Academic Leadership: The Online Journal

Volume 7 Article 16
Issue 1 Winter 2009

1-1-2009

Emergence of Strategic Human Resource Management Historical

Perspective
Nadeem Malik

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Academic Leadership Journal

The world of business has become a struggle to gain competitive advantage in a much larger and
more demanding marketplace. Markets now stretch across international boundaries, trade barriers
have crumbled and distribution channels have become more efficient. In order to survive, the strategic
human resource management provides support to the executives for formulating successful strategies.

The strategic management is concerned with policy decisions effecting the entire organization, overall
objective being to position the organization to deal effectively with its environment. Strategic HRM aims
to provide a sense of direction in an often turbulent environment so that organizational and business
needs can be translated into coherent and practical policies and programs . It provides competitive
advantage over the others.

The strategic HRM has been developed from different stages starting from personnel management and
Human resource management it has long historical development. The major objective of this article is
to see these historical developments which produced the emergence of Strategic HRM and as well as
different critics on the historical development. The primary actions of a strategic human resource
manager are to identify key HR areas where strategies can be implemented in the long run to improve
the overall employee motivation and productivity.

Actually the article attempts to describe the fact that it is the importance of SHRM which can be used
as competitive advantage for the firm. This study is desk-research based on published books, articles
and papers.

_______________________________________________________________

1. Nadeem Malik, Lecturer, Commerce Department, University of Balochistan Quetta.

2. Dr. Shafiq-ur-Rehman Registrar University of Balochistan Quetta.

Introduction

Organization today, by necessity have become more focused on exploiting sources of competitive
advantage in the face of rapid environmental, technological and global economic changes. According
to Pfeffer (1994:14), as other sources of competitive success have become less important, what
remains a crucial, differentiating factor is the organization, its employees and how they work.
Additionally, he states that the current recognition among strategic management researchers is that
sustained competitive advantage arises more from a firms internal resource endowments and resource
deployments particularly its human capital that are imperfectly imitable than from a firm’s product
market position. These “people” issues used to be the sole responsibility of personnel departments.
However, recent research such as that by Fernie, Metcalf, and Woodland (1994) in the United Kingdom
using data from a nationally representative sample of workplaces suggests that specialist personnel
functions appear to detract from both economic and industrial relations performance rather than
enhance it.
In the past 20 years, senior executives have become more strategic in their thinking. They have also
become more aware that human related considerations can be critically important for their firm’s
success. As competition become more global and the base of technological development accelerated
more sophisticated frameworks for managing this complexity were developed. His strategic
management stressed long-term planning through the examination of a set of environmental, public
policy, industry structure and organization factors. The strategic human resource management (SHRM),
involved linking of HRM to firm level outcomes with a financial and strategic importance. It evolved in
the beginning as an isolated planning function with restricted set of responsibilities, it gradually
expanded…To understand SHRM emergence we need to focus upon the historical developments
starting from PM, HRM and moving finally towards SHRM.

Methodology of Study

As the nature of the study is descriptive and related to the history of Strategic HRM therefore the data is
collected from the secondary data and for these purpose different articles, books related to study.
Thorough literature review was done.

Discussion:

Stages In The Development Of Personnel Management:

The origins of personnel management

The roots of personal management are fairly diversed. However certain developments are somewhat
international and primarily owe their existence to the process of industrialization. The roots of personnel
management can also be traced to the bureaucratization of organizations, the growth of large scale
organizations, spreading applications of bureaucracy and rise of specialist sections and departments
(accounting, production planning and so forth) all fostered a need of managing personnel

The literature attributes subsequent developments in personnel management to concomitant

developments in organization theory, such as scientific management (taylor), scientific administration
(fayol), human relations (Elton Mayo), and the revised view of human relations as human resources or
as individuals capable and willing to assume responsibility (McGregor). Each school of thought
stresses a particular image of man’s nature, a concurrent emphasis in personnel activities and a self
image of the roll that personnel management should play in organizations. More recent developments
in personnel management (from the mid-1970s onwards) generally demonstrate a more business-led
approach to personnel issues.

