International

Journal of
Manpower
16,5/6

Strategic HRM or managing

the employment relationship?
Bob Kane and Ian Palmer

University of Technology, Sydney, Australia

Introduction
The past ten to 15 years in the human resource management (HRM) literature
has seen a great emphasis being placed on a strategic approach to the
development and implementation of HRM policies and practices (Collins, 1988;
Dyer and Holder, 1988; Legge, 1995; Miles and Snow, 1984; Storey, 1995; Wright
and McMahan, 1992). Although the details vary, the basic prescription for a
strategic approach to HRM tends to parallel the process shown in Figure 1. Both
the external and the internal environment are considered in light of the
organizations mission and purpose (which may in turn be influenced by
corporate headquarters where the organization is a part of some larger entity).
As a result of this analysis, organizational strategies and objectives are
determined. HRM strategy should represent an integral part of achieving this
broader organizational strategy, with strategy in the various sub-fields or areas
of HRM supporting the overall HRM strategy. Thus, rather than HRM policies
and practices representing direct reactions to the various external and internal
forces, these forces are considered in light of organizational strategy and
objectives and then, if appropriate, changes are made to the overall HRM
strategy which may affect various HRM policies and practices.
Actual models of strategic HRM are usually more elaborated. A number of
writers, for example, have listed various types of organizational strategy, such
as the defender, prospector, analyser, reactor typology suggested by Miles and
Snow (1984), and then attempted to spell out the HRM policies and practices
which would support such a strategy (Collins, 1988; Kramar, 1992). Others have
applied a strategy typology to a particular sub-area of HRM such as staff
appraisal (Dunphy and Hackman, 1988) or career development (Fandt, 1988).
Although Figure 1 focuses on the strategic (or hard) aspects of HRM, critics
based in the UK, such as Legge (1989, 1995) and Storey (1995) have pointed out
that most descriptions of HRM also include what they refer to as a soft side
which emphasizes the need to build up employee commitment, flexibility and
dedication to quality.
In spite of these variations, the basic strategic HRM model as portrayed in
Figure 1 has been accepted widely in the HRM literature. Even critics such as

International Journal of Manpower,

Vol. 16 No. 5/6, 1995, pp. 6-21
MCB University Press,
0143-7720

An earlier version of this article was presented at the Annual Conference of the Australia and
New Zealand Academy of Management, 9 December, 1994, Wellington, New Zealand.

Strategic HRM
or managing
employment?

Organizational
mission, purpose,
actions of corporate
headquarters

Analysis of the
external
environment

Organizational
strategy and
objectives

Analysis of the
internal
environment

Human resource
management strategy

Human resource
management policies
and practices

Hendry and Pettigrew (1990), Legge (1995) and Storey (1995) appear to see it as
the mainstream view.
On the other hand, when studies are carried out to investigate HRM policies
and practices which have actually been implemented, the results typically
indicate that only a minority of organizations appear to have adopted the major
elements of a strategic approach to HRM. For example, in a recent survey
responded to by 377 Australian managers, employees and HRM staff, only 33
per cent believed their organizations HRM policies and practices adopted a
long-term perspective, only 37 per cent saw HRM policies and practices in the
various areas of HRM as closely integrated, and only 43 per cent saw these
policies and practices as designed in line with the organizations strategy and
objectives (Kane, 1994). In the UK, Legge concluded recently that There is only
patchy and sometimes contradictory evidence on HRMs strategic
implementation (Legge, 1995, p. 36).
Studies focusing on specific HRM sub-fields such as staff appraisal (Collins
and Wood, 1990), human resource planning (Kane and Stanton, 1991),
management development (Midgley, 1990) and training and staff development
(Kane et al., 1994) have also found significant gaps between strategic prescriptions and actual practice.
There are a number of possible explanations as to why the majority of
organizations do not appear to adopt the strategic HRM model portrayed in
Figure 1. Most of these explanations question the assumption in the model that
an HRM strategy is typically used as a kind of filter on the other external and
internal forces shown in the model. An alternative viewpoint is that a range of

