Models of hrm free essay sample

The history of human resource management has reflected prevailing beliefs and attitudes held in society about employees, the response of employers to public policy (for example, health and safety and employment standards legislation) and reactions to trade union growth. In the early stages of the Industrial Revolution in Britain, the extraordinary codes of discipline and fines imposed by factory owners were, in part, a response to the serious problem of imposing standards of discipline and regularity on an untrained workforce (Mathias, 1969). In Britain and North America increasing numbers of employers were accepting responsibility for the general welfare of their workers in the 1890s. In Britain, a number of philanthropic employers began to develop a paternalistic care and concern for their employees. From the 1890s Quaker employers, for example, Cadbury and Rowntree, began to emphasize welfare by appointing industrial welfare workers and building model factory villages. It was estimated that by 1914 there were probably between 60 and 70 welfare workers in Britain (Farnham, 1990). In the USA, Henry Fords autoplant, for example, established a Sociological Department to administer personnel policies which were a concomitant of the $5 a day remuneration package. In 1900, large German companies like Krupp and Seimens were highly paternalistic (Littler, 1982). Over time, industrial welfare workers developed into the modern personnel/human resource management specialist. World War I (1914–18) gave an added impetus to industrial welfare activities. To deal with the haemorrhage of skilled labour, many women were induced to enter industry for the first time. One outcome of this shift in employment was greater concern for workers welfare in industrial work. By 1918 about 1000 women supervisors had been appointed to observe and regulate the conditions of work and, based upon experiments during World War I, the relationship between welfare and efficiency was established (Pollard, 1969). World War II (1939–45), like World War I, immediately precipitated an increased demand for materials and labour. Between 1939 and 1943, Britain mobilized no fewer than 8. 5 million insured individuals (18 per cent of the total population) for the armed forces, auxiliary forces, and the munitions industries. The war fostered an increased demand for human resource specialists as the human relations approach was embraced by many organizations anxious to maximize labour productivity and foster industrial peace. Farnham (1990) explains that personnel officers, as they were increasingly called, were seconded to munitions factories to establish personnel departments and to educate institutions to provide training programmes. In 1943 there were nearly 5500 personnel officers in factories employing over 250 employees, or three times as many as in 1939. The pattern of personnel management activities and industrial relations bequeathed by the extraordinary arrangements of wartime mobilization therefore contained the beginnings of the personnel management orthodoxy. Moreover, unlike welfare activity at the end of World War I, personnel management continued to grow in importance in the post-war period. After the war the personnel profession emerged stronger than ever and its members, and academics who studied the field, began to establish a new orthodoxy. In Britain the Institute of Labour Management changed its name to the Institute of Personnel Management (IPM). It is argued that the name changes reflect a gender dimension to the discipline. The change from the Institute of Industrial Welfare Workers in 1924 to the Institute of Labour Management was influenced by concern that the term welfare projected a feminine image among the growing and influential male membership (Townley, 1994). In post-secondary educational institutions, personnel management and industrial relations became mandatory courses for most business students (Pitfield, 1984). The discipline of Human Resource Management A number of definitions have been proffered to explain the discipline of Human Resource Management (HRM). The most prominent of these are captured below; The purpose of HRM is to ensure that the employees of an organization are used in such a way that the employer obtains the greatest possible benefit from their abilities and the employees obtain both material and psychological rewards from their work (Graham, 1978). HRM involves all management decisions and actions that affect the relationship between the organisation and its employee – the human resources (Beer et al. ,1984). A distinctive approach to employment management which seeks to achieve competitive advantage through the strategic development through the strategic development of a highly committed and capable workforce using an integrated array of cultural, structural and personnel techniques. (Storey;2001) A philosophy of people management based on the belief that human resources are uniquely important to sustained business success. HRM aims at creating capable, flexible and committed people and rewarding their performance (Price;2001) A strategic and integrated and coherent approach to the management of the organisation’s most valued asset, the working there. (Armstrong;2009). In theory, the management of people is no different from the management of other resources of