Summary SHRM
Strategic Human Resource Management - Summary
Chapter 1
Introduction: Strategic Human Resource Management in the Twenty-first
Century
In the 1990s there was a shift from the old economy to the new economy.
• Old economy: characterized by physical tasks, job design and work design based
on mass production (assembly line), relatively low-skilled workers and high
degrees of unionization.
• New economy: emerging branches of industry, including the IT sector,
telecommunications, and financial institutions. The development of the World
Wide Web acted as a facilitator for the rise of the services industry in the new
economy.
¯
Organizational change: change has become a daily practice in organizations. For
organizations to survive, they need to have a competitive advantage. Competitive
advantage represents an organization’s position in comparison to its direct competitors.
Organizations need to constantly change in order to keep that advantage.
Work arrangements have also changed in the new economy. They are more flexible
because of the development of the computer and the internet.
SHRM key to success in process of organizational change. HRM involves management
decisions related to policies and practices that together shape the employment
relationship and are aimed at achieving individual, organizational and societal goals.
Three sub fields of HRM:
• MHRM: sub-functions of HR policy and practice, focuses on impact of single HR
practices on employees.
• IHRM: focuses on issues of transferability of HR practices across units in
diQerent countries.
• SHRM: focuses on issues of linking HRM to business strategy. Concept of ‘ fit’
plays central role.
Stakeholders represent all groups inside and outside an organization that can aQects its
strategy and goals.
Internal stakeholders: i.e. employees, line managers, top management and employee
representatives.
External stakeholders. i.e. shareholders, financiers, trade unions, national government,
local government and other interest groups.
1
,Summary SHRM
The multi-dimensional strategic HRM model:
1. A multi-actor perspective (multiple stakeholders)
2. A broad societal view (diQerent institutional contexts)
3. A multi-level perspective
Paauwe (2004) argues that human resources are people with feelings, emotions,
interests, norms and values, and that their behavior is not solely determined by
economic rationality.
HRM focuses on the exchange relationship between the employee and the organization:
Employment relationship:
• Legal aspects (contract)
• Economic aspects (salary)
• Psychological contract (expectations)
• Social aspects (relationships)
Boxall and Purcell (2003) argue that HRM is not just focused on typical HR practices
(recruitment, training, etc.), but also on work design and choices in job autonomy
(working in teams, rotation, etc.). Managing issues on multiple levels, individual as well
as collective. HRM is embedded in industries and societies.
Distinction is made between the Anglo-Saxon or Anglo-American models and the
Rhineland models.
• Anglo-American approaches in IR and HRM mainly focus on creating shareholder
value in terms of profits and market value with little or no attention to other
stakeholders including trade unions and work councils.
• Rhineland models acknowledge stakeholders and their interests explicitly taking
into account employee interests.
Competitive advantage depends on balancing market demands and institutional
pressures. Deephouse (1999) argues that financial performance AND societal
performance need to be above average for organizational success.
Balanced approach: taking into account multiple stakeholder interests and a broader
societal view in the design of the employment relationship in an organization is likely to
result in good people management. Balanced approach implies explicit inclusion of
multiple frames.
Framing HRM:
• Structural frame: understanding of structural parts of an organization, such as
goals, rules, roles, policies, technology and environment. (Metaphors: factory,
machine)
• HR frame: focuses on the employment relationship, such as needs, skills and
relationships. (Metaphor: family)
• Political frame: examines issues of power, emphasizes on diQerent parties.
(Metaphor: jungle of power, conflict, competition, and organizational politics)
2
,Summary SHRM
• Symbolic frame: builds upon meaning and identity, such as culture, meaning,
metaphor, ritual, ceremony, stories and heroes. (Metaphors: carnival, temple and
theatre)
Lecture 1
OCB Organizational Citizenship Behavior à you behave like a member of a family in the
organization. You respect each other.
5 I’s (Schnabel), characterize changes in organizations:
- Internationalization à people from other countries bring their knowledge.
- Individualization à people have more need to fulfill their own goals,
idiosyncratic, strive after their preferences.
- Informalization à less hierarchical in organizations. Decrease in power
distance. Dutch people don’t like gap in between management and people on the
work floor.