Figure 1.
A basic model of
strategic human
resource management

International
Journal of
Manpower
16,5/6
8

factors may impact on HRM policies and practices more directly than portrayed
in Figure 1. Thus, the aim of this study is to determine which factors appear to
have major direct effects on HRM policies and practices, and particularly the
extent to which an HRM strategy has a major effect as outlined in Figure 1.
Determinants of HRM policies and practices
At a theoretical level, writers from the USA such as Jain and Murray (1984) and
Tsui and Milkovich (1987) have suggested a number of competing theoretical
explanations as to what determines HRM policy and practice. Perhaps most
useful here is the analysis by Tsui and Milkovich (1987). First, they contrasted
three theoretical perspectives: the structural functionalism perspective, which
suggests that HRM departments and their activities are a result of organizational growth and/or the need to perform activities which require
specialists; the strategic contingency perspective, which sees HRM as a
reaction to critical external pressures such as legal requirements and union
activity; and the strategic HRM perspective, where HRM activities are designed
to foster the achievement of the organizations objectives (Tsui and Milkovich,
1987, p. 520). They then argue for a multiple constituency approach, wherein a
large number of interested parties or constituents, both within and outside the
organization, exert varying levels of influence on HRM policies and practices
which they perceive are relevant to their interests (p. 521).
A generally similar approach underlies much of the criticism of the US
model of HRM which has emerged in the UK. Legge (1989), for example, has
contrasted US and British definitions of personnel management and of HRM
and noted that US writers tend to assume a unitary frame of reference; that
is, in the long term all stakeholders have a common interest in the survival and
growth of the organization. Where unions exist, their support for
organizational strategy and HRM strategy should be co-opted. In contrast,
most of the British writers are seen as adopting a pluralist perspective, in
which efficiency is contrasted with justice, employee commitment is seen as
problematic and conditional and the employment relationship is seen as
rightly the subject of negotiation, agreement and regulation (Legge, 1989, p.
23). In Australia, the assumption that various stakeholders have a valid
interest in HRM policies and practices underlies the use of the term
employment relations. Gardner and Palmer (1992, p. 7) identified the major
actors in determining employment relations as including trade unions,
employer associations, arbitral tribunals and management groups.
At a less theoretical level, a wide variety of more impersonal forces or trends
have been seen as directly influencing HRM policies and practices. For example,
Gardner and Palmer stated: There are many factors beyond the direct control
of individual employees and employers, and groups of employees and
employers, which seem to affect strongly and even direct their actions (1992,
p. 7). Although these forces and trends are not necessarily portrayed as a part of
an overall model, the existence of a variety of interests is generally compatible
with an employment relations/pluralist/multiple constituency view of the field.

Although a complete review of arguments for and against the various possible
influences is beyond the scope of this article, some of the major potential
influences are summarized below.
Potential external influences on HRM policies and practices
International and national economic changes. Writers such as Dyer and Holder
(1988) have discussed the impact of macro-economic changes on business and
on attitudes towards human resources during the past two decades. They cited
a number of well known US corporations which had found their paternalistic HR strategies to be unsustainable in the face of continuing
competitive pressures and depressed earnings (p. 1,17). In particular, the
impact of the recent worldwide recession on recruitment, training and staffing
levels has frequently been discussed (Cascio, 1993). In Australia, for example, a
survey reported on by Giles (1992) indicated that 75 per cent of responding
organizations had reduced their workforce through techniques such as nonrecruitment and various forms of redundancy.
Technological changes. Technological changes, in particular the widespread
adoption of microprocessor based technology, are frequently cited as having an
effect on HRM policies and practices by causing changes in the staffing levels,
knowledge, skills and attitudes needed in the workforce (Fisher and Shaw, 1992;
Lansbury, 1992; Schuler, 1990; Stace, 1987). For example, central to the current
interest in re-engineering is the argument that it will lead to a reduction in
staffing levels as a result of the enabling role of information technology
(Hammer and Champy, 1993).
National culture/traditions. The globalization of the economy and the rise of
multinational corporations has led to considerable interest in international
HRM. A number of investigators have found significant national cultural
differences in attitudes towards and use of various HRM policies and practices
(Hofsted, 1989; Laurent, 1989; Sparrow et al., 1994).
Industry/sector characteristics. Many writers have argued that different
sectors of industry require and use different HRM policies and practices (Delery,
1994; Nankervis, 1993), and some empirical studies have reported evidence of
such industry-based variations in practice ( Jackson et al., 1989; Terpstra and
Rozzell, 1993).
Legislation/regulations. Legislation and regulations enacted by governments
are frequently cited as having a direct impact on the area of HRM policy and
practice with which they are concerned. Moon (1991) noted the impact of
legislation in areas such as equal opportunity, occupational health and safety
and industrial relations in Australia, and Stablein and Geare (1993) indicated
that similar factors had influenced HRM in New Zealand. Moore and Devereaux
Jennings stated that: In Canada, to a considerable extent, legal regulations
shape human resources policies and constrain HRM practices (1992, p. 15).
Dyer and Holder (1988, p. 1,14) noted the particularly strong impact of
legislation on HRM in the USA prior to the Reagan administration, citing a
survey of practitioners during the mid-1970s which indicated that government

