Different Theories of Human Resource Management

Different Theories of Human Resource Management

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Introduction In the 1980’s, the birth of a new concept called ‘Human Resource Management’ was born. This trend comes after an intense period of Taylorisation, Fordism and now, McDonaldisation. HRM came to counter balance these trends and to consider the concept of the Man as a Man and not as a machine. For the last several decades, the interests of companies in "strategic management" have increased in a noteworthy way. This interest in strategic management has resulted in various organizational functions becoming more concerned with their role in the strategic management process. The Human Resource Management (HRM) field has sought to become integrated into the strategic management process through the development of a new discipline referred to as Strategic Resource Management (SHRM). In current literature, the difference between SHRM and HRM is often unclear because of the interconnections linking SHRM to HRM. However, the concepts are slightly different. Thus, we can ask, what is strategic human resource management? What are the main theories and how do they work? What do they take into account and how are they integrated? What are the links between SHRM and organization strategy? In order to answer to these questions, we will precisely define strategic human resource management, followed by a look at the different approaches built by theorists, and finally, we will see the limits between the models and their applications depending on the company’s environment. Discussion Strategic Human Resource Management: definition Strategic human resource management involves the military word ‘strategy’ which is defined by Child in 1972 as "a set of fundamental or critical choices about the ends and means of a business". To be simpler, a strategy is "a statement of what the organization wants to become, where it wants to go and, broadly, how it means to get there." Strategy involves three major key factors: competitive advantages (Porter, 1985; Barney, 1991), distinctive capabilities (Kay, 1999) and the strategic fit (Hofer & Schendel 1986). Strategies must be developed with a relevant purpose to sustain the organizational goals and aims. SHRM is one of the components of the organizational strategies used to sustain the business long-term. SHRM defined as: “all those activities affecting the behaviour of individuals in their efforts to formulate and implement the strategic needs of the business. (Schuler, 1992)” or as “the pattern of planned human resource deployments and activities intended to enable the firm to achieve its goals.

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(Wright and McMahan, 1992)”. Human resource management understands that human capital can be considered the main source of competitive advantage. By considering a human as a human, giving him satisfaction, education, motivation, training and reward, human resource strategies intend to optimize human capital and take care of the relationship between the management of the firm and this type of capital, as this relationship can be ambiguous. To add further on this ambiguous relationship, we can emphasize that the organizational strategies are implemented by human capital in a big way, creating a powerful role in the implementation process of management strategies. Indeed, SHRM is integrated as a whole process into the management strategies implementation process and acts in the same way by pursuing the achievements of organizational aims. Following the Dyer and Holder (1988) definition, strategic HRM must have four main features, which are the: organizational level (decisions are formulated at the top), focus (business effectiveness focused), roles (the implementation directives are made by and depend on the managers) and framework (implementation of strategies involve a certain framework). All these characteristics go with the idea of vertical integration of the SHRM in management strategy. Different approaches in strategic human resource management