- Informatization à increasing technologies, digitalization.
- Intensification à feelings, experiences. Importance of diQerent life spheres
such as traveling.
Stakeholder perspective: we look at the diQerent stakeholders that have an influence
on HRM.
Ageing population means hiring older people you can still benefit from them for a long
time. Older workers are also more loyal. They tend to stay longer. Increase employability.
3
, Summary SHRM
Chapter 2
Strategic Human Resource Management and Context
Theoretical debate linked to the issue of fit is known for two competing schools:
• The best-fit school: argues that HRM is more eQective when it is aligned with its
internal and external context.
• The best-practice school: advocates a universalistic perspective. Argues that all
firms will be better oQ if they adopt best practice in the way they manage people.
PfeQer’s best practices:
PfeFer’s (1998) best-practice proposition: one size fits all in HRM, claims companies
will be successful if they apply the following seven practices in HRM:
• Employment security
• Selective hiring
• Extensive training
• Performance related pay (PRP), either linked to individual or team performance
• Self-managed teams or teamworking
• Information sharing
• Reduction of status diLerences
Supported by empirical research, however, this approach is criticized for its lack of
attention to contextual factors.
Best fit
In contrast, the best-fit proposition (Delery and Doty, 1996) stresses the contextual
embeddedness of HRM in organizations. Success can only be achieved through the
appropriate fit between HRM and its context, which represents the set of facts or
circumstances that surrounds the organization.
• Internal context represents the organization’s unique history, heritage, and
culture.
• External context represents the outside mechanisms that aQect the organization.
A better fit can be achieved through strategic decision making.
Strategy is defined by an organization’s intention to achieve certain goals through
planned alignment (or fit) between the organization and its environment.
Organizations aim for the achievement of certain goals. Anglo-American approaches
tend to use a narrow definition of goals, while the Rhineland approaches tend to apply a
broader definition.
SHRM is focused on the alignment or fit between the strategy of an organization and the
HR strategy of that organization.
Boxall and Purcell (2003) define the business strategy as the system of the firm’s
important choices. The HR strategy is one of the functional silos.
4
Strategic Human Resource Management - Summary
Chapter 1
Introduction: Strategic Human Resource Management in the Twenty-first
Century
In the 1990s there was a shift from the old economy to the new economy.
• Old economy: characterized by physical tasks, job design and work design based
on mass production (assembly line), relatively low-skilled workers and high
degrees of unionization.
• New economy: emerging branches of industry, including the IT sector,
telecommunications, and financial institutions. The development of the World
Wide Web acted as a facilitator for the rise of the services industry in the new
economy.
¯
Organizational change: change has become a daily practice in organizations. For
organizations to survive, they need to have a competitive advantage. Competitive
advantage represents an organization’s position in comparison to its direct competitors.
Organizations need to constantly change in order to keep that advantage.
Work arrangements have also changed in the new economy. They are more flexible
because of the development of the computer and the internet.
SHRM key to success in process of organizational change. HRM involves management
decisions related to policies and practices that together shape the employment
relationship and are aimed at achieving individual, organizational and societal goals.
Three sub fields of HRM:
• MHRM: sub-functions of HR policy and practice, focuses on impact of single HR
practices on employees.
• IHRM: focuses on issues of transferability of HR practices across units in
diQerent countries.
• SHRM: focuses on issues of linking HRM to business strategy. Concept of ‘ fit’
plays central role.
Stakeholders represent all groups inside and outside an organization that can aQects its
strategy and goals.
Internal stakeholders: i.e. employees, line managers, top management and employee
representatives.
External stakeholders. i.e. shareholders, financiers, trade unions, national government,
local government and other interest groups.
1
,Summary SHRM
The multi-dimensional strategic HRM model:
1. A multi-actor perspective (multiple stakeholders)
2. A broad societal view (diQerent institutional contexts)
3. A multi-level perspective
Paauwe (2004) argues that human resources are people with feelings, emotions,
interests, norms and values, and that their behavior is not solely determined by
economic rationality.