Strategic HRM
or managing
employment?
9

International
Journal of
Manpower
16,5/6
10

regulation had been a major instigator of change within their organizations

over the previous decade.
Actions of competitors. A number of writers have noted the tendency for
organizations to adopt HRM policies and practices used by their competitors.
Dyer and Holder commented on this as a kind of pervasive bandwagon
effectwhat company, what HR professional wants, or can afford, to be left
behind? (1988, p. 1,2). Wright et al. (1994) went so far as to suggest that HRM
policies and practices, per se, can never be a sustained source of competitive
advantage, as they are easy to imitate.
Actions of unions. Any analysis of influences on HRM policies and practices
would not be complete without considering the impact of trade union activities,
particularly in relation to pay and benefits and working conditions. The
influence of unions in turn often appears to vary in relation to government
philosophy and economic conditions. For example, Dyer and Holder (1988)
discussed the decline in union influence during the Reagan administration and
Guest (1989) noted a similar decline under the Thatcher administration in the
UK. On the other hand, Lansbury (1992) chronicled a parallel trend in Australia,
in spite of a generally supportive government administration.
Potential internal influences on HRM policies and practices
Organization size. Several investigations have found that organization size
tends to be related to the HRM policies and practices in use (Delery, 1994; Fisher
and Shaw, 1992; Jackson et al., 1989; Terpstra and Rozell, 1993).
Organizational structure. The structure adopted by the organization has also
been seen as a significant source of influence on HRM policies and practices.
Limerick (1992), for example, contrasted the HRM implications of the newer,
network forms with those of more traditional structures. Some researchers,
such as Delery (1994) and Jackson et al. (1989) have found significant differences
in HRM policies and practices to be related to structural variables.
History, traditions and past practices. A number of closely related factors,
such as history, traditions and past practices, tend to generate resistance to
change in most organizations. Dyer and Holder (1988), for example, noted such
resistance among the forces likely to constrain the adoption of a more strategic
approach to HRM in some organizations in the USA, as did Lansbury (1992) in
Australia. In a recent Australian study Kramar (1992) found the influence of
past practice to be one of the factors which prevented new policies from being
implemented successfully.
Top management. The influence of top management on the development and
implementation of HRM policies and practices is acknowledged by most
writers, even if only to the extent of advising that top management support
should be obtained. Some writers have, however, gone further. Buller (1988), for
example, found the values and skills of top management in regard to HRM to be
one of the most important variables effecting the adoption of HRM policies and
Dyer and Holder (1988) suggested that top management was likely to be the
most powerful force opposing the adoption of a strategic approach to HRM.

Kramar (1992) also found that a lack of consistent top management support led
to policies being at best partially implemented.
Line management. The devolution of HRM practices to line managers is seen
by writers such as Legge (1989) as one of the consistent hallmarks of both the
older personnel management and the newer HRM approach. Tsui and
Milkovich (1987) suggest that line managers are one of the important
constituents of the HRM department, and note that some research has found
managers at different levels undertake different HRM activities. Kramar (1992)
found that, because of their different agendas, some line managers would not
actually implement HRM policies and procedures in areas such as equal
opportunity.
Power and politics. The influence of power and politics is noted frequently,
especially when considering why new policies and procedures are not
implemented. Legge (1978) discussed these issues at some length in her classic
analysis of personnel management in the UK, as did Jain and Murray (1984) in
the USA. Tsui and Milkovich (1987) also see power and politics, as exercised by
the various constituencies, as a crucial determinant of HRM policies and
practices. In his recent survey of 377 Australian managers, employees and HRM
staff, Kane (1994) found that 59 per cent of respondents agreed with the
statement: our top managers appear more concerned about their own power
and about maintaining control than about the real needs of the organisation or
of its employees, which was the highest level of agreement on any item.
Academic/professional influences on HRM policies and practices
Jain and Murray suggested that HRM policies and practices are decided on the
basis of the power, motives and knowledge of those involved in the decisionmaking process (1984, p. 103). HRM staff are often among those involved in such
decisions, so that their knowledge of and beliefs about alternative HRM policies
and practices may represent important variables in their own right. Potential
inputs to this knowledge base are usually seen to include any
education/training in HRM that the practitioner has received, the written body
of HRM theory and research, what they have learned from experience, and
information obtained from peers, particularly those working in the same
industry sector. In a recent review, Terpstra (1994) identified a wide range of
possible influences on HRM practitioner behaviour, including the above, with
evidence from other fields seen as indicating that practitioners tend to obtain
their information from peers rather than from more academic sources.
Other discussions about the knowledge levels of HRM practitioners can be
found in the reviews of the state of the profession which tend to appear every
few years. In one of the latest of these, Smart and Pontifex (1993) detailed the
activities of the succession of HRM-oriented professional organizations in
Australia. This raises the possibility that the activities of relevant professional
bodies, which may include certification or grading, conferences, seminars,
codes of practice and guidelines as well as lobbying activities, may have direct
influence on which HRM policies and practices are used.