organizations. In practice, what makes it different is the nature of the resource, people. One set of perspectives views the human being as potentially a creative and complex resource whose behaviour is influenced by many diverse factors originating from either the individual or the surrounding environment. Many academics view HRM as a vague and elusive concept not the least because it seems to have a variety of meanings but also because pinning down an acceptable definition can appear like trying to hit a moving target in a fog (Price;2001) Storey (1998) concurs and views HRM as â€Å"an elastic concept† which covers a range of applications that vary from book to book and from organisation to organisation. A synthesis of all models and theories of HRM reveal that it is characterised as Diverse; Strategic, with an emphasis on integration; Commitment-orientated; Based on the belief that people should be treated as human capital; Unitarist rather than pluralist, individual rather than collective, with regard to employee relations; Individualistic A line management responsibility Focused on business values. The diversity of HRM A distinction was made by Storey (1989) between the ‘hard’ and ‘soft’ versions of HRM. The hard version of HRM emphasizes that people are important resources through which organizations achieve competitive advantage. The soft version of HRM traces its roots to the human-relations school. It emphasizes communication, motivation and leadership. The strategic nature of HRM Perhaps the most significant feature of HRM is the importance attached to strategic integration, which flows from top management’s vision and leadership, and which requires the full commitment of people to it. David Guest (1987, 1989a, 1989b, 1991) believes that a key policy goal for HRM is strategic integration, by which he means the ability of the organization to integrate HRM issues into its strategic plans, to ensure that the various aspects of HRM cohere, and to provide for line managers to incorporate an HRM perspective into their decision making. The commitment-orientated nature of HRM The importance of commitment and mutuality was emphasized by Walton (1985) as follows: ‘The new HRM model is composed of policies that promote mutuality – mutual goals, mutual influence, mutual respect, mutual rewards, mutual responsibility. The theory is that policies of mutuality will elicit commitment which in turn will yield both better economic performance and greater human development. ’ People as ‘human capital’ The notion that people should be regarded as assets rather than variable costs, in other words treated as human capital, was originally advanced by Beer et al (1984). HRM philosophy, as mentioned by Legge (1995), holds that ‘human resources are valuable and a source of competitive advantage’. The concept of â€Å"human resource management† implies that employees are resources of the employer. As a type of resource, human capital means the organization’s employees, described in terms of their training, experience, judgment, intelligence ,relationships, and insight—the employee characteristics that can add economic value to the organization. Unitary philosophy The HRM approach to employee relations is basically unitary – it is believed that employees share the same interests as employers. This contrasts with what could be regarded as the more realistic pluralist view, which says that all organizations contain a number of interest groups and that the interests of employers and employees do not necessarily coincide. Individualistic HRM is individualistic in that it emphasizes the importance of maintaining links between the organization and individual employees in preference to operating through group and representative systems. HRM as a line management activity HRM can be described as a central, senior-management-driven strategic activity, which is developed, owned and delivered by management as a whole to promote the interests of the organization that they serve. Purcell (1993) asserts that HRM is about the rediscovery of management prerogative. Keith Sisson (1990) suggested that: ‘The locus of responsibility for personnel management no longer resides with (or is â€Å"relegated to†) specialist managers. ’ Focus on business values The concept of HRM is largely based on a management- and business-orientated philosophy. It is concerned with the total interests of the organization – the interests of the members of the organization are recognized but subordinated to those of the enterprise. Hence the importance attached to strategic integration and strong cultures, which flow from top management’s vision and leadership, and which require people who will be committed to the strategy, who will be adaptable to change and who will fit the culture. By implication, as Guest (1991) says: ‘HRM is too important to be left to personnel managers. HRM Models There are a good number of models that have been postulated by various scholars to describe the HRM concept. However, as shall be seen these various models either fall under the soft or the hard approach of HRM. The Harvard Model The Harvard Model was postulated by Beer et al (1984) at Harvard University. The Harvard model acknowledges the existence of multiple stakeholders within the organization. These multiple stakeholders include shareholders various groups of employees, government and