II.a) Vertical Integration goes hand in hand with the Best-fit school approach
In fact, vertical integration, conceptualized by Torrington and Hall (1998), can be scaled by five different levels where integration varies in accordance with the relationship between the organization strategy and the HR strategy. Thus, we have a first level called separation where there is no link between HR and organization strategy. Then we have the ‘fit’ level, where people actually recognize HR strategy as a part of the organization strategy. Another upper level of vertical integration is the ‘dialogue’ level where HR strategy is useful for communication and debate. Then we can look at the ‘holistic’ level that considers both of the strategies as a whole, where the relationship is strong and the links are plentiful. Finally, there is the last level of vertical integration, the ‘HR driven’ level, where the strategy of the organization is conducted by the HR strategy. The concept of ‘vertical integration’ goes hand in hand with the best-fit approach to strategic HRM. The contingency school (best-fit) of SHRM takes into account several models like the ‘lifecycle model’ or the ‘competitive advantage model’ where the level of vertical integration of the HR strategy and organization strategy are similar to what was described earlier. Indeed, the best-fit approach emphasizes the relationship between the HR policies and the way to reach company’s goals, considering the external environment of the company. After assessing this kind of approach, which may appear to be an inflexible model of SHRM, and the effect of the different rapidly changing external factors, we can see that the life cycle models and competitive advantage models are not relevant enough in a strategy where the company’s goals are becoming more difficult to reach. However, those models, mixed with other models that can improve the flexibility of the approach, can help tremendously by increasing the conjugation of HRM strategies with organization strategies. Another limit of the best-fit approach is the trend of over simplification of the organizational reality; in effect, the best-fit models try to simplify the factors that influence business strategy and business goals. The greatest limit of this approach originates from the very beginning, with the hypothesis. Organizations are influenced by internal and external complex factors which can cause the frequent changing of environmental and implementation issues.
II.b) An evolution of ‘tight’ fit models introducing flexibility: configurational approach
In response to this limit, amongst others, Delery and Doty (1996:808) propose the ‘configurational model’ where horizontal integration (the internal development of HR strategy) is introduced for aiming toward better implementation of vertical integration. “The significant difference here between the contingency approach and the configurational approach is that these configurations represent ‘non-linear synergistic effects and higher-order interactions’ that can result in maximum performance”. Moreover, “as Marchington and Wilkinson (2002:222) note, the key point about the configurational perspective is that it ‘seeks to derive an internally consistent set of HR practices that maximize horizontal integration and then link these to alternative strategic configurations in order to maximize ‘vertical integration’”. Organizations have to develop HR system in order to achieve both horizontal and vertical integrations.

II.c) The resource-based approach: focusing on internal resources
Another view of SHRM exists where the internal resources are the principal factor for a sustainable competitive advantage. In effect, the value brought by human resource is the core of this approach where flexibility is optimized in order to reduce costs and increase efficiency. Human resource, by adding value, uniqueness and the most effective way to use resources, tend to increase the competitive advantage of a company in comparison to another. Horizontal integration is one of the main factors HR strategy uses to achieve the organizational strategy and reach the planned organization’s goals. However, horizontal integration cannot be considered a sole factor leading to the achievement of an organization’s goals. There first comes a limit to this approach. It is agreed that human resources do the implementation of organizational strategy, but it can only be properly done if the external environment allows the human resources and the organization to do so (Miller and Shamsie, 1996; Porter, 1991). The resource-based view tends to ignore the baseline of specific industries as it takes into account the differences of firms in the same sector as a competitive advantage. However, competitive advantages are gained by the ‘rightsizing’ process (Hamel and Prahalad, 1993) which implies that an organization obtains more output from its existing resources and optimizes the way in which they are used. Therefore, it is the way in which these resources are used, along with the same baseline in an industry, which create the competitive advantages rather than the differences between the firms.
II.d) Best practice SHRM, the universalist approach
This view of SHRM argues "that all organizations will benefit and see improvements in organizational performance if they identify, gain commitment to and implement a set of best HRM practices". In this approach, the ‘high commitment’ concept links with human capital, as it must have a high level of commitment, enforced by the ‘ideal set of practices’ (Guest, 1997). This means that the best set of HR practices must improve the productivity and effectiveness of human capital, place emphasis on any motivation made toward human capital, and an aim to reach the firm’s goals. Rewarding practices have to be properly set and implemented, targeting the idea of high commitment and satisfaction of employees. “A key element of best-practice is horizontal integration and congruence between policies”. This concept of a ‘universal best practices set’ is disputable as it is a non-specific and non-accurate definition of HR policies that have to be applied. Indeed, the best practice models are constituted by different policies that vary significantly from one model to another. Performances of this approach in organizations are, because of the difficulty of generalization and conceptualization, very hard to measure as they are determined by several different factors. Even in the case of Pfeffer (1994, 1998) who advocated for a universal best practices set, it is hard to see if the performances are due to the implementation of this view of SHRM or not. Conclusion Several different approaches can be discussed in relation to which hypotheses are taken into account. However, every approach aims toward the same core goal: business effectiveness and profitability. Even though each model has its own limits, they have been empirically successfully assessed. The final argument advocated for strategic HRM is that, in relation to internal and external environment differences between industries, the best way to integrate SHRM management strategy is to blur the differences between the models and to implement them in a complementary view.
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