Strategic HRM
or managing
employment?
11

International
Journal of
Manpower
16,5/6
12

Based on this, the following potential sources of influence seem worthwhile

to add to the external and internal sources discussed above: HRM theory,
research and writings; education and training in HRM; HRM professional
organizations; and practitioner experiences of HRM in other organizations.
Differential impacts on different areas of HRM
Although the discussion so far has focused on HRM policies and practices at a
general level, there is also a strong possibility that some influences may have a
greater direct impact on some areas of HRM than on others. Thus, for example,
the Training Guarantee legislation in Australia may have impacted more
directly on training than on other areas of HRM, equal opportunity legislation
on recruitment/selection, union activities on industrial relations issues, and
economic downturns on staffing levels.
The assumption of differential impact is compatible with the employment
relations perspective suggested by writers such as Gardner and Palmer (1992)
in Australia. It is also a part of the multiple constituency framework proposed
in the USA by Tsui and Milkovich (1987), who emphasized that each constituency is likely to have its own priorities, and that the issues which any given
constituency sees as critical may not be closely related to the major concerns of
the organization. In the UK, Storey (1995) reported that many of the HRM
initiatives uncovered in a series of case studies arose for diverse reasons and
had little in common.
The employment relations model
Thus a relatively broad alternative to the Strategic HRM model portrayed in
Figure 1 can be identified; this has been referred to as the employment relations
perspective in Australia, the multiple constituency framework in the USA and
the pluralist approach in the UK. The general outline of this model is portrayed
in Figure 2. While this model does not deny that HRM strategy and other
strategic concerns can have an impact on HRM policies and practices in some
cases, it also sees a number of other interests and forces as influencing HRM in
practice. As noted above, these influences may impact directly on certain areas
of HRM, rather than first being assessed to ensure that any potential changes in
HRM policies and practices are compatible with an overall HRM strategy.
Hypotheses
Because all of the possible influences discussed above have some conceptual
and/or empirical support, it is difficult to develop specific hypotheses in regard
to which influences are the most important in determining which HRM polices
and practices are implemented.
Therefore, this study represents a starting point in exploring two broad
alternative hypotheses. Based on the strategic HRM model, HRM strategy
would be hypothesized to have the highest mean level of influence on HRM
policies and practices overall as well as on policies and practices in the various
sub-areas of HRM. In addition, if HRM strategy provides a filtering or

Strategic HRM
or managing
employment?

Organizational mission
and purpose, strategy and
objectives, actions of
corporate headquarters,
human resource
management strategy

Pressures
from the
external
environment

Training and staff development

Pay and benefits
Recruitment and selection
Industrial relations
Staffing levels
Career development
Staff appraisal

13
Pressures
from the
internal
environment

Knowledge and experience of

human resource management
staff

moderating effect on other influences, the presence of an influential HRM

strategy should result in a reduction of the level of direct impact of other factors.
Based on the broader, employment relations-pluralist-multiple constituency
view of the field and the arguments of many theorists for the salience of
particular influences, the alternative hypothesis would be that a variety of
factors would be found to influence HRM policies and practices directly, both
overall and in specific sub-areas of HRM. Where an influential HRM strategy is
present, it is likely to be simply an additional factor rather than one which
reduces the impact of other factors.
Method
In order to begin to explore these issues, an initial list of 56 different influence
factors was developed, covering the broad areas of international forces, national
characteristics, industry/sector characteristics, immediate organizational
environment, the planning/corporate strategy cycle, actions of corporate
headquarters, organizational characteristics, forces of inertia and resistance to
change, personal and political factors, and the profession of HRM. Informal
discussions with HRM practitioners indicated that they found the list much too
long and believed it would be difficult to differentiate in practice between many
of the influences. Therefore, a shorter list of 29 influences was developed and
trialled in in-depth interviews with three HRM managers. As a result of these
interviews, some influences were combined or deleted while others were
reworded or divided into their component parts. This process resulted in the
more refined list of 22 possible influences on HRM policies and practices as set
out in Table I.
These possible influences were then explored in a survey conducted during
March 1994 which involved 28 full-time HRM managers drawn from part-time
postgraduate students in the Faculty of Business, University of Technology,

Figure 2.
An employment
relations model

14

15

16

0.17
0.26
0.02
0.29

0.03
0.21
0.33
0.05

1.22 0.04 0.34 0.32 0.36 0.21 0.29 0.37 0.20 0.38 0.45 0.37 0.08 0.20 0.09 0.05 0.15 0.14 0.37 0.33 0.18 0.55

0.29
0.42
0.10
0.30

3.04

0.12
0.43
0.09
0.38

1.25 0.19 0.10 0.08 0.26 0.09 0.02 0.22 0.12 0.53 0.59 0.39 0.34 0.19 0.31 0.24 0.06 0.10 0.27 0.02 0.01

0.11
0.25
0.48
0.08

2.89

0.19
0.49
0.10
0.14

0.96 0.02 0.30 0.18 0.47 0.19 0.29 0.32 0.28 0.20 0.24 0.33 0.42 0.27 0.40 0.09 0.14 0.27 0.10 0.11

0.14
0.46
0.17
0.04

1.93

0.05
0.64
0.27
0.41

1.11 0.10 0.21 0.10 0.26 0.03 0.11 0.16 0.03 0.25 0.23 0.38 0.12 0.45 0.29 0.08 0.05 0.17 0.59

0.32
0.23
0.37
0.50

2.96

0.04
0.12
0.28
0.10

0.10
0.43
0.39
0.06

1.03 0.07 0.18 0.02 0.13 0.07 0.09 0.01 0.32 0.34 0.22 0.37 0.01 0.18 0.19 0.34 0.36 0.29

0.12
0.10
0.17
0.01

0.03
0.22
0.57
0.12

2.30

0.21
0.04
0.32
0.15

0.18
0.15
0.12
0.03

1.13
1.18
0.99
1.11

21

3.15
3.67
3.30
3.19

20

1.52 0.21 0.44 0.15 0.24 0.03 0.22 0.38 0.02 0.64 0.54
1.05 0.28 0.02 0.08 0.08 0.30 0.08 0.16 0.20 0.29 0.33 0.23
1.05 0.11 0.26 0.23 0.02 0.00 0.16 0.11 0.08 0.37 0.41 0.54 0.39

