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The concept HR-function and its theoretical prospective (meaning, content, levels, etc.).
Analysis of how the HR-function should be organized according to HRM-theories and the way the HR-function is organized in practice within different organizations.
Identification of changes (direct and indirect) influencing the HRM function.
Discussion of the ways how these changes impact the HRM function, and how the HRM function might respond to the changes.
The HR-function can be understood by looking at which HRM-activities are performed by which individuals in a company. So one way of viewing the HR-function is by looking at what is (to be) done: the HRM-activities. The other way to look at the HR-function is by looking at who is supposed to/doing them. Valverde et al. (2006) combine both aspects of the HR-function and explain that it not only contains the set of activities performed by the HR-department, but it is considered as all the managerial actions at any level in the organization which are dealing with the organisation of work and the entry, development and exit of employees. Valverde et al. (2006) identify different levels within the organization involved in the execution of HRM-activities. These levels are the top management, the line management, the HR-department and external providers. Valverde et al (2006) distinguish HRM-activities along the line of the activities involved and identify: strategic decision making and leadership, operational decisions and daily people management, service delivery, policy making and diagnostic, monitoring and follow-up activities and high level specialist HRM. Valverde et al. (2006), based on empirical research, conclude that in different organizations the different HRM-activities are performed by different combinations of the levels of the HR-function. Valverde et al. identify seven possibilities. For example, in some organizations all levels are involved in all HRM-activities while in other organization a specific HRM-activity is performed by a specific level.
Caldwell (2003) focuses on 'what is to be done'. He distinguishes HRM-activities by looking at both the classification used by Storey (1992) and Ulrich (1998). Storey's model distinguishes four generic categories along the degree of intervention and the degree of strategic or operational focus. The four roles identified by Storey are changemakers, advisors, regulators and handmaidens. Ulrich, distinguishes four roles of the HR function based on the degree of focus on processes or people and the degree of strategic focus or operational focus. The four roles identified by Ulrich are the strategic partner, the change agent, the administrative expert and employee champion.
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Lepak et al. (2005) focus on the delivery of HR-practices by different parties. However, they distinguish among internal and external delivery. Internal delivery is delivery by parties within the firm while external delivery is the external provision of HRM. Among external delivery he also distinguishes contractual arrangements and long-term partnerships.
To distinguish among HRM-activities they consider the way HR-practices are used along the line of transactional to transformational. Transactional practices are those related to the administrative component of HR while transformational practices focus on the macro or strategic organizational objectives.
Based on normative theories, Lepak et al. (2005) prescribe, based on the nature of the HR-practices, if an organization is likely to deliver them internally or externally. Generally speaking they conclude that as HR-practices become more transactional, HR-functions will rely on outsourcing. As HR-practices become more transformational, HR-functions will deliver them internally. However, they identify contingency factors which influence the choice of the organization with respect to the delivery and distinguish them among strategic and operational moderators. Strategic moderators are a firm's strategic orientation and HR orientation. According to Lepak et al. (2005), the strategic orientation lies between cost-orientation and innovative orientation and the HR orientation along the roles identified by Ulrich (Caldwell, 2003), mentioned above.
The operational moderators are the availability of delivery options, the frequency of delivery, the use of Information Technology and the environmental uncertainty. Appendix 1, table 2, shows the propositions made by Lepak et al. (2005) in relation to these moderators.
Even though Lepak et al. (2005) consider the internal delivery option as one, they do note that, although traditionally the responsibility of the HR-function belonged to the HR-department it has now shifted towards other organizational members.
The approach used by Lepak et al. (2005) is a normative approach based on theories and they assume a contingency approach with reference to the decision of a firm to deliver HR-practices internally or externally. However, Valverde (2006) concludes, from an empirical research, that the distribution of HRM activities to different levels in the organization do not prove a contingency approach. Even though Valverde distinguish among top and line management, HR department and external sources and Lepak et al. only among internal and external delivery, Valderde also hasn’t found prove for a contingency approach towards using external sources even though she has researched similar factors as Lepak et al. have done. Valverde et al. hypothesize that the model of HR-function adopted by an organization may not be contingent but in stead a strategic choice.
All authors identify direct and indirect changes which influence the HRM function. In table 1 these changes are listed per author.
Table 1: Changes in the internal and external context which influence the HRM function
(2003) Lepak et al. (2005) Valverde (2006) Ruel et al. (2004)
Information Technology (IT)
internet √ √
Globalization √ √
Availability of outsource agencies √
Cost pressures √ √
Complexity √ √
Institutionalization √ √
Both Ruel et al. (2004) and Lepak et al. (2005) state that the availability of IT and internet have changed the HRM-function. Lepak et al. (2005) explain that IT and internet in combination with the increasing availability of outsource agencies have made it possible for organizations to further differentiate. However, this differentiation requires more coordination or integration, also of the HRM function. Lepak et al. (2005) therefore conclude that HR-functions are more likely to deliver transactional HR-practices through partnerships as employee access to IT increases.
