In order qualify and appraise current human resource management practices in Britain one must initially consider the very definition of this popularised term and then compare current practices with the definition.
However, it is suggested that the very fundamental and benchmark definition of human resource management varies highly between and within academic and organisational camps. It is this ambiguity that leads to a higher-level argument as to whether a clear shift in management style has actually occurred, or whether human resource management, as practiced in industry, is simply an old idea with a new image.
The Move to Human Resource Management
Along with the Thatcherite era and an emphasis away from collective bargaining, reduction in bureaucracy and a move from the collective to the individual, a new void in the personnel function required to be filled.
Thus, human resource management, or HRM, emerged as a practiced personnel function, promising flexibility, responsiveness and a marked increase in the value of the employee. Furthermore, with the reduction in heavy industries and increase in services and high technology, HRM promised to put emphasis on the individual and the longer-term strategic issues.
The push towards this seemingly ideological approach to personnel increased in the late eighties, arguably, due to increasing competitive pressures, increased globalisation and a generally harsher business environment. It is these factors that caused managers to want to enhance internal corporate effectiveness and thus improve external competitiveness. This entailed the maximisation of all resources, including the human resource.
However, the failure of personnel management to adequately promote to others the benefits of effectively managing people at work is also cited as a reason for the need for a new approach, a fact stated by Skinner (1981). Legge (1978) however suggested that the failure occurred at an even more fundamental level; personnel management as an activity has failed to develop an appropriate theoretical base, resulting in “…piecemeal textbook interventions, usually out of context with the needs of the organisation???.
Defining Human Resource Management
There appears to be no single definition of the term human resource management that is accepted by both people management practitioners and the academic community. Furthermore, trade unionists argue that HRM is a slippery concept which means different things to different people (Monks, 1994). With this fact underlined, to attempt to draw a qualitative judgement as to the impact of HRM practices in Britain can only be done with the knowledge that evidence cited may actually be referring to differing concepts and approaches.
Guest (1987) refers to a model of HRM that is characterised by;
“…being people-orientated throughout with an ethic of respect for the individual, maximisation of individual talent, well developed well-integrated policies and practices, genuine consultation and involvement, and clear challenging goals with feedback???.
However, it is argued that Guest’s model does not identify the key difference between HRM and personnel management, namely a shift from a hands-on, fire fighting approach to a planning function of a company as part of an overall corporate strategy.
Legge (1989) further supports this view, defining HRM as being a central strategic management task; it is the ability of a company to utilise its personnel at all levels to create and sustain a competitive advantage.
The above definition can be compared to a more procedural approach seen in Megginson’s (1972) definition of personnel management;
“…it is believed that the most significant aspect of personnel management is to be found through the direction and control of human resources of an organisation in its daily operations… the successful performance of the personnel function necessitates that each manager orient himself within his total business environment in order to help achieve the various organisational programs and objectives???.
Thus, by comparing HRM with personnel management, we see that HRM is the achievement of a fit between management of the work force and the strategic thrust of the organisation, a notion reinforced by Harris (1984);
“Successful companies guide and shape their company’s culture to fit their strategy. One of the tools used to accomplish this shaping is the reinforcing of certain ideas, values and behaviours and discouraging others by means of human resource management activities???.
However, this concept of fit has been identified by Legge (1995) as one of several ambiguities and contradictions proliferating in HRM definitions. Does fit refer to the external integration of HRM with business strategy, as identified above, or the internal integration of employment policies?
Regardless of these ambiguities in the HRM definitions, it is clear that whilst personnel management is seen as a short-term solution, reacting to stimuli, HRM is founded on the idea that an organisation includes human resource factors within top-level corporate strategies and hence seeks to adopt a long-term view.
However, empirical evidence as to the extent of HRM implementation tends not to support the idea of top-level corporate human resources strategy integration. This is backed by findings from Storey (1992) from a study of fifteen companies in Britain, where, in the majority of instances, there was a lack of a strong link between people management activities and an overall corporate plan. This fact is given further credence by Legge (1995), who found that there was patchy implementation of practices designed to achieve flexibility and quality, and more emphasis on dealing with short-term issues and opportunities such as high unemployment rates, rather than “…any long term strategic considerations???.
Given this lack of empirical support on a key distinguishing feature of HRM, doubts must be raised as to the claimed strategic shift from personnel management to HRM.
A Case of “Old wine in new bottles????
It is highly common to find texts citing HRM as simply being variation on a single theme; that HRM is merely personnel management, under a new label – eloquently stated by Armstrong (1987) as being “Old wine in a new bottle???. Miller (1989) concludes that any difference between HRM and personnel management remains confusing and confused. Possibly more insightful is Fowler (1987), who states, “…what’s new in HRM is not what it is, but who is saying it… HRM represents the discovery of personnel management by chief executives???.
The fact, pointed out by Guest (1987), that a number of personnel departments have become “human resource departments??? without any observable changes in roles does not help. This is a practice mirrored in some long standing personnel management textbooks, where the title was changed to “human resource management???, with little or no change in the actual content.
