Human Resource Management Models

• Human Resource Management (HRM) is a strategic and coherent approach to managing an organization's most valuable assets which are the people who contribute to its objectives.

Models of HRM

• HRM is the frameworks that serve as guidelines for human resource management and intersect with the HR Strategy.

The Matching Model of HRM

• Created by The Michigan School (Fombrun et al, 1984)
• HR systems and organizational structure should align with organizational strategy.
• Human resource cycle consists of four processes performed in all organizations:
  • Selection: matching available human resources to jobs
  • Appraisal: performance management
  • Rewards: reward short and long-term achievements
  • Development: developing high-quality employees

The Harvard Framework

• Created by Beer et al (1984), also known as the 'Harvard framework' by Boxall (1992)
• Problems of historical personnel management are solved when general managers develop a vision of how they want employees to be involved and developed, and understand what HR policies can achieve
• A central philosophy or strategic vision can only be provided by general managers
• Without a central philosophy or strategic vision, HRM will remain a set of independent activities guided by individual practice traditions
• Pressures create a need for a longer-term perspective of people, and consider people as potential assets, not variable costs
• HRM belongs to line managers
• HRM involves all management decisions and actions affecting relationship between the organization and its human resources
• Two features of HRM:
  • Line managers take more responsibility for aligning competitive strategy and personnel policies
  • Personnel sets policies governing how personnel activities are developed and implemented to be mutually reinforcing
• Advantages of the Harvard Framework as modelled by Beer et al:
  • Incorporates recognition of stakeholder interests
  • Recognizes importance of trade-offs between owners and employees, as well as interest groups
  • Broadens context of HRM to include employee influence, work organization and supervision
  • Acknowledges contextual influences on strategy, suggesting a product market and sociocultural logics
  • Emphasizes that strategic choice is not driven by situational or environmental determinism

Three-Dimensional People Strategy

• The question of whether every company should adopt a similar people strategy and aim to establish best practices in each HR policy area.
• Describing people strategy as an internally coherent set of HR policies and practices has proven difficult and elusive
• There is no single ideal type of people strategy

Vertical Alignment

• An appropriate people strategy must vary according to organizational circumstances, specifically business goals and strategies.
• HR policies and practices should reflect, reinforce and support the organization’s business aims and objectives.
• A strong linkage is needed between the overall vision held by senior executives and the aims, objectives and underlying philosophy of the organization's approach to managing people.
• Ensures HR interventions become a creator, not an inhibitor, of sustained competitive advantage
• This is the link between people strategy and business-unit strategy

Horizontal Alignment

• Vertical integration is a crucial dimension of a people strategy, but not the only aspect
• This is the link between corporate and business strategy as a whole and the firm’s people-management strategy
• The second dimension operates at the level of individual HR policy areas
• The goal is a consistent approach to managing people that permeates the HR function and other organizational areas
• Involves policy level
• Treat putting people strategies into action as a separate dimension
• High horizontal alignment means the organization has developed and articulated clear HR policies that consistently relate to one another
• The goal is to communicate consistent and reinforcing messages to employees

Standard Causal Model of HRM

• Derived from similar models published in the 90s and early 2000s
• HR strategy is only effective if allied with the business strategy.
• HR processes impact the organization
• Model begins with company's business strategy, which influences HR strategy and processes, and leads to improved business performance.

Examples of HR Processes

• Hiring, training, appraisal, and compensation practices can lead to commitment, quality output, and engagement
• HR and HRM outcomes lead to improved internal performance, such as better ROI, financial turnover, and profits

Factors that influence HR effectiveness

• The four external forces that influence how organizations do HR:
  • External general market context
  • External population market context
  • External general institutional context
  • External population institutional context

How external forces affect HR

• Shortage of certain skills in the market affects how companies recruit, source, and hire, compared to having an abundance of qualified workers
• Legislation, trade unions, and work councils control what HR can and cannot do

Core elements of HR

• The company's history, culture, and technology all influence how HR communicates what it wants to achieve and how effective HR policies are
• HR strategies and practice elements have four parts:
  • Intended HR practices
  • Actual HR practices
  • Perceived HR practices
  • HR outcomes
• Critical HR goals consist of cost-effectiveness, legitimacy, and flexibility
• Ultimate business goals are viability, profit, market share, and market capitalization

HR Value Chain

• One of the best-known models created by Paauwe and Richardson (1997)
• HR can be divided into two categories:
  • HRM activities
  • HRM outcomes

Aspects of strategic human resource management (SHRM)

• What is “Strategy”:
  • Strategy is an action business owners take to attain their business goals
  • Creating a business strategy guides business owners in what they will be doing long-term which lead to informed decision-making
• Three subsidiary concepts:
  • Competitive advantage (Porter, 1985)
  • Distinctive capabilities (Kay, 1999)
  • Strategic fit (Hofer & Schendel, 1986)

SHRM vs HRM

• Strategic HR is focused on long-term outcomes, and operational HR is focused on short-term outcomes
• Goals in operational HR focus on managing in-house recourses, and strategic HR keeps business goals in mind when doing recourses planning
• Strategic HR managed by stake holders in senior management, and operational HR managed by a single team
• Strategic HR is dependent on advanced analytics

HRM Value Chain

• HRM activities & processes:
  • Workforce Planning
  • Recruitment & Selection
  • Compensation & Benefits
  • Industrial Relations
  • Training

HRM - outcomes

• Employee Engagement
• Retention
• Absenteeism (sickness)
• Competency Levels
• Performance
• Workforce Costs
• Talent Metrics