The Practice in HRM

Introduction to HRM Concept

Human Resource Management (HRM) may be seen as activities related to the management of
people in organizational setup. HRM may be defined as: ‘a strategic approach to managing employment
relations which emphasizes that leveraging people’s capabilities is critical to achieving sustainable
competitive advantage, this being achieved through a distinctive set of integrated policies, programs and
practices (Bratton & Gold, 2007).

As this definition suggests, the term HRM is often associated with both:

a) An orientation towards personnel management, viewing its role as pro-active, system-wide

interventions, linking HRM with strategic planning and cultural change; and

b) An orientation towards the employment relationship, embracing distinctive people-centered

values such as trust, commitment, involvement and collaboration.

The Development of the HRM Concept

The term HRM has largely taken over that of ‘personnel management’. Personnel management has
its roots in four traditions: the welfare tradition, the industrial relations tradition, the control of labor
tradition and the professional tradition. Welfare tradition was based on concern for improved working
condition for workers. The industrial relations tradition arose in response to the growing power of trade
unions through to the 1960s and 1970s. The control of labor tradition of personnel management arose
in response to the increasing pace of organizational growth and change. Later, personnel management
became recognized as a professional discipline in its own right, broadly applicable to all fields of
employment.

The term Human Resource Management (HRM) gained recognition in the USA in early 1980s as a
label for the way certain blue-chip companies such as IBM, Xerox and Hewlett Packard were managing
their people. The terms and its implications were subsequently explored by UK writers including David
Guest, Karen Legge and John Storey in the late 1980s and early 1990s. Despite heated debate about the
nature, impact and morality of HRM, the term has had widespread adoption in the last few decades, and
many of its underlying assumptions are now being incorporated into personnel management policy and
practice.

Characteristics of HRM

The main features of HRM may be summed up as follows (Armstrong, 2009).

a) The attempt to achieve strategic fit or integration between HR and business planning: HR
policy should be formulated at the strategic level, and directly related to the organization’s
competitive and value-adding objectives. (This may be called vertical integration.)

b) The development of coherent, mutually-supporting HR policies and practices: the strategic

management of people management of people will be reflected in all areas and systems of
HRM. (This may be called horizontal integration.)

c) An orientation towards commitment: securing employee identification with the

organization’s goals and values, not mere compliance with directives. This is often associated
with management practices such as flexibility, team building, empowerment, involvement and
the creation of strong cultural values.

d) The treatment of people as assets rather than cost: regarding employees as a source of
competitive advantage and as human capital to be invested in through the provision of learning
and development opportunities. This is often associated with a strong emphasis on the delivery
of quality and customer satisfaction, and on rewarding performance, competence, contribution
and added value.

e) A unitarist approach to employee relations, which assumes that there need be no inherent
conflict of interest between employers and employees. This is often reflected in a shift from
collective/representative to more individual employee relations.

f) The responsibility of line management for delivery of HRM objectives.

Goals of HRM

In his influential work, Guest (1989) defined the four-key policy of HRM as follows:

a) Strategic integration – the ability of organizations to integrate HRM issues into their strategic
plans, to ensure that the various aspects of HRM cohere and for line managers to incorporate an
HRM perspective into their decision-making.

b) High commitment – people must be managed in a way that ensures both their genuine
behavioral commitment to pursuing

c) The goals and their attitudinal commitment, reflected in strong identification with the
enterprise.

