Human Resource Management works well in theory but not in practice. Discuss.

03BSP020: Human Resource Management

Human Resource Management is concerned with the way in which organizations manage their people (Redman and Wilkinson 2001: 1). It covers a wide range of ideas, approaches, and techniques for managing and improving relationships and performance in organizations. However, much of this is criticized for working in theory but not in practice. Due to the vast scale of the human resource management theory, this essay mainly aims to discuss this argument with reference to a key and topical contemporary aspect of HRM, the strategic human resource management.

Strategic Human Resource Management Theory Review

More recently, human resource management has expended its breadth of study beyond the staple concerns of recruitment, selection, training reward and appraisal, etc. in particular, one stream of research, strategic human resource management (SHRM) has emerged as being highly influential in this respect (Wilkinson A et al., 2001:10). SHRM points that an organization’s human resource assets are potentially the sole source of sustainable competitive edge and much of the work in this area stems from the resource-based theory (RBT) of the firm (Barney, 1991, 1995). The resource-based theory provides conceptual basis for asserting that HR resources are key to firms’ competitive and comparative advantage. Miller argue that operational linkages between the business strategy and the policy towards employees are the key, or in his words, the ‘fit of HRM with the strategic thrust of the organizations’ (Wilkinson A et al., 2001:10) and he gives his definition of SHRM:

Those decisions and actions which concern the management of employees at all levels in the business and which are directed towards creating and sustaining competitive advantage. (Miller, 1987:352)

Theorists regard HRM as being focused, unified and driven by strategy:

A strategic orientation is a vital ingredient in human resource management. It provides the framework within which a coherent approach can be developed to the creation and installation of HRM policies, systems and practices. […] The aim of strategic human resource management is to ensure that the culture, style and structure of the organization, and the quality, commitment and motivation of its employees, contributes fully to the achievement of business objective. (Armstrong M., 1992:47)

The concern with strategy, which emphasizes on integrating policy with organizational strategy, taking a long-term perspective and resource rather than cost (see Cheyne A, Lecturer notes, week 1/2003), distinguishes HRM from personal management. It is claimed that personal management is substaintially reactive, however HRM, exemplified by strategy, is proactive. For example, Guest differentiates traditional personal management from HRM ‘by virtue of the way in which the former ignored, but the latter embraces strategy’ (1993:213). SHRM takes a proactive way towards the competitiveness and efficiency of the organization instead of reactive day-to-day oriented personal management.

Strategic literatures stress the internal resource of a business as the source of competitive edge, which can be maintained by the following aspects:

They must add value to the organization activities
They must be rare, unique
They must be unable to be replaced by technology
The competition should have difficulty in copying them / nonimitable

These criteria of HRM appear in the form of skills, expertise and experience

(Storey 1995: 4)

The assumption of a close link between business strategy and HRM policies is based on contingency theory, which holds that HRM policies are selected according to the type of competitive strategy adopted by businesses. Moreover, it assumes that companies that closely reconcile their business strategy and HRM policies achieve better performance than companies that do not. Contingency theory (Miles and Snow, 1984; Porter, 1985; Schuler and Jackson, 1987a) tells us, HRM strategies must be gelled with specific business competitive strategies if they are to promote organization performance. The notion of “fit’’ facilitates the close linkage between HRM strategies and business strategies in order to help retain and motivate employees. A firm implementing HRM practices that encourage employee behavior consistent with its business strategy is able to achieve superior performance (Delery and Doty, 1996). In addition, the application of the ‘fit’ helps companies to manage their resources more efficiently, so that they can reduce operational costs and respond effectively to environmental restraints and new opportunities (Bird and Beechler, 1995). Therefore, effective linkage between business strategies and HRM strategies may well reinforce organizational performance.

Competitive strategy implies a series of systematic and related decisions that give a business a competitive advantage relative to other businesses (Schuler and Jackson, 1987a; Dowling and Schuler, 1990). The concept of business competitive strategy stems primarily from Porter’s (1980, 1985) classifications of generic strategies: cost leadership, differentiation, and focus. And Miles and Snow (1984) classified business strategies into three types: defender, prospector, and analyzer. Schuler and Jackson (1987a) used the terms trivially different from that of Porter to classify business competitive strategies into three types: cost reduction, innovation, and quality enhancement. They also identify different kinds of employee behavior and HRM policies, which are fitted to each competitive strategy.