Early philosophies:

One of the pioneer industrialist was Robert Oven (1771-1858), a Scottish textile manufacturer who in
1813 wrote a book entitled “a new view of society” he built model worker villages by his cotton mills at
Scotland. He built decent health and sanitation facilities in his factories and established schools for
children and workers. Eventually, he abolished child-labor in his mills. He took genuine interest in the
welfare of his people. Andrew Ure (1835) London, praised the factory system over the home
production. In the early 1990s, the welfare movement became fairly widespread in American industry.
This movement aimed to uplift the physical, hygienic, social and educational condition of working class
people for the own benefit and to make them better employees/ These programs included health
facilities, lunch rooms, libraries, schools, insurance and pension programs.

1. Addition to recruitment and record keeping, craft and supervisory training. Welfare officers became
staff or labor managers and the latter were increasingly involved in industrial relations, but they
operated almost entirely at the tactical level.

2. Personnel management, the mature phase (1960s and 1970s) __in which the services provided in
the previous phase were extended into organization and management development, systematic
training (under the influence of the training boards) and man-power planning. More sophisticated
selection, training, salary administration and appraisal (management by objectives) techniques were
used. Under the influence of the behavioral Scientists, some businesses went in for organizational
development (OD) programs and job enrichment. Industrial relations were a major preoccupation and
the period saw formal productivity bargaining come and go. Personnel or industrial relations directors
appeared more frequently on boards, although in most cases the extent to which they were really
involved in business strategy was limited. The increase in the amount of employment legislation placed
greater onus on personnel professionals to become employment law experts. Personnel managers
took on a more professional role.

INFLUENCES ON PERSONNEL MANAGEMENT

The main influences on current thinking in personnel come from the following writers and
commentators:

• The human relations school represented by academics such as Elton Mayo (1933) who emphasized
people’s social needs and believed that productivity was directly related to job satisfaction.

• The behavioral science movement represented by such writers as Maslow ( 1954), Argyris (1957),
Herzberg (1957) and Likert ( 1961) who underlined the importance of integration and involvement and
highlighted the idea that management should accept as a basic value the need to increase the quality
of working life as a means of securing improved motivation and better results.

• The excellence school consisting of writers such as pascale and Athos (1981), and Peters and
waterman (1982) who produced lists of the attributes which they claimed characterized successful
companies. These popular writers have strongly influenced management thinking about the need for
strong cultures and commitment.

CRITICISMS ON PM:

There is an evidence of long-standing criticism on the PM. A widespread is that it lacks strategic
relevance because it performs a mainly administrative-type role (Drucker, 1968; Watson, 1977; Legge,
1978; Rowland and summers, 1981 . It is an uneasy relationship with line managers because
HRM is a dimension of all managerial roles. The seeds of its problem are traceable to its origin in
the industrial revolution when a combination of factors led to the fundamental and by now, historic
division between employers and employed. I.e. trade unions and collectivism versus management and
its various control mechanisms. The introduction of the welfare worker into organizations was viewed
by many trade unionists as a cynical managerial control tactics (Sheehan, 1976, Watson, 1977,
Lawrence, 1985). Another major weakness derived from its failures to develop a sound theoretical
base, which is manifested in a tendency to introduce piecemeal prescriptive text book interventions as
a cure of organizational ills. Such prescriptions have been too frequently experienced by management
as out of context with the aims of the organizations and therefore irrelevant Legge, (1970).

DEVELOPMENT OF THE HRM CONCEPT__THE US MODELS

HRM first emerged as a clearly defined concept in the mid-1980s when two models were produced by
American academics. These were christened by Boxall (1992) as the ‘matching model’ and the
‘Harvard framework’.

