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Unit 3: Human Resource
Management

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LEARNING
OUTCOME 1

LO1 Explain the impact of the role of HRM in creating sustainable

organizational performance and contributing to business success.

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HRM, business and management

‘HRM is the basis of all management activity.

Whatever the nature of the business, the basis of management is

always the same: getting the people of the business to make things
happen in a productive way, so that the business prospers and the
people thrive’.

+ The management process

The management process is increasingly complex as the result of:

n Specialisation in roles and therefore skills needed to fill them.

n Competition between organisations for talent.

nA requirement for more sophisticated methods to recruit, deploy and retain

talent.

n Increased regulation and employment law.

n The international nature of modern employment.

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Human resources

n ‘Human resources include the knowledge, skills, networks and

energies of people and, underpinning them, their physical and
emotional health, intellectual capabilities, personalities and
motivations.’

(Boxall, 2007)

+ Human Resource Management

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+ HRM philosophy

n An HR philosophy is ‘a statement of how the organization regards its

human resources, what role the resources play in the overall success
of the business and how they are to be treated and managed.’
(Schuler, 1992)

n The guiding principles that identify and characterize the value and
treatment of employees covered within a particular HRM system’
(Kepes and Delery, 2007)

+ HRM philosophy

Common themes in HRM philosophies : That human resource policies should

be integrated with strategic business planning and used to reinforce an
appropriate (or change an inappropriate) organizational culture, that human
resources are valuable and a source of competitive advantage, that they may
be tapped most effectively by mutually consistent policies that promote
commitment and which, as a consequence, foster a willingness in employees
to act flexibly in the interests of the ‘adaptive organization’s’ pursuit of
excellence.

(Legge, 1989)

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+ The goal of HRM

n Support the organization in achieving its objectives

n Contribute to the development of a high- performance culture;

n Ensure that the organization has the talented, skilled, and engaged people it
needs;

n Maintain a positive employment relationship between management and

employees,

n Provide for a satisfactory employee experience;

n Further the wellbeing of employees as major stakeholders;

n Achieve social legitimacy

Note that the goals include both high performance and employee wellbeing.

+ The theoretical base of HRM

Activity 1- Each group present

n AMO theory
n Contingency theory
n Human capital theory
n Motivation theory
n The resource-based view
n Social exchange theory
n Stakeholder theory

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+ Models of HRM

n The Michigan framework or ‘matching’ model

n The critical management task is to align the formal

structure and human resource systems so that they drive
the strategic objectives of the organization (Fombrun et al,
1984)

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+ Models of HRM

n The Harvard framework Beer et al (1984)

‘Human resource management (HRM) involves all management
decisions and actions that affect the nature of the relationship between
the organization and employees – its human resources’. Thus HRM had
two characteristic features:

(1) line managers accept more responsibility for ensuring the

alignment of competitive strategy and HR policies, and
(2) HR has the mission of setting policies that govern how HR
activities are developed and implemented in ways that make them
more mutually reinforcing.

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+ Models of HRM

n Contextual model
n the social, institutional and political forces, the circumstances and
features of the organization.

n The 5-P model

n HR philosophy
n HR policies

n HR programmes
n HR practices
n HR processes

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+ Models of HRM

n European model
n Environment
n Focus
n Relationship with employees
n Relationship with line managers
n Role of HR specialist

n The hard and soft models

n ‘The hard one emphasizes the quantitative, calculative and business-
strategic aspects of managing human resources in as “rational” a way
as for any other economic factor.
n The soft version traces its roots to the human relations school; it
emphasizes communication, motivation and leadership.’

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Hard HRM

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Soft HRM

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+ HRM and business success

Research suggests a link between good HRM and business success.

Possible reasons include:
n good HRM results in superior employee motivation and
performance;
n effective HRM builds corporate reputation;
n HRM approach increases organisational efficiency;

OR
n cause and effect are reversed; business success allows an
organisation to afford better HRM.

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+ HR activities can be divided into two broad categories

n Transformational (strategic) activities that are concerned with developing

organizational effectiveness and the alignment and implementation of HR
and corporate or business strategies;

n Transactional activities, which cover the main areas of HR service delivery.

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Organisation

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People resourcing

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Performance management

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Reward management

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Human resource development

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Health, safety and welfare

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Employee relations

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Classification by
Graham and Bennett (1998)

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+ Typical roles in HR and responsibilities

n Level of work
n Gerenalist
n strategic
n HR director,
n HR manager, n Executive
n administrative
n HR business partner,
n HR officer n Other

n Specialist n Strategists partners

n head of learning and n Business partners
development n Innovators

n head of talent management n internal consultants

n head of reward n facilitators

n coaches or service providers.
n ……

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+ Typical roles in HR and responsibilities

- The Ulrich model

n 1 Employee advocate
n2 Human capital developer
n3 Functional expert.
n4 Strategic partner
n5 Leader

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+ Typical roles in HR

n The strategic role

n The HR business partner role
n The partnership role of HR professionals
n The innovation role
n The change agent role
n The service delivery role
n Carrying out the role of the HR professional
n HR role of line managers

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+ Personnel versus HRM

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+ Purcell: HRM and success

‘Bundles’ of progressive HRM practice can lead to organisational

success.
n Giving people career development opportunities
n Giving people influence of their own area of work
n Making jobs challenging and interesting
n Providing good training
n Appraising people regularly on individual performance
n Teamworking
n Involving employees in decision making
n Providing a good work-life balance
n Employing line managers who are good leaders and who show
respect.

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+ Human capital

n Human capital is the knowledge, skills and abilities of the people

employed in an organization.

n Human capital theory regards people as assets and stresses that

investment by organizations in people will generate worthwhile returns.

n Human capital management (HCM) is an approach to managing people

that regards them as assets and emphasizes that competitive advantage
is achieved by strategic investments in those assets

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+ Constituents of human capital

n Intellectual capital – the stocks and flows of knowledge available to

an organization.

n Social capital – the knowledge derived from networks of

relationships within and outside the organization.

n Organizational or structural capital – the institutionalized knowledge

possessed by an organization that is stored in databases, manuals,
etc

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