Firstly, cost-reduction strategy includes reinforcing competitive edge by lowering the prices of products or services. This strategy promotes production efficiency and reduces expenses through employing new technology, expanding the sizes of production, or re-organizing production process, whereby a company can launch its products or services at a lower price in order to gain more market shares. Secondly, innovation strategy stresses the development of products or services, which are unique, nonimitable or different from those of the competition. Finally, the goal of quality enhancement strategy is to achieve success by providing a quality that excels that of other products or ...

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The Reality of Strategic Human Resource Management

However, it is difficult to identify the relationship between human resource management and strategy and it appears to be easier in theory than in practice. Marginson et al. (1998) found that 80 percent of senior managers in HRM claimed that they have overall HRM strategies but few can describe what the strategies are! In effect, both academics and practitioners have found it hard to appreciate the meaning of strategic human resource management in practice. Hendry (1994b) concedes that strategy is the dominant theme in HRM but also a misunderstood concept and ‘the perspective writers on HRM offer on strategy is often glib and lacking in sophistication’ (1994b: 2) Perhaps the problem is compounded by lacking of case studies, which enable us have a insight look into the strategy in practice. For practitioner part, the stress of SHRM in theory has led to great interest from senior management team but fail to fit the lower-level managers. We will discuss this in the later part of the article.

In fact, just like Guest (1987) described in his book, human resource strategy may only unproblematic in the ideal conditions and Price (1997) concludes that:

It should take place within a purpose- built modern location, a green field site employing care fully selected ‘green’ labour. Such stuff would have no previous experience of the industry in which the company operates and therefore would be untarnished by an ‘undesirable’ industrial subculture. They would not be hide-bound by traditional but outmoded ways of doing things.
The organization requires highly professional management, preferably Japanese and American.
Employees should be given intrinsically rewarding work rather than uninteresting functions for which pay is the sole motivation.
Workers should have security of employment and not be constantly in fear of losing their jobs.

Guest concedes that these conditions are difficult to achieve in practice because most organizations have pre-existing staff, buildings and equipment that cannot be discarded. They bring with them with patterns of power and behaviors, which may be contrary to the HR philosophy.

In addition, the formalities of strategic planning are vast different specific to different companies and the documents seem to be the done thing to have one. Some organizations develop a detailed several hundred pages document while some use an unwritten guidance. However, neat theoretical approaches with successive phrases of analysis, choice and implementation are rarely seen in practice. On the other hand, many senior managers convey the business goals to their employees by the mission statement, hoping this practice can lead to a high commitment from everyone in the company, since high commitment is seen to be crucial for competitive edge. To some extent, such policy does work for the mission statement tells the employees the essence of what an organization is about: why it exists, what kind of business it intends to be, and who its intended customers are etc. However, it has to acknowledge that many organizations develop a mission statement merely because it is the done thing to have one. The mission statement is locked into the company’s first-order strategies and these are major decisions on its long-term aims and the scope of its activities (Purcell 1995: 67)

The main characteristics of strategic HRM is its integration with business strategy, the idea being that HR policies and practices should support the goals of a business (Redman and Wilkinson, 2002). Storey’s research (1992) concludes that such integration is rare in British organizations. His project focused on 40 large employing organizations and involved 350 interviews with managers at all levels, in which approximately 80% were line and general managers. He concluded that: ‘human resource management type initiatives had been “bolted on” to the embedded system’ (Storey, 1992). The management change was very slow and uncertain process. There seemed to be lack of integration between employment practices, both individual and collective, and wider business strategy.