It is clear that there is no universally accepted description of the concept of HRM, although there are those who clearly have identified variations of HRM. Most notably, is Story (1989), in his identification and classification of two types of HRM, namely ‘hard’ and ‘soft’.
Summed up by Kessler et al (1998), ‘Hard’ HRM puts the stress on the idea of a ‘resource’ that is something to be used dispassionately and in a formally rational manner, as with any other economic factor. ‘Soft’ HRM lays the stress on the term ‘human’, thus conjuring up echoes of the human relations school, and emphasises communication, motivation and leadership.
Further types of HRM have been identified by Keenoy (1990), who makes reference to four variations; traditional – as practiced by the companies mentioned previously, which stresses the importance of people; neo-pluralist – which includes joint consultation, and the use of quality circles and increased employee involvement; strategic human resource management, this being concerned with the integration of human resource issues into corporate plans, and having little or nothing to do with actually managing people, and adversarial pluralism.
Whilst it can be seen that there is a certain amount of overlap between the definitions, there are also clear differences. What is striking, therefore, is that the same term is thus capable of signalling dramatically opposite sets of assumptions. Thus it is up to the individual or an organisation on how they interpret HRM – an echoing of Monk’s statement that HRM is practiced on individual interpretations. Legge (1989) points out that, not only are there differences in the definitions of HRM, they exhibit central characteristics that may ultimately be irreconcilable.
A knock on effect is the difficulty in defining the level to which organisations practice HRM. Noon (1992) states that it is not merely a case of semantics; it does matter which label is attached, as each carries different expectations and important practical implications.
What is clear however is that whichever variation of HRM is implemented by the organisation, its adoption will impact directly on the management of people at work. For some, this means a move away from institutionalisation and collectivism, and also a move away from the traditional view of employee relations management as being concerned with the making and administering of rules which regulate the employment relationship. This can be seen as an ideological shift away from the collective, and towards a unitarist and individualistic standpoint, within which employees’ commitment to the company replaces the traditional Western allegiance to the occupation (Wickens, 1987).
Now that the differences between HRM and personnel management have been discussed, and more significantly, variations in HRM identified – despite higher-level ambiguities and confusion, it is appropriate to consider actual empirical evidence as to the extent and nature to which HRM has been implemented in actual organisations.
Popular management theorists draw a clear link between company success or excellence and the practice of human resource management. Excellent organisations such as IBM, Hewlett-Packard and, at one point, Marks and Spencer are often cited as practicing HRM. However, it must be questioned as to whether it is appropriate for the tag “HRM??? to be appointed to an organisation given the lack of a precise definition.
Despite this issue, not withstanding the considerable variations and implementations or HRM practices, there are undoubtedly indications that current management attitudes are consistent with many of the core elements of HRM, such as employee involvement, strategic human resources considerations and a move to devolve the personnel function to the line. Over the years, research has been carried out, looking at organisations that display these characteristics, and much can be learnt from these studies.
Research carried out by Hope-Hailey et al (1997) looking at self-proclaimed HRM practicing organisations, namely Glaxo (pharmaceuticals), Citibank (investment banking), Hewlett-Packard (hi-tech), WH Smith (retail and distribution), Lloyds Bank (retail banking), BT (telecommunications), KJS (fast moving consumer goods) and an NHS Trust (healthcare) revealed several interesting facts.
It was found that in most companies, there was an HR function at the board level of the company, although HRM was seen as a secondary decision making process. Furthermore, it was seen to be more of a process rather than a strategy and emergent rather than intended. A further surprising indicator of this, is the fact that there were very few examples of written HR strategies, reinforcing the idea that;
“HR strategy formulation is much more of an interactive process, based on what is feasible in terms of organisational politics at board level and practical in terms of implementation???.
A further emergent fact is that as the HR function has been devolved, in terms of decision making to line managers, the presence of the HR department has diminished. As a personnel manager of Citibank typifies;
“We operate fairly independently within broad parameters and guidelines. We don’t behave as a department on a weekly basis… I don’t think you could look at us and say we are a department… this puts us very close inside, next to the business???.
However, it was found that the move did not reduce in any way the necessary bureaucracy associated with the personnel policies and procedures. Furthermore, the recruitment, selection and the operations of the pay systems were still tasks of a now diminished HR staff. This has led to an observable lack of co-ordination, with a lack of communication between an organisation’s business units. The research cites examples of secretaries being released on one floor of a bank due to overstaffing, and secretaries being recruited on another, due to an increase in workload.
Paradoxically, however, this downsizing and devolution of HR departments has been accompanied by an increased regard for the function’s contribution at a strategic level, despite it’s diminished capability to deal with direct requests for help from staff; HRM is clearly regarded by management to be working, rather than non-management staff.
The researchers state three effects due to this paradox;
- Lower levels of staff often had little understanding of the role and purpose of the function;
- There was a clear identification for the worker’s need in a neutral body or department within the organisation that could be consulted for neutral opinion;
- There seemed to be a demand for a counselling service within the organisation.
It is clear from the last two points that having spent decades shedding the image of personnel as the loyal opposition to management (Sisson, 1989), once this has been actualised, there is exactly a demand for these very services. This is contrast to beliefs that with the advent of service based industries and individualisation of the workforce, the welfare mechanisms necessary in factories and heavy industries would become redundant.