d) Flexibility – HRM policies must be structured to allow maximum flexibility for the
organization, so it can respond to ever-changing business needs: for example, by encouraging
functional versatility in employees and by creating an adaptable organization structure with the
capacity to manage innovation. The need for flexibility underpins three working practices: (1)
increasing managerial ability to adapt the size and deployment of the workforce in line with
changing demand and supply, (2) increasing scope for flexible working for individual employees
and (3) raising the quality and/or quantity of workforce output. e) High quality – the notion
of quality must run through everything the organization does, including the management of
employees and investment in high-quality employees, which in turn will bear directly on the
quality of the goods and services provided The Role and Structure of the HRM Function
Operational Task and Activities The range of task and activities commonly carried out by
human resource practitioners include the following. Organization § Organizational
design: structuring the organization, by grouping activities, assigning accountabilities and
establishing communication and authority relationships. § Organizational development:
planning and implementing interventions in the organization’s social processes to improve
effectiveness through techniques such as structural change, team building, process consultancy,
interpersonal skill development and role negotiation. § Job/role design & definition: structuring
the content and size of jobs (for efficient task performance, flexibility and worker satisfaction)
and defining their component tasks, conditions and competency requirements (for recruitment,
appraisal, reward and number of other HR processes). § Flexible working: planning and
implementing flexible structures and procedures to maximize the efficiency and adaptability of
the organization. People Resourcing § Human resource planning: forecasting the
organization’s future resource requirements for labor, skills and competence, and to meet them
through subsidiary plans for recruitment, deployment, resourcing development, retention and
talent management. § Recruitment: attracting employment applications from the number, type
and caliber of people required by the HR plan. § Selection: assessing and selecting suitable
employees from applicants. § Retention: planning rewards and incentives to control labor
turnover and retain high quality staff. § Exit management: managing the termination of
contracts, retirements, resignations, dismissals and redundancies, in such a way as to comply
with legal requirements and minimize human and financial costs. Performance
Management § Objective and competence requirement setting: developing and agreeing
frameworks of organizational, unit and individual goals to direct and motivate performance. §
Performance monitoring and appraisal: on-going monitoring and periodic assessment of
performance within agreed requirements. § Discipline holding: managing informal and formal
processes to confront employee behavior or performance which falls below organizational rules
and standards. § Grievance handling: managing informal and formal processes to address
individual employee grievances or complaints. § Identifying learning & development needs: as
part of continuous improvement of performance. Reward Management § Pay systems:
developing and managing salary structures, systems and scales that are equitable, fair and
compliant with equal pay legislation. § Performance pay systems: developing and managing
ways of relating pay progression or bonuses to results, attainments (ex. competence or skill),
effort and other measures of performance. § Benefit schemes: developing and managing
employee entitlements (eq pensions, maternity and sick pay, annual leave) and fringe benefits
(ex. allowances and services). § Non-financial rewards: building non-monetary rewards (such as
recognition, challenge, personal development) into job design and management style, as part of
total reward package. Learning and Development § Learning organization: creating a
culture and systems to support individual and organization learning, information gathering and
sharing and so on. § Education and training: planning implementing and evaluating on- and off-
the-job learning opportunities and programs to meet identified gaps in the skills required by the
HR plan. § Personal development: facilitating individual learning plans and opportunities,
beyond the immediate job (ex. for general employability). § Career management: identifying
potential and planning career development opportunities; succession and promotion planning;
guiding and mentoring individuals in career planning. § Managerial development: providing
education, training and opportunities to develop managerial competencies and support
enhanced contribution. Health, Safety, and Welfare § Occupational health and safety:
monitoring and managing work environments, practices and culture to ensure that employees
are protected from health hazards and accidents; complying with relevant legislation; actively
promoting health, fitness and work-life balance to improve the well-being and performance of
staff. § Welfare services: providing services such as catering or recreational facilities, individual
counselling and support (ex. for illness, forthcoming redundancy of retirement, personal health
problems). Employee Relations § Industrial relations: managing informal and formal
relationships with employee representatives (trade unions and staff associations); collective
bargaining on terms and conditions; resolving collective disputes; implementing consultative
committees and partnerships agreements. § Employee communication: informing employees
about matters relevant to their work or of interest or concern to them. § Employee voice:
creating consultation for employees to contribute to decision-making in matters affecting them
and their work. HR Services § HR policies and procedures: developing and administering
guidelines and systems for all the above, to guide line managers and employees. § HR
information systems: developing and operating integrated systems for preparation of employee