19

3.30
3.52
3.48

17

1.23 0.13 0.00 0.02 0.22 0.36 0.20 0.07 0.34 0.78

0.00
0.11 0.30
0.22 0.18 0.12
0.02 0.41 0.64 0.26

13

3.85

12

1.49 0.10 0.05 0.19 0.26 0.24 0.34 0.20 0.02

11

3.30

10

1.22
1.04
1.41
1.36

3.85
4.19
3.08
2.81

1.04 0.27 0.39

1.16 0.23 0.07 0.20
0.05
0.02 0.35
0.09 0.31 0.71
0.41 0.31 0.06 0.24

3.19
2.26

0.93
1.09 0.23

2.22
3.48

Notes:
N = 26-27 for all items except 11, for which N = 22
All correlations of 0.39 or greater are significant at p 0.05
All correlations of 0.47 or greater are significant at p 0.01
All correlations of 0.59 or greater are significant at p 0.001

1. Changes in the
international economy
2. Changes in technology
3. Changes in the national
economy
4. National culture/traditions
5. Industry/sector
characteristics
6. Legislation/regulation
7. Actions of unions
8. Actions of competitors
9. Organizational
mission/purpose
10. Organizational
strategy/objectives
11. Actions of corporate
headquarters (if applicable)
12. Size of the organization
13. Structure of the organization
14. History/traditions/past
practice
15. Priorities of top management
16. Priorities of line managers
17. Issues of power and politics
18. Impact of HRM theory,
research and writings
19. Impact of education
and training in HRM
20. Impact of professional
organizations (e.g. AHRI)
21. Impact of an overall
HRM strategy
22. HRM staffs experiences
in other organizations

18

SD

Table I.
Major influences on
human resource
management-related
activities descriptive
statistics
Means

14

Influences on HRM

International
Journal of
Manpower
16,5/6

Sydney. Respondents were asked to rate each influence as to the amount of

impact they believed it had had on HRM policies and practices in their
organization. Where they rated an influence as having had at least some impact,
they were asked to indicate briefly which aspects of HRM had been influenced.
Since the study was exploratory and small in size, details of the background
characteristics of respondents were not gathered as the spread across
industries, sectors and organizational sizes would not have allowed meaningful
comparisons to be made.
Results
Table I shows the means, standard deviations and correlations among the
responses to the various possible influences on HRM. The scale ranges from 1
= no impact through to 5 = great impact. Assuming that influences with mean
scores of 3.0 or above represent relatively major influences, it can be seen that
these include:
legislation/regulation (4.19);
organizational strategy/objectives (3.85);
industry/sector characteristics (3.85);
priorities of top management (3.67);
size (3.52);
structure (3.48);
changes in technology (3.48);
priorities of line managers (3.30);
actions of corporate headquarters (3.30);
organizational mission/purpose (3.30);
issues of power and politics (3.19);
changes in the national economy (3.19);
history/traditions/past practice (3.15);
actions of unions (3.08);
HRM staffs experience in other organizations (3.04).
Influences with mean scores below 3.0 include:
the impact of professional organizations (1.93);
changes in the international economy (2.22);
national culture/traditions (2.26);
the impact of HRM theory, research and writings (2.30);
actions of competitors (2.81);
impact of an overall HRM strategy (2.89); and
impact of education and training in HRM (2.96).

Strategic HRM
or managing
employment?
15

International
Journal of
Manpower
16,5/6
16

It is thus clear that the impact of an overall HRM strategy is not a major source
of influence on the HRM policies and practices in use in this sample. Of the 27
HR managers in the sample, only three rated HRM strategy as having a great
impact (a rating of 5) and only seven more as having what can be interpreted as
a moderately great impact (a rating of 4).
To consider whether or not the presence of impact by HRM strategy lowered
the extent of impact of the other factors, respondents were divided into two
groups. Those indicating a high or moderately high impact of HRM strategy (5
or 4) were considered high impact, while those indicating little or no impact of
HRM strategy (2 or 1) were considered low impact. One-way analysis of
variance (ANOVA) was used to assess the extent to which these two groups
differed in the level to which other factors influenced HRM. Respondents who
rated the impact of HRM strategy as high also reported more influence by
organizational mission/purpose ( p = 0.033), by organizational strategy/
objectives (p = 0.002) and by HRM staffs experience in other organizations (p
= 0.008). Although only these three differences were statistically significant, the
majority of the other influences were also rated slightly higher in impact where
HRM strategy had a high level of impact. Thus there was no evidence that an
influential HRM strategy resulted in a reduction in the direct influence of other
factors.
The correlations in Table I show a range of significant relationships among
variables within the external environment category and among those within the
internal organizational environment category. There are also some significant
correlations between some of the categories outlined in Figure 1. There were
relatively high correlations, for example, between organizational mission and
organizational strategy (0.78, p < 0.001); between organizational strategy and
HRM strategy (0.59, p = 0.001); and between organizational mission and HRM
strategy (0.54, p = 0.004). These correlations could be seen as implying a
relatively consistent organizational mission organizational strategy HRM
strategy pattern of influence in at least some organizations. This is supported
by the finding that of the ten respondents who rated HRM strategy as a great or
moderately great influence, eight also rated both organizational mission and
organizational strategy as great or moderately great influences.
It is also interesting to note that, as would be predicted by Tsui and
Milkovichs (1987) multiple constituency approach, there is little correlation
between the level of top management influence and the level of line
management influence (0.12). Similarly, top management priorities are
significantly related to issues of power and politics (0.64, p = 0.001), while line
management priorities are somewhat negatively correlated with issues of
power and politics (0.26).
In order to investigate these relations further, an exploratory factor analysis
(using varimax rotation) was conducted which identified seven factors with an
eigenvalue greater than 1.0, and which explained 84 per cent of the variance.
The first factor, which accounted for 24.6 per cent of the variance, could be
labelled a strategy factor, since it included HRM strategy, organizational

