This
chapter has charted the development of SHRM, exploring the links between the
strategic management literature and SHRM. It has examined the different approaches
to SHRM identified in the literature, including the
best-fit approach, the best-practice approach, the configurational approach
and the resource-based view, in order to understand what makes HRM strategic.
A key claim of much SHRM literature is a significant
contribution to a firm’s competitive advantage, whether
it is through cost-reduction methods or more often added value through best-practice
HR policies and practices. An understanding of the business context and
particularly of the ‘strategy-making’ process is
therefore considered central to developing an understanding
of SHRM.
Whittington’s (1993 , 2001 ) typology was used to analyse the
different approaches to ‘strategymaking’ experienced by
organisations and to consider the impact this would have on our understanding
of the development of SHRM. The influence of the classical, rational-planning approach
on the strategic management literature and therefore SHRM literature was noted, with
its inherent assumption that strategy-making is a
rational, planned activity. This ignores some of the
complexities and ‘messiness’ of the strategy-making
process identified by Mintzberg and others. Other approaches
that recognised the constituents of this ‘messiness’, namely
the processual approach, the evolutionary approach and the systemic
approach, were identified. These took account of changes and competing
interests in both the external and internal
business environments. Significantly for HRM, there is a recognition that it is
not always appropriate to separate operational policies from
higher-level strategic planning, as it is often operational
policies and systems that provide the source of ‘tactical excellence’, and thus
the traditional distinction between strategy and operations can become blurred.
The best-fit approach to SHRM explored the close relationship
between strategic management and HRM by
considering the influence and nature of vertical integration. Vertical
integration, where leverage is gained through the close link of HR policies
and practices to the business objectives and
therefore the external context of the firm, is considered to be a key theme of SHRM.
Best fit was therefore explored in relation to life
cycle models and competitive advantage models, and the associated difficulties
of matching generic business-type strategies to generic
HRM strategies were considered, particularly in their inherent assumptions
of a classical approach to the strategy-making process. The inflexibility of
‘tight’ fit models in a dynamic,
changing environment was evaluated, and consideration was given to achieving
both fit and flexibility through complementary SHRM systems.
The configurational approach identifies the value of having a
set of HR practices that are both vertically integrated
to the business strategy and horizontally integrated with each other, in order
to gain maximum performance or synergistic benefits. This approach recognises
the complexities of hybrid business strategies and the need for HRM
to respond accordingly. In advocating unique
patterns or configurations of multiple independent variables, they provide an
answer to the linear, deterministic relationship advocated by the best-fit
approach.
The resource-based view represents a paradigm shift in SHRM
thinking by focusing on the internal resources of
the firm as a key source of sustainable competitive advantage, rather than
focusing on the relationship between the firm and the external business
context. Human resources, as scarce, valuable, organisation-specific
and difficult-to-imitate resources, therefore become key strategic assets.
The best-practice approach highlights the relationship between
‘sets’ of good HR practices and organisational
performance, mostly defined in terms of employee commitment and satisfaction.
These sets of best practice can take many forms. Some have advocated a
universal set of practices that would enhance the performance of all
organisations to which they were applied (Pfeffer,
1994, 1998), while others have focused on integrating the
practices to the specific business context (high-performance work practices). A
key element of best practice is horizontal
integration and congruence between policies. Difficulties
arise here, as bestpractice models vary significantly in their constitution and
in their relationship to organisational performance, which makes
generalisations from research and empirical data difficult.
In endeavouring to gain an understanding of the meaning of SHRM,
it soon becomes apparent that a common theme of all
approaches is enhanced organisational performance and viability,
whether this be in a ‘hard’ sense, through cost-reduction and efficiency-driven
practices, or through high-commitment and involvement-driven
value added. This relationship is considered
significant to understanding the context and meaning of SHRM. The need to conduct
further empirical research, particularly in Europe, is identified (Stavrou and
Brewster, 2005) and the lack of methodological rigour and the extensive
use of single source respondents in current research
studies evaluating the SHRM/performance link are noted (Wall and Wood, 2005).
It is also importance to note that there is a broader, political
economy that shapes the behaviours structures and
outcomes of business which is driven by increasing financialisation within the
capitalist system (Thompson, 2011).
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