HRM focuses on the exchange relationship between the employee and the organization:
Employment relationship:
• Legal aspects (contract)
• Economic aspects (salary)
• Psychological contract (expectations)
• Social aspects (relationships)
Boxall and Purcell (2003) argue that HRM is not just focused on typical HR practices
(recruitment, training, etc.), but also on work design and choices in job autonomy
(working in teams, rotation, etc.). Managing issues on multiple levels, individual as well
as collective. HRM is embedded in industries and societies.
Distinction is made between the Anglo-Saxon or Anglo-American models and the
Rhineland models.
• Anglo-American approaches in IR and HRM mainly focus on creating shareholder
value in terms of profits and market value with little or no attention to other
stakeholders including trade unions and work councils.
• Rhineland models acknowledge stakeholders and their interests explicitly taking
into account employee interests.
Competitive advantage depends on balancing market demands and institutional
pressures. Deephouse (1999) argues that financial performance AND societal
performance need to be above average for organizational success.
Balanced approach: taking into account multiple stakeholder interests and a broader
societal view in the design of the employment relationship in an organization is likely to
result in good people management. Balanced approach implies explicit inclusion of
multiple frames.
Framing HRM:
• Structural frame: understanding of structural parts of an organization, such as
goals, rules, roles, policies, technology and environment. (Metaphors: factory,
machine)
• HR frame: focuses on the employment relationship, such as needs, skills and
relationships. (Metaphor: family)
• Political frame: examines issues of power, emphasizes on diQerent parties.
(Metaphor: jungle of power, conflict, competition, and organizational politics)
2
,Summary SHRM
• Symbolic frame: builds upon meaning and identity, such as culture, meaning,
metaphor, ritual, ceremony, stories and heroes. (Metaphors: carnival, temple and
theatre)
Lecture 1
OCB Organizational Citizenship Behavior à you behave like a member of a family in the
organization. You respect each other.
5 I’s (Schnabel), characterize changes in organizations:
- Internationalization à people from other countries bring their knowledge.
- Individualization à people have more need to fulfill their own goals,
idiosyncratic, strive after their preferences.
- Informalization à less hierarchical in organizations. Decrease in power
distance. Dutch people don’t like gap in between management and people on the
work floor.
- Informatization à increasing technologies, digitalization.
- Intensification à feelings, experiences. Importance of diQerent life spheres
such as traveling.
Stakeholder perspective: we look at the diQerent stakeholders that have an influence
on HRM.
Ageing population means hiring older people you can still benefit from them for a long
time. Older workers are also more loyal. They tend to stay longer. Increase employability.
3
, Summary SHRM
Chapter 2
Strategic Human Resource Management and Context
Theoretical debate linked to the issue of fit is known for two competing schools:
• The best-fit school: argues that HRM is more eQective when it is aligned with its
internal and external context.
• The best-practice school: advocates a universalistic perspective. Argues that all
firms will be better oQ if they adopt best practice in the way they manage people.
PfeQer’s best practices:
PfeFer’s (1998) best-practice proposition: one size fits all in HRM, claims companies
will be successful if they apply the following seven practices in HRM:
• Employment security
• Selective hiring
• Extensive training
• Performance related pay (PRP), either linked to individual or team performance
• Self-managed teams or teamworking
• Information sharing
• Reduction of status diLerences
Supported by empirical research, however, this approach is criticized for its lack of
attention to contextual factors.
Best fit
In contrast, the best-fit proposition (Delery and Doty, 1996) stresses the contextual
embeddedness of HRM in organizations. Success can only be achieved through the
appropriate fit between HRM and its context, which represents the set of facts or
circumstances that surrounds the organization.
• Internal context represents the organization’s unique history, heritage, and
culture.
• External context represents the outside mechanisms that aQect the organization.
A better fit can be achieved through strategic decision making.
Strategy is defined by an organization’s intention to achieve certain goals through
planned alignment (or fit) between the organization and its environment.
Organizations aim for the achievement of certain goals. Anglo-American approaches
tend to use a narrow definition of goals, while the Rhineland approaches tend to apply a
broader definition.
SHRM is focused on the alignment or fit between the strategy of an organization and the
HR strategy of that organization.
Boxall and Purcell (2003) define the business strategy as the system of the firm’s
important choices. The HR strategy is one of the functional silos.
4