the community at large. The recognition of the legitimacy of these multiple stakeholders renders this model a neo pluralist model. This model emphasizes more on the human/soft side of HRM. Basically this is because this model emphasizes more on the fact that employees like any other shareholder are equally important in influencing organizational outcomes. In fact the interest of the various groups must be fused and factored in the creation of HRM strategies and ultimately the creation of business strategies. A critical analy An analysis the model shows that it is deeply rooted in the human relations tradition. Employee influence is recognised through people motivation and the development of an organization culture based on mutual trust and team work. The factors above must be factored into the HR strategy which is premised on employee influences, HR flows, reward system etc. The outcomes from such a set up are soft in nature as they include high congruence, commitment, competencies etc. The achievement of the crucial HR outcomes has got an impact on long term consequences, increased productivity, organizational effectiveness which will in turn influence shareholder interests and situational factors hence making it a cycle. It is thus important to note that the Harvard model is premised on the belief that it is the organization’s human resources that give competitive advantage through treating them as assets and not costs. Soft HRM Soft HRM traces its roots to the Harvard Model of HRM and the Human Relations school of thought as proposed by Elton Mayo. Soft HRM is premised on the treatment of employees as â€Å"whole men†, valued assets and the most important source of competitive advantage as opposed to treating them as objects. Soft HRM emphasizes commitment to ensure that a skilled and loyal employee creates a mutuality of purpose with the management in the organisation for achievement of a sustainable competitive advantage. The Michigan/Matching Model The Michigan model was propounded by Fombrun Tichy and Devanna (1984) at the Michigan Business School. They also named this model a matching model of HRM. Precisely, the matching aspect of this model demonstrates that the model is inclined towards the harder side of HRM. This is because the matching model emphaizes more on â€Å"tight fit† between the HR strategy and the buisness strategy. NB It demands that available human resources must be matched with jobs in the organization. The HR strategy must be highly calculative in terms of the quantity of the human resources required to achieve the objectives enshrined in the business strategy. Business strategy takes the central stage in this model hence human resources are taken like any other resource which must be fully utilised together with the other resoruces to achieve organizational objectives. (Evans and Lorange, 1989) argue that the Michigan model is based on the â€Å"product market logic† which demands that to gain high profits labour must be obtained cheaply, used sparingly, developed and exploited fully. Devanna (1984) The point of departure in the Michigan Model is the pre-eminence and pre-dominance of a business strategy, which must strictly be achieved by the available resources regardless of whether, they are able to do so or not. In fact the business strategy must be achieved through minimum labour costs enhanced by structural re-organization, Performance Related Pay and staff reduction. Hard HRM Hard HRM which has its origin in Michigan Model of HRM (Matching Model) traces its roots to Taylors scientific Management principle which called for adoption of a set of management practices or techniques that would lead to an increase in organisational efficiency and productivity. Hard HRM is quantitative in nature as it calls for the strategic needs of the organisation in terms of the quantity of human resources needed and which must be treated nationally like any other factor of production. The Michigan model has a harder, less humanistic edge, holding that employees are resources in the same way as any other business resource. People have to be managed in a similar manner to equipment and raw materials. They must be obtained as cheaply as possible, used sparingly, and developed and exploited as much as possible. Hard HRM is market driven and adopts a business philosophy as it aims to make us of people in a manner that adds value and one which bring competitive advantage The Guest Model The Guest model was propounded by David Guest in 1987. This model is a fusion of aspects that resemble both a hard and a soft approach of HRM. Guest proposes 4 crucial components that underpin organizational effectiveness. These 4 crucial components are: 1. Strategic Integration This is the ability of organizations to maintain a fit between the HRM strategy and the business strategy. In other words, there must be congruence between business strategy and the HR strategy for the organization to achieve its goals. Strategic integration shows the harder side of the Guest Model. This is precisely because human resources are treated in a similar manner like any other resource with the prime goal of achieving business objectives. Thus there are implications of labour exploitation. 