record-keeping, management reporting, statistical reports and returns and so on. §
Compliance: ensuring that all HR policies and practices are compliant with relevant law,
regulations and codes of practice (and ideally, best practice) in areas such as employment
protection (including dealing with employment tribunals), health and safety, equal opportunity
and diversity, data protection and so on. HR Processes Another way of thinking
about what HR practitioners do is to consider the various processes that are involved in
performing the various activities and tasks listed. A process is a sequence of activities
(often crossing functional and organizational boundaries) involved in achieving goals, delivering
services or adding value. Armstrong (2009), identifies following broad set of processes
underpinning HRM approach. * Strategic HRM – defining intentions and plans for the
development of HRM practices, and ensuring that HR strategies are integrated with the business
strategy and one another. * Policy making – formulating and implementing HR policies which
set guidelines on how personnel issues should be handled. * Competency, job and role
analysis – developing content and competency frameworks to support various activities such as
organization and job design, recruitment, appraisal, training and reward * Change
management – advising on an facilitating the process of change in organizational structures and
systems. * Knowledge management – developing systems for obtaining and sharing
knowledge, to foster organizational learning, innovation and performance. Roles of HR
Management HR practitioner may fulfill a range of roles, depending on the organization
context. Much of this work will be undertaken in partnership with line managers. (a)
Guidance role – offering specialist recommendations and policy frameworks to guide line
management decisions: for example, in regard to emerging HR issues, and the consistent and
effective implementation of HR procedures. (b) Advisory role – offering specialist
information and perspectives to line managers (and individual employees on employment
matters. Managers, for example, may be advised on training options, legislative provisions or
how to handle specific people problems. Employees may be advised on their legal rights or
development options, or counselled in relation to work or personal problems. (c) Service
Role – providing services to a range of internal customers. This includes administrative services
(in areas such as payroll administration, employee records, reports and returns) and delivery of
HRM programs (recruitment and selection, training, health and welfare and so on). (d)
Control/auditing role – analyzing personnel indices (such as wage costs or labor turnover),
monitoring performance, carrying out benchmarking or a local government review. This role has
traditionally caused conflict with line managers, who felt they were being policed – but line
managers’ discretion must be balance with the need for consistency in applying HR policy,
compliance with legal obligations, and ensuring that the strategic aims of HRM are being met.
(e) Planning/organizing role – for example, in human resource forecasting and planning,
developing flexible working methods and so on. At more strategic level of HRM, HR
practitioners may also take on additional role as: (a) Strategist: helping to fulfill the
business objectives of the organization through strategic management of the human resources
and influencing business planning by highlighting the human resource implications of objectives
and strategies. (b) Business partners: sharing responsibility with senior and line
management for the success of the enterprise, through the identification and exploitation of
opportunities and the seeking of competitive advantage. (c) Internal management
consultants: working alongside line managers in analyzing business processes and systems,
diagnosing and exploring problems, recommending solutions that the client can own and
implement, or implementing solutions and delivering services. Shared Responsibility for
HRM Centralization and decentralization refer to the degree to which the authority to
make decisions is held centrally by a particular group of people or delegated and spread to a
number of individuals and groups within the organization. Centralized control over
human resource management generally implies the existence of an HR officer or department
with authority over (or advisory input to) all personnel management tasks in the organization.
Decentralized control over human resource management generally implies the delegation to the
line managers and team leaders of the authority for personnel management tasks affecting their
own staff and activities. In practice, there is a need for a mix or both, in order to gain the
benefits of coordination and consistency as well as flair and flexibility. As the role of the
HR function has become more strategic/proactive, rather than welfare or administrative or
reactive, the following areas have commonly been retained as the responsibility of a centralized
HR function. a) Strategic issues, such as change management programs and human
resources planning, and all aspects of HR at the strategic level, including the formulation and
communication of organizational policy. This ensures that the impact of human factors on
strategic plans (and vice versa) is taken into account. b) Organization-wide
communication and employee relations management. Centralization has the advantage both of
special expertise and a wider organizational viewpoint. c) Provision of specialist services
and advice/consultancy, where up-to-date specialist knowledge or input, or extra-departmental
perspective, is required. d) Researching and auditing of HR systems. This helps to co-
ordinate and control HR functions across the organization, to ensure that line departments are
complying with policy and that policies are effective and relevant to the needs of line
departments. Such centralized functions create a coherent and integrated framework of
policies, plans, systems and rules, developed by HR specialist, which help to maintain consistent
practice and minimize redundant problem-solving and reinventing the wheel by the line
