Human Resource Management ->C the new era?

Changes in labour markets

The reform of the trade unions, introduced in the 1980s by the conservative party, under Margaret Thatcher, which encouraged the breaking up of national bargaining arrangements and made strike action more difficult. (Legge 1995) The result was a high degree of decentralization in wage determination and a widespread use of performance related pay, as well as the labour market flexibility.

2.3 Human Resource Management

In response to conditions of heightened competition and a range of other environmental changes, UK companies’ common responses are downsizing, restructuring and re-engineering, partnerships, mergers and acquisitions with moves to introduce total quality, to enhance flexibility, to install performance-related pay, to institute novel forms of employment contract.

Thus, a new employment management model – Human Resource Management, adopted from American, appeared and seemed to cover the demands of British managers and researchers.

The normative model of Human Resource Management is defined in Guest (1987) as

The main dimensions of HRM [involve] the goal of integration [i.e. strategy, policies…], the goal of employee commitment, the goal of flexibility / adaptability [i.e. organic structures, function flexibility], the goal of quality [i.e. quality of staff, performance, standards and public image].

And in Torrington and Hall (1987)

Human resources management is directed mainly at management needs for human resources to be provided and deployed. There is greater emphasis on planning, monitoring, and control, rather than on problem solving and mediation.

The common themes of HRM models are:

1. External fit, HR strategy fits with the demands of business strategy, and
2. Internal fit, HR policies and activities fit together, coherent whole, mutually reinforcing each other.

The critical management task is to align formal structure with key HR systems of selection, appraisal, rewards, and development.

2.4 Compare with PM and HRM

Compare with the normative models of PM and HRM, the body of management activities they covered are similar. Both models identify placing the ‘right’ people into ‘right’ jobs as an important means of integrating PM/HRM practice with organizational goals, including individual development (Legge 1995). In this way, HRM is a restatement of existing Personnel Management ‘Old Wine in New Bottles’.

While there are few differences between the normative models of HRM and personnel management, HRM appears to be ‘a more central strategic management task than personnel management in that it is experienced by managers, as the most valued resource to be managed, it concerns them in the achievement of business goals and it expresses senior management’s preferred organizational values. (Karen Legge, 1989)

HRM is characterized as being people-oriented with emphases on the maximization of individual skills and motivation through consultation with the workforce. In HRM, labour is an asset to be invested in, not a factor of production to be minimized. It provides potential not constraint and is a resource to be used to its fullest capacity.

PM is workforce centered, while HRM is resource & management centered. The traditional ‘production model’ (PM) is based on the negotiation and enforcement of collective agreements, an emphasis on the need for closed managerial definition of the nature of work and forms of control that support this definition and behaviours that conform to it, employee compliance rather than commitment, and relationships of low trust between management and labour.

HRM is aimed at management needs, being proactive, focusing on Demand for labor rather than supply, it plans, monitors and controls rather than mediates, so as to produce high levels of commitment to company strategic goals.

3. Argument 2: Outcomes of HRM rhetoric

There appear to be four classes of organizational outcome that might reasonably be linked to HRM. The first is changes in HR and industrial relations –related outcomes such as disputes, including strikes, labour turnover and absenteeism. A second group of variables are concerned with organizational processes and include innovation and achievement of change. A third is productivity and the fourth is the range of conventional financial criteria for business performance. (Beardwell and Holden 1997)

Human Resource Management (HRM) rhetoric represents an approach to the employee management, which “emphasizes employee commitment and involvement and a relatively caring concern for employees while simultaneously integrating HR policy and practice with strategic business objectives.”  (Keenoy 1990) 

As illustrated in above section, under the impact of recession and competition, the need for an HR strategy was revoked in UK in 1980s. The attempt to integrate HR policies with business strategy, the various HRM policies cohere and complement rather than contradict each other, using HRM strengths as a basis for competitive advantage were discovered to have swept both personnel management and industrial relations aside and enjoyed almost instant legitimacy. Other outcomes of HRM rhetoric is to establish a culture of ‘total quality’ and to give renewed emphasis to customer-orientation, innovation, enterprise and competitiveness, and to develop the mission statement in which some primacy is given to the importance of human resources.

 

HRM seemed an essential appendage of all those excellent companies pursuing the visions and missions of assorted charismatic leaders through their distinctive management cultures. Brewster and Smith (1990) in their survey of a cross-section of organizations found that a little over 70 per cent claimed to have a formal HRM strategy and half the heads of the function contributed to the development of corporate strategy.

Companies such as British Airways and Rank Xerox, in their different ways, have achieved significant changes in culture, with HR considerations playing a central role. Other exemplar companies, some of the well-established companies such as Marks and Spencer, IBM, Hewlett-Packard, Jaguar Cars, ICI, BP and Shell have been introducing significant changes in their HR strategy coincidentally with, and often as stimulus to, shifts in culture. (Guest 1992)  

Through the research concerning the nature of commitment and trust in contemporary organizations (Beardwell and Holden 1997), the findings in these genuine HRM are clear and highlight the importance of self-development and career opportunities, involvement and communication, and the establishment of just and fair HR practices in the creation of high-commitment workforces.

HRM could be seen as a rhetoric intended to reach other legitimate HR goals: re-construct the motivation to work, re-legitimize managerial authority in the employment relationship, formulate and integrate HR strategy, decentralize the degree of policy, and increase employee commitment to the organization or a better trained workforce.

4. Argument 3: a new era of humane people-oriented employment management?

4.1 Definition and reality limitations

In comparing HRM and PM, HRM is ‘more rhetoric than reality’ (Keenoy 1993).

As illustrated from above section, there is little difference between the normative models of PM and HRM (Legg 1989). Besides that, the management activities, in terms of reality approach, are all focusing on selecting, recruiting, performance evaluating, and awarding.

