effects
Stream 2: Strategic = How Strategy predicts HRM
Stream 3: Strategic = Strategy x HRM predicts performance