Coherent and integrated strategies sound good in theory but problem arise when they are to be translated into action. This ‘surface neatness’ hides an organizational reality which is far from simple (Blyton and Turnbull 1992: 2) Some theorists argue that strategic management should not be limited at the top layers in a company. For example, Mintzberg argues that the strategies that are actually carried through into practice include an unintended element, which he terms ‘emergent strategies’ (1994: 26):

Big strategies can grow from little ideas (initiatives), and in strange places, not to mention at unexpected times, almost anyone in the organization can prove to be a strategist. All he or she needs is a good idea and the freedom and resources required to pursue it. (Mintzberg 1994: 26)

In fact, strategy involves the decisions making about capital equipment, finance and marketing aspects by people while it requires people to make decisions about themselves. Stacey argues that it is “important…to think of strategy as a game that people play, because when it is discussed more seriously there is a strong tendency to slip into talking about it as a response that ‘the organization’ makes to an ‘environment’. […] The inevitable result is a lack of insight into the real complexities of strategic management because in reality organizations and their environments are not things, one adapting to the other, but groupings of people interacting one with another”. “However, it is a deadly serious game, with people’s careers and livelihoods at stake” (Stacey 1993: 2)

The reality is that in front of a choice between profit and the well-being of employees most organizations will select the former. Alan Price argues that ‘long-term HRM goals such as training and developing skills for the future are rarely considered’ and ‘if employee commitment, flexibility and product quality are valued, they are sought for profit and not pursued as beneficial for workers’ (Price A, 1997:167) He also claims that within the free-market capitalist model there is an stress on short-term improvement in financial or technological performance and considerations, which can have a direct and relatively immediate effect on an organization’s people instead of long-term strategy. All these result in that financial knowledgeable managers, in western organizations, have taken the lead as the ‘bottom line’ of profit or loss drives business (Price A, 1997:167)

Besides, the implement of HRM strategy seems to be problematic. The goal of implement is to realize the organization’s long-term strategy in terms of numbers and, more importantly, attitudes, behavior and commitment. Just mentioned above, Miller argues that the key lies with the concept of ‘fit’ (Miller, 1989:36) And Armstrong (1992:53) argues that the significant issue in HR strategy is that of integration with overall business strategy. However, in practice, such integration is hard to achieve. Armstrong (1992) points out some difficulties such as diversity of strategic processes, levels and style in an organization; the evolutionary nature of business strategy; the absence of written business strategies and the qualitative nature of HR. Purcell (1989) sees personnel policy choice as important “downstream” strategic choice that serves to implement “upstream” strategic decisions on competitive strategy effectively. But in reality, it is felt that personnel systems need to become more flexible in order to “fit” strategies. Moreover, the environmental context may well affect the implementation of HR strategy. For example, when it is a recession time, the HR strategy of some large, diversified organizations with a wide range of interests may focus on redundancies, and sacking employees and the business needs do not fit with ‘soft’ HR values. Legge (1989) described these as tough love in which employees are expected to be both dedicated and disposable.

On the other hand, the emphasis of strategy in HRM by theorists has resulted in great interest from senior managers. However, can SHRM fit the interests of low-level managers? In practice, there are both objective and subjective factors relating to line managers and supervisors that lead to several blocks and obstacles to the integration between HRM strategy and organization strategy and the implementation of strategy. Marchington, M. and Wilkinson, A. (2002) in their book People Management and Development conclude that:

Division between managers and senior management. Many middle managers and supervisors do not identify closely with the goals of the employer, but instead view themselves as distinct from senior management (Thompson and McHugh, 2002). Line managers treat themselves to be in the middle and are not willing to associate themselves with workers or with managers. An important first step in any change programme may be involved line managers in the process and give them increased responsibility and authority as ‘a central part of the agenda’ (Fenton O’Creevy, 2001).
Work overload. It constrains the successful integration within organization that line managers and supervisors are sustaining work overload, at the same time, conflict the requirements from senior managers. Furthermore, there is a lack of exact reward for their job involving in HR aspects. Fenton O’Creecy (2001) questioned whether reward and appraisal mechanisms are appropriate to encourage positive behaviours or not or if there is enough time left during the working day to devote to staff development. It is hardly surprising if line managers concentrate on the achievement of targets they know will be used to assess their performance at appraisal (Bach, 2000, quoted in Marchington, M. and Wilkinson, A. 2002: 235 ). In other words, the heavier the workload is, the harder it is for line managers to perform HR aspects.
Lack of training. More worrying is caused by the feeling that line managers and supervisors may be incompetent to cope with their responsibility (Cunningham and Hyman, 1995). It takes time and needs much more efforts to develop first line managers. Whereas it is converse in reality since training in people management seems not to be the key issue. Less time is allocated to the training since senior managers try to finish new initiatives within a minimum of delay, which becomes the third block to converting strategy into practice.
Flexibility for supervisors. It is allow supervisors to vary the application of rules so that they can strengthen their managerial control. However, though they wish to retain some flexibility to adapt rules in the workplace, they are constrained by guidelines from senior managers in reality.
Managers unaware of the rules. The final obstacle for achieving integration is that managers may not realize that they do not follow the organizational rule and may run counter to employee goals.