Rhetoric may be that of people centered but reality is cost reduction of hard HR. By 1980, over 90 per cent of companies were using some form of budgetary control and financial performance indicators Armstrong (1987). Labeled as financial control companies, they tend to be primarily driven by the short-term imperatives of ‘bottom-line’ criteria.

As Ewart Keep points out, training is a critical pillar in the rhetoric of HRM. ‘One of the primary objectives of HRM is the creation of conditions whereby the latent potential of employees will be realized and their commitment to the success of the organization secured’. (Keep in Storey 1989 P112)

Ewart Keep’s detailed assessment of developments in training in the 1980s portrays a picture of corporate neglect relative to Britain’s competitor countries.  Deficiencies in the provision of management training and development, alternative growth strategies, company restructuring through takeovers and disinvestments and the pressure of short-term financial constraint are cited among the reasons for the continued low-level of investment in training and the absence of a ‘training culture’ among British management.  

Concluded by Purcell (in Storey 1989, p90), the material and structural conditions necessary to permit the emergence of HRM as a genuinely strategic function ‘do not exist’ and that the ‘ideals of human resource management’ are presently ‘unobtainable’.  

4.2 Evidence of rhetoric success?

Strategic role

As defined in Keenoy’s HRM rhetoric, the two main themes are the strategic role and commitment / culture functions.

Perhaps the key distinguishing feature of HRM is its evolving strategic role. Miller (1989) sees traditional personnel management as non-strategic, separate from the business, reactive, short term and constrained by a limited definition of its role as dealing with unionized and lower-level employees.

Too many British companies appear to have pursued HRM innovations without a clear strategic view or an awareness of the complexities, resulting in limited progress and skepticism about HRM.

Marginson et al. (1988) have reinforced the case of the skeptics of HRM in their research, which found that many of those claiming an HR strategy were unable to describe the content of that strategy. This type of evidence appears to reinforce the impression that companies are often paying lip service to the idea of HR strategy rather than taking it seriously.

Specific techniques, which could form part of an HRM strategy, include quality circles, job redesign and various forms of financial participation. Here again, the evidence is not encouraging (Guest 1991). The impact of these initiatives on performance is generally limited and short-lived. The exception, and probably the best model of what can be achieved, is found in many of the foreign-owned greenfield sites.

Commitment and culture change

Companies such as British Airways, HP, and Rank Xerox have achieved significant changes in culture and achieved ‘genuine’ HRM. Although, most had to be pushed to change by strong external pressures.  (Grinyer et al. 1988)

Aside from the exemplar companies and the sometimes-powerful impact of journalistic anecdote, there is precious little evidence of any employers practicing a form of employment regulation, which remotely resembles the rhetorical model of HRM.

The most comprehensive research on strategy and HRM in the UK has been undertaken by the team directed by Pettigrew at Warwick. They report the experience of a limited number of cases where significant change took place. One conclusion from their research (Hendry and Pettigrew 1990) is that HRM is extremely tricky and few British companies have risen successfully to the challenge. Instead they have ‘played’ with strategy and culture.

Furthermore the research (Guest 1992) on organizational commitment, which theoretically provides the clearest causal link to lower absence and turnover, shows that its impact is invariably slight. In summary, there is no good evidence showing that HRM policies in the UK are associated with positive industrial relations outcomes.

4.3 Ambiguity of HRM concept

The question of whether human resource management has the capacity to transform or replace deeply rooted models of personnel management, or could become a new era of humane people-oriented employment management, is one that cannot be answered in a simple manner. Because. Human resource management has many cogent critics and even many contradictions, in both the meanings and the practices.  

In examining the meanings of HRM, Keenoy notes that a ‘remarkable feature of the HRM phenomenon is the brilliant ambiguity of the term itself’ (Keenoy 1990). From soft and hard HRM, to the term of ‘resource’, ‘commitment’, ‘quality’, ‘flexibility’, they all seem to have double purposes and meanings.  

He later continues: ‘On the “Alice principle” that a term means whatever one choose it to mean, each of these interpretations may be valid but, in Britain, the absence of any intellectual touchstones has resulted in the term being subject to the process of almost continuous and contested conceptual elision’ (Keenoy 1990)

5. Conclusions

Compare with PM and HRM, there are few differences between the normative models, and even fewer differences on the main management activities. HRM is more rhetoric than reality. (Keenoy 1993)

There are some cases success of HRM rhetoric on the strategy integration and commitment & culture change in UK, British Airways for instance. Only those companies hold great competition advantages and better market positions could apply the long-term strategic HRM development. Apart from them, there is no evidence and appearance of the ‘genuine’ HRM in the companies suffering from recession and severe competitions.

HRM could be seen as a rhetoric intended to re-construct the motivation to work and re-legitimize managerial authority in the employment relationship. (Keenoy 1990)

Thus, the argument cited at the beginning is illustrated to be true. The new era of humane people-oriented employment management is far from coming. The primary purpose of Human Resource Management rhetoric is to provide a legitimate managerial ideology to facilitate an intensification of work.

However, the answer to Storey’s (1995) rhetorical question ‘HRM: still marching on or marching out?’ is that the debate is still progressing.

HRM is an evolving and integrated model. Although HRM is more advance on rhetoric as humane people-oriented, it is limited by the short-term performance criteria and competition stress. A more integrated and coherent approach may fit the future of HRM:  

While the changes on behaviours should be implemented at the local level in organization, commitment and culture change should be used in the management level to reassure and secure the achievement of core competitive advantage.

In terms of soft and hard HRM, the integrated model should embrace the tenets of the soft version at the level of rhetoric, but restrict the underlying principle to the improvement of bottom-line performance.

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