2. Flexibility Flexibility is basically concerned with the ability of the organization and its people to adapt to the changing business and work environment and to the capacity to manage innovation. Flexibility can be numeric, functional, pay, distancing. Flexibility carries both connotations of hard and soft HRM. Hard HRM for example can be seen through numeric flexibility where employees are employed only when their production is required and when their labour is not required they are discharged. This can be exemplified through seasoned work. Flexibility can also show the soft side of HRM through the same example given above. Flexibility in this case is not only concerned with the need to achieve business objectives but also the need to treat its employees as fairly as possible. 3. High Commitment This is concerned with the need to have both behavioural commitment, which is the ability to go an extra mile, and attitudinal commitment, which is reflected through a strong identification with the organization. 4. Quality Quality is based on the assumption that provision of high quality goods and services results from a quality way of managing people. Strategic Integration/Fit This ensures that the HR policies and business policies are integrated. It argues that HR strategies and planning form part of a manager’s role and that the HR strategy should form part of the business strategy and not be treated as a separate entity. This means that managers take responsibility for the human resource and need to ensure that they have the right people in the right places to ensure that the business strategy can be achieved. Strategic integration can either be vertical or horizontal. Vertical integration This relates to the linkage between the policies and practices associated with the management of people, and the wider business or organizational strategies and objectives. Vertical integration can be based on the cascading down of corporate priorities and objectives, which then inform and give direction to HR priorities, policies and practices. Alternatively, it can be based on representatives of HR informing senior management of the current and future state of human resource capacity and capabilities, which helps to ensure that corporate strategy is grounded in a realistic understanding of what is, or will be, available to deliver the strategy. Horizontal integration This relates to the linkage between different HR activities and practices, and emphasizes the importance of looking at what HR does holistically, rather than as separate and disconnected elements. The concept also expresses the need for consistency in the sense that the way in which the activities are carried out reflects understood and agreed strategic objectives. For example, adopting an individualist, rather than a collectivist, approach to the management of people implies the use of individual reward and development practices if consistency in practice is to be achieved Tutorial Using David Guest (1987)’s Model and John Storey (1989)’s model of HRM: Critically demonstrate your understanding of Hard and Soft HRM. John Storey Model (1989) John Storey emerged to be one of the strongest proponents of HRM as a completely different discipline from the preceding disciplines embraced by the TPM approach. He believed that HRM is a holistic approach with a set of interrelated policies with an ideological and philosophical underpinning. Because of these ideological and philosophical aspects, HRM does not only stand distinctively outstanding from TPM but also emerges to be a much more humane approach to employment management. The model by John Storey is based on four aspects. 1. Beliefs and Assumptions The model is premised on the notion that HRM is based on a set of beliefs and assumptions, which makes it a distinctive approach. Fundamentally it is believed that it is the human resource among all the other factors of production, which gives the difference. Successful organizations are distinguished from the rest by the capabilities and commitment of the people who work for them. It is therefore imperative that the human resource ought to be treated with great care and nurtured as valuable assets. Finally it is believed that the employment relationship is based on commitment and not compliance. 2. Strategic Qualities HRM is further distinguished by the fact that it is strategic in nature and therefore requires the attention of senior management and top executives. The above-mentioned assumption stems from the 1st belief that the human resource is the most important source of competitive advantage. HR Policies are too important to be a product of prescribed best professional practice only. In fact they must be sensitive to the demands of the competitive business environment, business strategy and the HR strategy. 3. Role of Line Managers Line managers have a very important role to play in people management. It is clear from the HRM philosophy that people management is too important to be left to operational personnel specialists. Fundamentally, the importance of line managers is seen through the strong link that exists between them and their respective subordinates or employees. 