mission, organizational strategy, and actions of corporate headquarters. This

reflects the strong correlations which were noted above between organizational
mission, organizational strategy and HRM strategy.
It was difficult to see any real coherence among the items in the remaining
factors, so the factor structure was further tested by specifying three, four, five,
and six factor solutions and by excluding items with low mean levels of impact
and/or with low communalities. This exploration revealed that only the
strategy factor continued to emerge consistently. It is, of course, possible that
the composition of the other factors was affected by the relatively low number
of respondents used in the analysis. On the other hand, an employment relations
perspective would expect to find a considerable number of largely independent
influences, so this lack of a simple coherent factor structure may provide
additional support for this perspective.
Where an influence was rated as having at least some impact, respondents
were asked to indicate briefly which aspects of HRM were influenced. The two
authors categorized these responses independently and then resolved any
disagreements by discussion. The majority of the responses referred to what
would normally be seen as the major areas of HRM. Table II shows the
frequency with which an area of impact was identified in relation to the
influences included in the questionnaire.
It can be seen that some areas of HRM are identified as having been affected
more than others, and some types of influences have influenced more areas than
have others. There also appears to be a tendency for influences rated as having
greater impact overall to have had more total influence across the various areas.
The correlation between the mean level of impact given to an influence and the
total impact on the various areas is 0.46 (p = 0.030).
Conclusions
The basic model of strategic HRM (Figure 1) assumes that HRM policies and
practices flow directly from the overall HRM strategy, which is itself an
outcome of organizational strategy and objectives. Aspects of the external and
internal environments as well as organizational mission and purpose are
expected to influence organizational strategy which in turn influences HRM
strategy, rather than impact directly on HRM policies and practices. Based on
this, a reasonable expectation is that respondents should rate HRM strategy
highly in comparison to other potential influences on HRM policies and
practices. However, as shown in Table I, most respondents in this study rated
the impact of an overall HRM strategy as having only a relatively minor
influence on HRM practices, with 16 other factors achieving a greater mean
level of influence. Only three of the 27 HR managers rated the impact of an
overall HRM strategy on their organizations HRM policies and practices as
great. Even where the influence of an HRM strategy was great or moderately
great, there was no evidence that this resulted in a reduction in the direct
influence of other factors.

Strategic HRM
or managing
employment?
17

Table II.
Type of influence and
areas of impact
3
3
5
1
6
2
4
7
1
2
3
2
2
1
1
1
3
0
0
1
3
2
53

0
8
2
1
4
6
2
4
4
4
0
2
2
0
2
5
1
4
5
1
3
3
63

1
44

1
0
4

1
1
2
1
1
3
1

2
3
5
0
4
3
1
5
2
2

Recruitment
and selection

2
41

1
1
1

0
1
0
5
0
2
0

0
0
0
1
3
11
11
2
0
0

Industrial
relations
issues

Note: N = 26-27 for all items except 11, actions of corporate headquarters, for which N = 22

Changes in the international economy

Changes in technology
Changes in the national economy
National culture/traditions
Industry/sector characteristics
Legislation/regulation
Actions of unions
Actions of competitors
Organizational mission/purpose
Organizational strategy/objectives
Actions of corporate headquarters
(if applicable)
Size of the organization
Structure of the organization
History/traditions/past practice
Priorities of top management
Priorities of line managers
Issues of power and politics
Impact of HRM theory,
research and writings
Impact of education and
training in HRM
Impact of professional organizations
Impact of an overall HRM strategy
HRM staffs experiences
in other organizations
Total