This paradox links directly to management practices in relation to trade unions, and the impact HRM has and potentially will have on unionised organisations.
Human Resource Management and Trade Unions
The impact of HRM on trade unions is relative to the environment in which it is being implemented. Traditional British industrial relations, post-Donovan and pre-Thatcherism, has be characterised by pluralism and the institution of collective bargaining, both of which argued as conflicting in nature to HRM practice, which unitarism as it’s core concept, which Guest (1987) sees as marginalising unions.
This process of marginalisation is seen as likely due to the importance placed upon employee commitment and employee involvement within an HRM framework. If an organisation, through the adoption of HRM, stresses the importance of commitment to that organisation, the employee may be put in a position where they will find it necessary to offer allegiance to both the company and the union.
However, it is important to note that HRM is not by definition anti-union, although practices associated with it may well prove to be detrimental to unions in practice. Reinforcing this, Millward (1994) found that HRM practices were actually more likely to be found in unionised companies.
Guest (1989) has suggested that the perspective adopted by management will dictate the impact of HRM on unions. Where the management leans towards a more pluralistic approach then there will be no threat to unions. But where the approach shows accord with the values of hard HRM, namely, individualism and unitarism, then the outcome could be the failure of management to recognise trade unions.
The precise impact on employees generally will depend on the type of HRM that is actually practised, as opposed to simply the adoption of an HRM policy. The TUC (1994) refer to; bad HRM, which they define as the piecemeal, ad hoc, unsystematic attempt to select items from the HRM menu to improve company performance which conceals a vigorous anti-union strategy; and good HRM which is in keeping with companies’ attempts to build a workplace by developing employee commitment.
Keenoy (1990) describes HRM as a wolf in sheep’s clothing. Furthermore, Fowler (1987) argues that employee involvement under HRM is actually involvement on the company’s terms, and is actually a subtle form of employee manipulation disguised as mutuality.
Therefore, it’s possible that, whilst it may appear that employees have a greater involvement in the organisation, it is only selective involvement on the company’s terms, a situation that may change with the advent of works councils. At the same time, it is feasible that management, in adopting HRM, will no longer see trade unions as being appropriate, as they raise the potential problem for the employee of dual allegiance – union or company? If the union were indeed no longer recognised, then if a situation arose where an individual is placed in a position of conflict with the company, due to this process of individualisation that employee would be in a relatively weak position to oppose the company.
It is clear that there are identifiable components that recur in HRM topics, such as employee involvement, commitment, appraisal and reward. However, these are also tenants of personnel management. The only clear factor that goes some way to differentiate HRM from personnel management is strategic planning. But, does the presence of an element of strategic thinking in people management justify the application of the term human resource management?
Focusing on this view of a long-term strategic view, Skinner (1981) argues that benefits as a result of the implementation of HRM practices may not become apparent for five or more years, and secondly, current corporate polices tend not to reward managers for results that might not become apparent for several years. Hence, whilst it may be argued that HRM has the means of providing increased organisational effectiveness in the long term, will organisations, and managers, be prepared, or even allowed, to wait?
There also appears to be very little qualitative evidence to support any great degree of consistency between people management strategies and corporate strategies within companies. Hope-Hailey et al (1997) indeed suggest that HRM is not being practiced in the forms suggested in the 1980s, and that current practices are actually highly diverse. This diversity in practice suggests that HRM is highly sensitive to environmental and contextual factors as well as higher-level issues such as culture and managerial mentality.
These points lead to the question as to whether human resource management is actually sustainable in the long-term, despite the fact that HRM practices in organisations is on the increase. In order for HRM to be sustainable, several high-level definitions and concepts must be clarified.
Firstly, there is an implication that HRM can be seen as an “all or nothing??? concept. This leads to a fundamental question; does an organisation have to actively implement all the practices that fall within HRM in order to claim that they are truly practising HRM? Conversely, can it be said that an organisation practices HRM if the personnel function centres on the practice of any combination of defined constituents of HRM?
Secondly, as Legge (1989) suggests, HRM suffers from three inherent contradictions; individualism versus co-operation, commitment versus flexibility, and strong culture versus adaptability. Clearly unless such internal tensions can be rationalised, they too may threaten the long-term sustainability of HRM.
Finally, the effect on the employee must be considered. In effect, this is directly related to the effects on, and response of, trade unions to HRM. With the move in management to draw direct links to the employee, the potential for trade unions to intervene on behalf of the employee, through the traditional means of collective bargaining, will become increasingly marginalised.
Potentially, with increasing allegiance from the employee being sought by the company, there may come a time when an employee will have to choose between company and union. Furthermore, as company-employee links strengthen, the company may question the very need for trade union recognition, leaving the employees in a potentially undermined position.
Ultimately, though, the question that has to be asked is whether or not HRM is simply context specific; it seems that the observed shifts in management style to HRM is simply a response to the new employment conditions in the 1990s, and the question that begs answering is, if this is the case, how well will HRM fare with the next inevitable change in personnel management methodology?
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