Karen Legge (1989) recognizes the support to be greater for the hard approach to HRM. It assumes employees to be similar to any other resource that may be exploited for the benefit of the organization. She feels that soft HRM is irrelevant in the eyes of employees.
While I can agree that the soft approach may, in practice seem irrelevant to employees, I agree with its fundamental concept. Given that employees are a product of their complete environment (Kossen, …) excessive control by managers in a workplace creates an unhappy environment and in turn a dissatisfied workforce. The hard approach does not foster common understanding through the strata of the organization.
One of the goals of HRM is to diffuse any possible tension and encourages both workers and managers to trust one another. It was this tension that brought about the development of personnel management to act as a means of communication between the organization and its employees. The main problem with personnel was that the ways in which personnel managers were trained did not align them with business functions. If the emphasis was on employees as a resource it could not exist as a separate function it must in fact be integrated into the strategies of the business.
As such a distinction was made between the traditional personnel management and a more modern HRM. The greatest difference was the positioning of HRM at a strategic level. While Storey (1989) states HRM makes up for the failures of personnel management, some argued it was simply personnel management re-designed - 'old wine in new bottles' (Armstrong, 1987). I feel the difference lies in the methods in which performance is enhanced. It harnesses the need for an organization to be flexible and responsive (Hope-Hailey et al, 1998)
I believe HRM is a crucial factor in gaining competitive advantage. It treats employees as ‘superior intellectual resources.’ Many organizations fail to assess the benefit of long- term success as key to sustaining competitive advantage. This is shown in reluctance to invest time and money now into human resources that could in fact develop more efficient effective means of exploiting traditional resources.
The strategic HRM concept attempts to develop the HR function to achieve strategic fit. Three main approaches have been identified: Best Practice, Best Fit and the Configurational Approach (Richardson & Thompson, 1999)
Becker et al (1997) believed that organizations are individual and should be tailored as such. This undermines the concept of best practice it is an idea supported by Purcell (1999.) He sees it to be inconsistent with the resource-based view of HR. If it is the unique, inimitable characteristics of organizations that drive profit performance (Nelson, 1991) than best practice – a blanket approach using universal practices simply cannot be effective.
However, I accept that knowledge of best practices allows for greater understanding of which practices will work for an organization.
Purcell (1999) also argues against best fit. He feels the two approaches place a barrier against organizational change. The external environment for all businesses is dynamic by nature. Markets are chaotic and so an organization must be flexible. Although best fit gives equal status to the culture of an organization as to the business strategies Purcell (1999) observes that it would be impossible to match all variables successfully to create best fit.
I am inclined to agree with Mac Duffie (1995) when he states that more is better. That is that the configurational approach – which ‘bundles’ practices to suit the culture of the organization, the industry and the objectives to achieve greater performance. This lends itself to strategic fit, as ascertained from research by Ichniowski et al (1997.)
I feel that logic in favor of the configurational approach is straightforward. That employee performance is a function of both motivation and ability, it follows that practices should reflect both. (Dyer and Reeves, 1995) Regarding ability this takes root in careful selection and training and the inclusion of both financial and non-financial incentives.
Seconding the ‘more is better’ belief (Mac Duffie, 1995,) Guest (1997) suggests the implementation of a broad range of high performance practices to achieve competitive advantage.
Whichever approach is deemed suitable, the overall assumption of HRM is that the basis for competitive advantage can be developed through the implementation of practices that develop HR policy, rely on strategic integration and promote commitment.
Strickland and Thompson ( …) state that firms should position themselves based on their unique, valuable resources and capabilities rather than products or services because they are more enduring than products and they provide increasing return as they are used.
Formulating the HR strategy however is where the greatest difficulty in my opinion lies. Gratton et al (1999) highlight the difference between rhetoric and reality. But it gives direction and places importance on the human resource of a company that we now view as paramount to the success of an organization.
It is useful to view the reality of strategic HRM. When we view HRM as a philosophy we accept that it is a perspective, something to keep in mind. It is not an applied logic (Mintzberg et al, 1988)
Questions, which need to be asked when formulating strategies, focus on objectives and resources. This can be achieved through SWOT analysis. Models of HRM must be kept in mind, although not in a prescriptive way. These models include High Performance Management, High Commitment Management and High involvement management.
High performance management emphasizes recruitment procedures; extensive training and incentive pay schemes. It follows closely the Department of Labor’s characteristics of Best Practice (1996.)
High involvement management treats employees as partners, respecting their interests and promoting dialogue to gain greater understanding of an organizations mission, values and objectives (Armstrong, 2001)
I feel the greatest merit lies in the high commitment model. This illustrates the concept of mutual commitment (Walton, 1985b.) by encouraging self-regulation of behavior. It requires a high level of trust from all involved (Wood, 1996)
Beer et al (1984) and Walton (1985 b) emphasize the importance of team structure, problem solving to successful strategic HRM. While Wood and Albanese (1995) identify the benefits of having a core group of permanent workers, supplemented by temporary positions where necessary.
For me, the crux of the development of staff to achieve competitive advantage is knowledge management. It can be seen from the above arguments that successful organizations must invest in learning and development due to the constantly changing markets and technology. Employee skills, or human capital can be codified (Nonanka and Takeuchi, 1995.) This would allow the expertise of staff to be updated and expanded as required. Knowledge management initiatives increase business value and heightened organizational success; it also gives and increased competitive edge (Silver, 2000). This is just one aspect of the HRM (others include issues of changing culture and structure and development of capabilities) but it illustrates well the importance of developing this asset to the benefit of the organization’s profit.
I feel having analyzed the models and methods of HRM I question whether it is all that different from personnel management. The difference and the benefit of HRM is that it is a strategic model that recognizes the abilities and knowledge of human resources.
Some view it as manipulative (Legge, 1998) a form of insidious control (Wilmott, 1993) this may well be true. Implementing strategy obviously relies on an element of control. But I feel the positive aspect of HRM is how it views and treats employees. It offers discussion, choices and treats staff yes as a means to achieve competitive advantage, but it rewards them for doing so.
The main difficulty I have observed is in implementation. Indeed I found very little productive discussion to this issue in research the topic. To see HRM as a working theory it is necessary to observe the presence of some elements in Japanese management.
I conclude that the development of staff as a concept of HRM does promote competitive advantage. But I must admit that I do not see it as being of paramount importance to organizations. This fear of spending time and money now at the risk of upsetting shareholders is one that must certainly dictate the long-term success of organizations. Pfeffer argues the greatest competitive advantage comes from people rather than technology (Price ,1997.) It is not enough to invest in technology as he says it will be available to competitors before you can capitalize on it. With the growing importance being placed on knowledge management, (an asset unique to each organization) this conflict must be resolved. And will be, through use of strategic HRM.