Pay and
benefits

Areas of impact

0
25

0
0
0

2
0
1
0
0
0
1

5
2
5
1
1
1
0
2
2
2

Staffing
levels

0
18

0
0
0

1
2
2
3
0
0
2

1
1
0
0
2
0
0
2
0
2

Career
development

18

Influences on HRM

Training
and staff
development

1
15

1
0
1

0
1
0
1
1
1
0

2
0
0
1
0
0
2
0
1
2

Staff
appraisal

9
259

8
3
12

7
9
9
11
5
12
8

13
17
17
5
20
23
20
22
10
14

Total

International
Journal of
Manpower
16,5/6

Table II revealed that individual areas of HRM activity result from different
HRM influences. This also lends support to the argument that the influence of
an overall HRM strategy is limited, with HRM strategy being cited first or
second most commonly in only one HRM area, recruitment and selection.
Thus no support was found for the strategic HRM-based hypothesis that
HRM strategy would have the highest mean level of influence on HRM policies
and practices overall as well as on policies and practices in the various subareas of HRM, and that the presence of influence by an HRM strategy would
result in a decrease in the amount of direct influence by other factors.
Instead, the results appear to support the employment relations/pluralist/
multiple constituency model presented in Figure 2. The key assumption of this
model is that HRM policies and practices are the outcome of multiple direct
influences rather than the result of an overall HRM strategy which moderates
these influences. The view that HRM strategy simply becomes an additional
influence factor was also supported. These results are also compatible with
what is probably the majority of writings and studies in the HRM area, which
discuss the impact of specific factors on particular HRM policies or practices
without any explicit reference to an overall model.
While it is tempting to speculate on why various influences obtained the
mean ratings that they did and why some influences impacted more on certain
areas of HRM than did others, the small sample size, along with the lack of any
data as to how representative the respondents are of all Australian HR
managers, makes such speculation premature. It can be noted, however, that
even though this was a sample of HR managers who might have a vested
interest, they rated most of the potential HRM-related influences as having a
rather low level of impact in comparison to other influences. This may indicate
that most HR managers in Australia are not taking the proactive, strategic role
which they are often urged to adopt.
Further empirical study of both models could usefully be carried out to
investigate questions such as the strength of the connections between specific
areas of HRM policy and procedures and types of influences, the extent to
which these relationships vary across organizations, industries and countries,
and any relationships these differences bear to the types of HRM policies and
practices used and their effectiveness.
In terms of the implications of this study for practitioners, academics and
students in the HRM and industrial relations fields, it would seem at best
premature to assume that a new era, dominated by strategic HRM, has actually
occurred. Although a minority of organizations in this study seemed to be
making some use of a strategic HRM approach, this would appear to have
become an additional aspect of the more complex process of managing the
employment relationship rather than a substitute for it.
References
Buller, P.F. (1988), Successful partnerships: HR and strategic planning at eight top firms,
Organizational Dynamics, Vol. 17 No. 2, pp. 27-43.

Strategic HRM
or managing
employment?
19

International
Journal of
Manpower
16,5/6
20

Cascio, W.F. (1993), Downsizing: what do we know? What have we learned?, Academy of
Management Executive, Vol. 7 No. 1, pp. 95-104.
Collins, R.R. (1988), The strategic contribution of the personnel function, in Palmer, G. (Ed.),
Australian Personnel Management: A Reader, Macmillan, Melbourne, pp. 34-49.
Collins, R.R. and Wood, R. (1990), National survey of performance appraisal and management
practices: August 1990, Personnel Management, CCH Australia, Sydney, pp. 4,443-64.
Delery, J.E. (1994), The determinants of human resource management practices: an empirical
investigation, paper presented at the 1994 Annual Conference of the Academy of
Management, Dallas, TX.
Dunphy, D.C. and Hackman, B.K. (1988), Performance appraisal as a strategic intervention,
Human Resource Management Australia, Vol. 26 No. 2, pp. 23-34.
Dyer, L. and Holder, G.W. (1988), A strategic perspective of human resource management, in
Dyer, L. (Ed.), Human Resource Management: Evolving Roles and Responsibilities, Bureau of
National Affairs, Washington, DC, pp. 1,1-1,46.
Fandt, P.M. (1988), Linking business strategy and career management, in Ferris, G.R. and
Rowland, K.M. (Eds), Human Resources Management: Perspectives and Issues, Allyn &
Bacon, Boston, MA, pp. 56-63.
Fisher, C.D. and Shaw, J.B. (1992), Establishment level correlates of human resource practices,
Asia Pacific Journal of Human Resources, Vol. 30 No. 4, pp. 30-46.
Gardner, M. and Palmer, G. (1992), Employment Relations: Industrial Relations and Human
Resource Management in Australia, Macmillan, Melbourne.
Giles, P. (1992), The HR policies you are using in the 1990s, HR Monthly, September, pp. 8-10.
Guest, D.E. (1989), Human resource management: its implications for industrial relations and
trade unions, in Storey, J. (Ed.), New Perspectives on Human Resource Management,
Routledge, London, pp. 41-55.
Hammer, M. and Champy, J. (1993), Re-engineering the Corporation: A Manifesto for Business
Revolution, Harper, New York, NY.
Hendry, C. and Pettigrew, A. (1990), Human resource management: an agenda for the 1990s,
International Journal of Human Resource Management, Vol. 1 No. 1, pp. 17-43.
Hofsted, G. (1989), The cultural relativity of organizational practices and theories, in Sheth, J.
and Eshghi, G. (Eds), Global Human Resources Perspectives, South-West, Cincinnati, OH,
pp. 2-19.
Jackson, S.E., Schuler, R.S. and Rivero, J.C. (1989), Organizational characteristics as predictors of
personnel practices, Personnel Psychology, Vol. 42 No. 4, pp. 727-86 .
Jain, H. and Murray, V. (1984), Why the human resources management function fails, California
Management Review, Vol. 26 No. 4, pp. 95-110.
Kane, R.L. (1994), Perceptions of human resource management effectiveness, Proceedings of the
Fourth Conference on International Human Resource Management, IHRM Conference
Secretariat, Gold Coast, Australia.
Kane, R.L., Abraham, M. and Crawford, J.D. (1994), Training and staff development: integrated
or isolated?, Asia Pacific Journal of Human Resources, Vol. 32 No. 2, pp. 112-32.
Kane, R.L. and Stanton, S. (1991), Human resource planning: where are we now?, Asia Pacific
Human Resource Management, Vol. 29 No. 2, pp. 5-20.
Kramar, R. (1992), Strategic human resource management: are the promises fulfilled?, Asia
Pacific Journal of Human Resources, Vol. 30 No. 1, pp. 1-15.
Lansbury, R.D. (1992), Managing change in a challenging environment, Asia Pacific Journal of
Human Resources, Vol. 30 No. 1, pp. 16-28.
Laurent, A. (1989), The cross-cultural puzzle of international human resource management, in
Sheth, J. and Eshghi, G. (Eds), Global Human Resources Perspectives, South West, Cincinnati,
OH, pp. 54-63.