managers. Within such a framework, a number of aspects of personnel management could be
devolved to line departments. Outsourcing HR Tasks The need for organization
flexibility has supported the concept of the core organization: focusing in-house resources and
expertise on the distinctive value-adding and competitive advantage-gaining competences and
functions of the organization, and purchasing non-core support services and functions from a
range of peripheral sources. A number of HR activities may be regarded as peripheral or
complementary to the primary functions of the business, and outsourced to external
consultants or service providers. The main areas identified as amenable to effective
outsourcing include: a) Training & development b) Recruitment (and some
aspects of selection, such as screening or testing) c) Health & safety monitoring & advice
(and related health & fitness promotion & services, if provided) d) Employee welfare &
counselling e) Payroll management (and related benefit schemes, pensions administration and
so on) f) Legal advice on compliance In addition, the HR function may have de
facto responsibility for a range of ancillary activities – such as on-site catering, security,
office/facility management, child care, company care fleet management and so on – which could
be more effectively outsourced to external specialists. Models of HRM The most familiar
models defining what HRM is and how it operates are as follows. The 5 – P Model of
HRM As formulated by Schuler (1992) the 5 – P model of HRM describes how HRM
operates under the five headings of: 1. HR philosophy – a statement of how the
organization regards its human resources, the role they play in the overall success of the
business, and how they should be treated and managed. 2. HR policies – these provide
guidelines for action on people-related business issues and for the development of HR programs
and practices based on strategic needs. 3. HR programs – these are shaped by HR policies
and consist of coordinated HR efforts intended to initiate and manage organizational change
efforts prompted by strategic business needs. 4. HR practices – these are the activities
carried out in implementing HR policies and programs. They include resourcing, learn and
development, performance and reward management, employee relations and administration.
5. HR processes – these are the formal procedures and methods used to put HR strategic plans
and policies into effect. Theory X and Theory Y The distinction between hard/tight
and soft/loose management control was suggested by Douglas McGregor. He identified two
extreme sets of assumptions (Theory X and Theory Y) and explored how management style
differs according to which set of assumptions is adopted (McGregor, 1987). a) Theory X
holds that human beings have an inherent dislike of work and will avoid it if they can. People
prefer to be directed, wishing to avoid responsibility. They have relatively little ambition and
want security above all, resisting change. They are self-interested, and make little effort to
identify with the organization’s goals. They must be coerced, controlled, directed, offered
rewards or threatened with punishments in order to get them to put adequate effort into the
achievement of organization objectives: this is management’s responsibility. b) According
to Theory Y, however, the expenditure of physical and mental effort in work is as natural as play
or rest. The ordinary person does not inherently dislike work: according to the conditions, it may
be a source of satisfaction or deprivation. A person will exercise self-direction and self-control in
the service of objectives to which he/she is committed. Management’s responsibility is to create
conditions and methods that will enable individuals to integrate their own and the
organization’s goals. You will have your own viewpoints on the validity of Theory X and
Theory Y. In fact, McGregor intentionally polarized his theories as the extremes of a continuum
along which most manager’s attitudes fall at some point. If people are treated according
to Theory X (or Theory Y) assumptions, they will begin to act accordingly – thus confirming
management in its beliefs and practices. Essentially, Theory X embodies the hard-tight control
theory of management, while the Theory Y embodies the soft-loose commitment theory of
management. The Four Cs (Harvard Model) The Four Cs model was developed by
researchers at the Harvard Business School as a means of investigation HRM issues (Beer et al,
1984). It suggests that the effectiveness of the outcomes of HRM should be evaluated under
four headings. a) Commitment – that is, employees’ identification with the organization,
loyalty and personal motivation in their work. This, may be assessed through methods such as
attitude surveys, exit interviews and analysis of presumed effects (such as absenteeism and
labor turnover). b) Competence – that is, employees’ skills and abilities, training needs
and potential for performance improvement and career development. This may be measured
through skill audits, competency testing and performance appraisal systems. c)
Congruence – that is, the harmonization of the goals, values and efforts of management and
employees (or at least the perception by employees that they have a mutual vision and purpose,
to mutual benefit). This may be estimated by the quality of employee relations, the incidence of
grievance and disciplinary action, conflict and communication and so on. d) Cost-
effectiveness – that is, efficiency, whereby HRM objectives are met and benefits obtained at the
lowest input cost. The Harvard model does not solve the problems of the accurate
measurement of qualitative criteria; nor of the incompatibility of varying criteria (cost-
effectiveness achieved by downsizing, for example, might not encourage commitment or
congruence); nor the sheer variety of HR activity and contexts (since there are organizations and
areas of organizational activity in which low-skilled monotonous jobs and authoritarian
management styles, for example, are still possible and indeed appropriate). However, it does
offer a simple framework for thinking about HR effectiveness.