Organizations must change to survive. In fact, change, or transformation, is an inevitable consequence of many human resource strategies. However, change is a difficult management task. Change initiatives fall into one of two types: turnaround change and organizational transformation (Bertsch and Willianms 1994). Organizations always face restructuring, shrinkage and incremental change etc. Redman and Wilkinson (2001) argue that “the best fit approach can be ctiticized for failing to acknowledge the importance of social norms and legal rules in the search for alignment…Indeed, the notion of fit is rather static and inappropriate metaphor in a fast-changing and chaotic corporate world”.

And a key word in this aspect is BRP. Re-engineering is a methodology of the 1990s that has inspired many change strategies. Michael Hammer defines business process reengineering as: Fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance. (Hammer and Champy 1993, cited at website address www.prosci.com/reengineering.htm, accessed 25/10/03) Hammer and Champy mention some key words: leader—a visionary and motivator; process owner—sufficiently senior to oversee the entire process to be re-engineered; re-engineering tem—composed of insiders who understand present activities and outsiders to question assumptions; steering committee (optional)—to oversee the organization’s re-engineering as a whole; re-engineering czar—the operational head of the organization’s re-engineering activities (Price 1997:179). Obviously, such a directed process attracts senior managers in the promise of redundancy but give few benefits to the employees. Employees may be ‘permitted and required to think, interact, use judgement, and make decisions’ but this applies only to the workers who are allocated jobs after the process has been re-engineering, eliminating one or two departments alone the way (Price 1997:179). Burke and Peppard (2995: 34) argue that there are many barriers to implementing BPR:

There is a paradox in that people with knowledge of a particular process are unlikely to have the authority to redesign it, and vice versa.
Redesign disturbs existing patterns of power in an organization. The power base may not coincide with senior management but with a ‘dominant coalition’ with a vested interest in frustrating BPR.
The firm’s culture may work against a process-base organization and consequent changes in work practices, job content and relationships.
Within multinational companies, processes may cross national boundaries, bringing in further difficulties.

Wilmott (1995: 306) argues that given the importance of employees in implementing BPR, and the embodiment of strong ideas about HR management in its basic texts, it is surprising to find that HR issue have rarely been addressed and conclude that the human aspect has been trivialized in the BPR literature.

Restructuring can take place in the organization or go beyond its boundaries, such as merger. Theorists argue that mergers and alliances can draw on the capacity and potential of participants. However, in practice, they have a poor history of success. Price argues that survey shown that over 50 percent of mergers and acquisitions fail to achieve strategic objectives—often disastrously (Price 1997:180) People who have been ‘taken over’ tend to feel defensive and threatened and the new managers are inclined to feel superior and to regard methods which are different from their own as inefficient or second rate … this is not a simple matter of upsetting workers, important though that may be in consequences on morale and cooperation (Price 1997:181).

In conclusion, while it works well in theory surrounding the issue of SHRM, human resource management seems to be problematic in practice. Based on the discussion above, we have to admit that strategic human resource thinking, which provides a framework for HR requirements over a period, has its basis on rational thinking but in practice personnel managers have a variety of difficulties in appreciating and implementing the strategy. Some of the problems people face include developing new initiatives, restructuring, changing and retaining for new skills. And more difficulties come from cultural and behavioural change and so on. Strategic human resource management stresses numbers, quantitative statements, attitudes, behavior and commitment while uses harder ‘matching’ models of HRM (Price 1997: 184), but the implementation is problematic particularly when the responsibilities pass to the line managers. In practice, there are both objective and subjective factors relating to line managers and supervisors that lead to several blocks and obstacles to the integration between HRM strategy and organization strategy and the implementation of strategy. In summary, it is fair to say that human resource management theory works well in theory but not in practice.

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