Legge, K. (1978), Power, Innovation and Problem-solving in Personnel Management, McGraw-Hill,

London.
Legge, K. (1989), Human resource management: a critical analysis, in Storey, J. (Ed.), New
Perspectives on Human Resource Management, Routledge, London, pp. 19-40.
Legge, K. (1995), HRM: rhetoric, reality and hidden agendas, in Storey, J. (Ed.), Human Resource
Management: A Critical Text, Routledge, London, pp. 33-59.
Limerick, D. (1992), The shape of the new organization: implications for human resource
management, Asia Pacific Journal of Human Resources, Vol. 30 No. 1, pp. 38-52.
Midgley, D. (1990), Interim Report on the Benchmark Study of Management Development in
Australian Private Enterprises, National Board of Employment, Education and Training
Commissioned Report No. 5, Australian Government Publishing Service, Canberra.
Miles, R.E. and Snow, C.C. (1984), Designing strategic human resources systems, Organizational
Dynamics, Vol. 13 No. 1, pp. 36-52.
Moon, O. (1991), Future roles of human resource specialists and managers: the task ahead, Asia
Pacific Human Resource Management, Vol. 29 No. 1, pp. 121-30.
Moore, L.F. and Devereaux Jennings, P. (1992), Canadian human resource management at the
crossroads, Asia Pacific Journal of Human Resources, Vol. 31 No. 2, pp. 12-25.
Nankervis, A.R. (1993), Enhancing productivity in the Australian hotel industry: the role of
human resource management, Research and Practice in Human Resource Management,
Vol. 1 No. 1, pp. 17-39.
Schuler, R.S. (1990), Repositioning the human resource function: transformation or demise?,
Academy of Management Executive, Vol. 4 No. 3, pp. 49-60.
Smart, J.P. and Pontifex, M.R. (1993), Human resources management and the Australian human
resources institute: the profession and the professional body, Asia Pacific Journal of Human
Resources, Vol. 31 No. 1, pp. 1-19.
Sparrow, P., Schuler, R.S. and Jackson, S.E. (1994), Convergence or divergence: human resources
practices and policies for competitive advantage worldwide, International Journal of Human
Resource Management, Vol. 5 No. 2, pp. 267-99.
Stablein, R. and Geare, A. (1993), Human resource management in New Zealand: profession and
practice, Asia Pacific Journal of Human Resources, Vol. 31 No. 2, pp. 26-38.
Stace, D.A. (1987), The value-added organization: trends in human resource management,
Human Resource Management Australia, Vol. 25 No. 3, pp. 52-63.
Storey, J. (1995), Human resource management: still marching on, or marching out?, in Storey, J.
(Ed.), Human Resource Management: A Critical Text, Routledge, London, pp. 3-32.
Terpstra, D.E. (1994), A model of HRM information, practice implementation, and organizational
outcomes, paper presented at the 1994 Annual Conference of the Academy of Management,
Dallas, TX.
Terpstra, D.E. and Rozell, E.J. (1993), The relationship of staffing practices to organizational level
measures of performance, Personnel Psychology, Vol. 46 No. 1, pp. 27-48.
Tsui, A.S. and Milkovich, G.T. (1987), Personnel department activities: constituency perspectives
and preferences, Personnel Psychology, Vol. 40 No. 3, pp. 519-37.
Wright, P.M. and McMahan, G.C. (1992), Theoretical perspectives for strategic human resource
management, Journal of Management, Vol. 18 No. 2, pp. 295-320.
Wright, P.M., McMahan, G.C. and McWilliams, A. (1994), Human resources and sustained
competitive advantage: a resource-based perspective, International Journal of Human
Resource Management, Vol. 5 No. 2, pp. 301-26.

Strategic HRM
or managing
employment?
21