4. Key Levers ?There is a strong belief that culture management is important than managing Procedures and systems. This is primarily important because culture management brings consensus on overall organizational values, beliefs and assumptions. Culture management is also believed to be essential in flexibility and commitment. ii) Integrated action on all HRM policies iii) Restructuring and job redesign to allow developed responsibility and empowerment. Approaches to HRM There are basically two approaches to HRM, the Best Fit Approach and the Best Practice Approach The Best Fit Approach The best fit approach focuses on the importance of making sure that the HR strategies are suitable to the different circumstances of the entire organization, together with culture, operational processes as well as external environment. Thus, it focus on the idea that different human resource (HR) strategies have to focus on a given needs of both the organization and its people (Armstrong 2006, p. 138). Due to the said reason, most of critics and commentators believe that best fit approach is more important and vital than the best practice. The Best Fit Approach focuses on learning what works, and what does not work, in connection to the organizations, thus, it is up the firm to decide what may be pertinent and applicable in the general terms and what lessons can be learnt that can be adopted in order to fit the company’s given strategic as well as operational requirements. The process starts with the analysis of the business needs of the firm within its context such as culture, structure, technology and process that indicate what has to be done. Afterward, it can be useful in order to choose and mix different best practices ingredients, as well as develop an approach that applies those that are applicable in a way that is aligned in order to identify different business needs (Armstrong 2006,). As a result, the best fit approach has a huge appeal to the HR practitioners due to the fact that it positions them as the first-level strategic partners in the process of management decision-making. This is because, the rejection of a one-size-fits-all approach helps to widen the range of good judgment that are available to them (Shields 2007). Best Practice Approach On the other hand, the best practice approach speculate that there is a exact set of human resource practices that can be applied in almost any organizational context that helps to increase the performance that helps to deliver outcomes that are valuable for all the stakeholders, particularly employees. However, the effect of the performance is said to be stronger and more influential if all of the said practices are packed together in order to balance and harmonize each other, thus create positive synergies between them. As a result, the said approach covers different related prescriptive models of human resource management such as high-commitment, high-involvement, high-performance work system and the mutual gains model. The best practice approach is based on the idea that there is a set of best HRM practices and that applying them will help to superior organizational performance. The best known set is Pfeffer’s (1994) model that shows that seven important HR practices of a successful organizations which are: employment security,  selective hiring, self-managed teams, high compensation contingent on performance, training, reduction of status differentials sharing information There are different critics and commentators that are attacking the idea of best practice. This is because the best practice or universalist views by pointing out the discrepancy between a belief in best practice as well as the resource-based view that pertains on the intangible assets that includes HR, which allows the firm in order to do better than its competitors. The major question is how can the universalism of the best practice be squared with the view that only some resources and routines are significant and vital by being rare as well as imperfectly limitable? Aside from that, it is also hard to accept that there is a universal best practice, because one practice that have been successful for one organization, doesn’t necessarily mean that will work on others (Armstrong 2006). Personnel Management (PM) and Human Resource Management (HRM) So what is the difference if any between HRM and personnel management often referred to as Traditional Personnel Management (TPM)? This has been an area of debate between scholars over the years. We have already defined and discussed what HRM is and at this point in time let us attempt to define the concept of personnel management and later discuss the differences if any between PM and HRM. Torrington and Hall (1995) define personnel management as â€Å"a series of activities   which enables working people and the organisation which uses their skills to agree about the objectives and nature of their working relationship and secondly ensures that the agreement is fulfilled† Cole (1999) defines personnel management as all responsibilities related to hiring and firing staff, supervising, promoting, organizing, motivating staff, and developing their professional capabilities. â€Å"Personnel management assists with t he management of people in an organisation. It is concerned with establishing, maintaining and developing systems that provide the framework of employment. Cole (1999) HRM derived its root from the traditions of personnel management. Many commentators have suggested that HRM is just a grander term for a mundane function, representing ‘old wine in new bottles’. Others have argued that HRM reflects a shift in employment relations, made necessary by changes in the organisational environment. By