Ruel et al. (2004) focus their entire research on the question to what extent HRM changes with the use of web-tools for HRM purposes and how this change occurs. Firstly, they conclude that a cost-reduction and a decrease in the administrative burden are an effect of e-HRM. Second, e-HRM allows for the strategic integration of HRM with the company strategy, structure and culture.
This can result in a change of the individuals involved in the HRM-function because it allows centralization on the one hand but also facilitates execution and operations at the other hand.
E-HRM can function as a push towards the integration of line managers in the HRM-function. The employee’s involvement may bring changes in their perception of HRM and the instruments they get offered. The HR department may experience a change in which their policies were first directed by a stable environmental context towards policies which can support strategies of change, quality and innovation.
The merit of e-HRM is that it offers both centralization on the one hand and decentralization on the other hand. According to Ruel et al. (2005) this can function as an important push towards globalization. A global company requires HR-policies and practices to be similar in the different locations in which they are settled. Caldwell (2003) describes that globalization has led to growing autonomy of divisional and business unit managers. In line with this, the competitive, customer-oriented and cost-pressure focus has increased. This has its influence on the roles identified by Caldwell. The advisor role in these companies has become more important and more intertwined with the role of change agent. The traditional role of advisor can better be described by Ulrich’s definition of strategic advisor. The regulator role has become less important and has moved more towards the role of employee champion. The role of the service provider has been pressured by constant demands for re-invention and Ulrich’s typology of the administrative expert captures these dynamics. The change agent role has become more important, in line with the increasing importance of HRM as a method of change in firms.
Inherent in the contingency factors described by Lepak et al. (2005) is that a firms (HR) strategy, cost pressures on a firm, the innovativeness, the level of uncertainty in the environment, IT, availability of outsource agencies and the frequency of delivery can all change. The propositions in appendix one describe the implications which this has for the balance between internal and external delivery of the HR function.
Ruel et al. (2004) and Caldwell (2003) see changes in the HRM function due to changes in the institutional context of companies. Ruel et al. explain that globalization pressures may be positively influenced by e-HRM as it offers the possibility of both decentralization and standardization, described above. However, the different institutional context with which a company is confronted when ‘going global’ may cause difficulties for this standardization. Caldwell (2003) describes that changes in institutionalization have made the role of the regulator decline. New modes of social and employment legislation may have served as input to the shift of this role towards the role of the employee champion.
• Caldwell, R. (2003), The Changing Roles of personnel Managers; Old Ambiguities, new Uncertainties, Journal of Management Studies, 40, (4), 983-1004.
• Lepak, D.P., Bartol, K.M., & Erhardt, N.L. (2005). A contingency framework for the delivery of HR practices, Human Resource Management Review, 5, 39 – 159.
• Ruël, H., T. Bondarouk & J.C. Looise (2004), E-HRM, Innovation or Irritation. An explorative empirical study in five large companies on web-based HRM, Management Revue, 15, (3), 364-380.
• Valverde, M., Ryan, G., & Soler, C. (2006). Distributing HRM responsibilities: a classification of organizations, Personnel Review, 35, (6), 618 – 636.
Table 2: Contingency factors which influence the HR delivery in companies.
Strategic orientation Proposition 2. HR functions in firms pursuing a cost-oriented strategy will use contractual arrangements as HR practices become more transformational. These HR functions will rely on internal delivery or partnerships as HR practices become more transactional (Lepak, 2005: 147).
Proposition 3. HR functions in firms pursuing an innovative strategy will use contractual arrangements or partnerships as HR practices become more transactional. These HR functions will rely on internal delivery as HR practices become more transformational (Lepak, 2005: 149).
HR orientation Proposition 4. HR functions with role orientations that emphasize serving as a change agent or strategic partner will perform transformational HR practices internally. These firms will outsource transactional HR practices (Lepak, 2005: 149).
Proposition 5. HR functions with role orientations that emphasize managing the firm’s infrastructure or serving as an employee champion will perform transactional HR practices internally. These firms will outsource transformational HR practices (Lepak, 2005: 149).
Availability of delivery options
Proposition 6. HR functions will deliver HR practices internally as the availability of external providers decreases (Lepak, 2005: 150).
Proposition 7. HR functions will rely on contractual arrangements for the delivery of HR practices with only a few available external suppliers (Lepak, 2005: 150).
Frequency of delivery Proposition 8. HR functions will internally deliver frequently performed transformational practices.(p.152)
Proposition 9. HR functions will rely on partnerships to deliver frequently performed transactional
Practices (Lepak, 2005: 152).
The use of Information Technology Proposition 10. HR functions are more likely to deliver transactional HR practices through partnerships as employee access to information technology increases (Lepak, 2005: 154).
Environmental uncertainty. Proposition 11. HR functions are more likely to use contractual arrangements or partnerships for the
delivery of HR practices than rely on internal delivery when the operating environment is characterized by uncertainty that is routine and predictable (Lepak, 2005: 155).
Proposition 12. HR functions are more likely to perform HR practices internally or use contractual
arrangements than rely on partnerships as the operating environment becomes characterized by
unpredictable uncertainty (Lepak, 2005: 155).