definition personnel management captures three central concepts. Engaging in techniques to maximise productivity by employees, to the benefit of the organisation. Dealing with any disputes that may arise during the course of business by the employee or a third party. Undertake any administrative policies which fall within the employment cycle. By contrast the overarching purpose of HRM is to contribute to organisational effectiveness through the development of an integrated range of policies which can enhance the quality of working life and encourage high commitment, flexibility and high performance from employees i. e. business focus. Legge (2003) identifies four similarities between the two practises: i. Both emphasise integrating with organisational goals ii. Both vest firmly in line management iii. Both stress maximising individual potential  iv. Both stress putting the right people into the right jobs We can safely conclude that the HRM function clearly encompasses the personnel’s role within the organisation, thus there is an element of overlap between the two disciplines. This lends justification to commentators who might argue these movements are one in the same. Guest (1987) sees HRM as a distinct approach to managing the workfo rce and argues that, although personnel management will also select and train staff, it is the distinct approach in the selection and training that matters. HRM’s approach should be linked to high performance and commitment rather than compliance. Guest (1997) recognises that, although empirical evidence is only just beginning to show the link between HRM and performance, evidence is already suggesting that HRM works. The view from industry is also suggesting that HRM is taking on a strategic role in industry. The CIPD (2003) HR survey identified HR issues as now being regularly discussed at executive boards and HR managers seeing their role as that of a strategic business partner, with the HR function now focused on achieving key business goals and developing employee capabilities. The table below summarises the difference between HRM and personnel management. From the table below, Storey defines the elements that differentiate HRM as follows: Human capability and commitment: Storey argues that this is what differentiates organisations. Strategic importance of HRM: it needs to be implemented into the organisational strategy and considered at the highest management level. The long-term importance of HRM: it needs to be integrated into the management functions and seen to have important consequences for the ability of the organisation to achieve its goals. The key functions of HRM: seen to encourage commitment rather than compliance. Storey (1992) identifies a model with 27 points that differentiate HRM from personnel and industrial relations (IR) practices. Storey’s model is based on an ideal type of organisation and is a tool used to present what Storey sees as the essential features of personnel and HRM in an exaggerated way. The role of the HR manager The role of the manager is to enable individuals to achieve organisational goals and objectives. Managers get things done through people. To do this successfully, they need to know who these people are, where they are from, how they can be developed not only for personal fulfilment but also to help achieve the organisational goals, and the impact of external constraints such as legislation, competition, employee relations, and education and training. The HR manager needs to know how these come together to form the function of HRM. The HR manager has to juggle the different functions of HR in the internal environment of the organisation while keeping an eye on what is happening in the external environment. These functions are mainly concerned with the following: Planning, resourcing and retention Managers need to know how many staff they will need in order to achieve the organisational goals. They need to identify where the staff will be needed, how many and at what times. This is part of the planning and resourcing process. The retention of staff is also important, as recruiting staff is an expensive and time-consuming process. A manager needs to ensure that staff are happy in their work as not only will they be more productive, they will also be more likely to remain with the organisation. Recruitment and selection When the need for people has been ascertained, the next task is to find them, and ensure that the right people are selected and recruited for the organisation. If the wrong people are recruited then there could be difficulties in achieving organisational goals and business could suffer. Training and development In order to get the best from employees they need to be trained. Training is done to fill gap between the skills and knowledge they have at present and the skills and knowledge the organisation wants them to have in order to fulfil set goals. It ensures that employees are able to perform to the required standard. Whenever someone new is employed they need to be trained; this may take the form of an induction programme to make the new employee feel welcome and orientate them to the culture and working methods of the organisation. Remuneration and reward Employees need to be paid so that they are able to live. Pay needs to be adequate and equitable. Money is not the only reward and may not motivate em