The matching model of HRM

One of the first explicit statements of HRM was Beer et al (1984). Their framework is based on the
belief that the problems of historical personnel management can only be solved: When general
managers develop a viewpoint of how they wish to see employees involved in and developed by the
enterprise, and of what HRM policies and practices may achieve those goals. Without either a central
philosophy or a strategic vision__which can by provided only by general managers__HRM is likely to
remain a set of independent activities, each guided by its own practice tradition.

Walton (1985b), also of Harvard, developed the concept of mutuality:

The new HRM model is composed of policies that promote mutuality__ mutual goals, mutual influence,
mutual respect, mutual rewards, mutual responsibility. The theory is that policies of mutuality will elicit
commitment which in turn will yield both better economic performance and greater human development.

The advantages of the Harvard model, according to Boxall (1992), are t hat it:

• Incorporates recognition of arrange of stakeholder interests

• Recognizes the importance of ‘trade-offs’, either explicitly or implicitly, between the interests of
owners and those of employees as well as between various interest groups

• Widens the context of HRM to include ‘employee influence’, the organization of work and the
associated question of supervisory style

UK VERSIONS OF THE HRM MODELS:

A number of British academics have made major contributions to the concept of HRM and their work is
summarized below.

David Guest

David Guest (1987, 1989a, 1991) has taken the Harvard model and developed it further by defining
four policy goals which he believes can be used as testable propositions:

1. Strategic integration: the ability of the organization to integrate HRM issues into its strategic plans,
ensure that the various aspects of HRM cohere and provide for line managers to incorporate an HRM
perspective into their decision-making.
2. High commitment: A behavioral commitment to pursue agreed goals and attitudinal commitment
reflected in a strong identification with the enterprise.

Guest (1989a) believes that the driving force behind HRM is ‘the pursuit of competitive advantage in
the market-place through provision of high-quality goods and services, through competitive pricing
linked to high productivity and through the capacity swiftly to innovate and manage change in response
to changes in the market-place or to breakthroughs in research and development.’

KAREN LEGGE

Karen Legge (1989) considers that the common themes of typical definitions of HRM are 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.

Like other writers, Legge (1995) comments on the rhetoric of HRM. She refers to HRM rhetoric as
being consistent with the enterprise culture and states that:Without doubt, the language of HRM__ and
its close cousin, the language of excellence__ is that of managerial triumphalism. Managers create
missions for their organizations; they change their cultures, they act as transformational leaders that
gain the commitment of employees to the values of quality, service, customer sovereignty, that is
translated into bottom-line success. In the interests of achieving these values, employees must take
responsibility; become empowered__ as also are the supreme arbiters, the customers.

CHRIS HENDRY AND ANDREW PETTIGREW

Hendry and Pettigrew (1990) play down the perspective element of the Harvard model and extend the
analytical elements. As pointed out by Boxall (1992), such an approach rightly avoids labeling HRM as
a single form and advances more slowly by proceeding more analytically. It is argued by Hendry and
Pettigrew that’ better descriptions of structures and strategy-making in complex organizations, and of
frameworks for understanding them, are an essential underpinning for HRM’.

Hendry and Pettigrew believe that, as a movement, HRM expresses a mission to achieve a turnaround
in industry: HRM was thus in a real sense heavily normative from the outset: it provided a diagnosis and
proposed solutions’. They also suggested that:’ What HRM did at this point was to provide a label to
wrap around some of the observable changes, while providing a focus for challenging deficiencies __in
attitudes, scope, coherence, and direction __of existing personnel management’.

JOHN PURCELL

John Purcell (1993) thinks that ‘the adoption of HRM is both a product of and a cause of a significant
concentration of power in the hands of management’, while the widespread use ‘of the language of
HRM, if not its practice, is a combination of its intuitive appeal to managers and, more importantly, a
response to the turbulence of product and financial markets’.

He considers that HRM policies and practices, when applied within a firm as a break from the past, are
often associated with words such as commitment, competence, empowerment, flexibility, culture,
performance, assessment, reward, teamwork, involvement, cooperation, harmonization, quality and
learning. But ‘the danger of descriptions of HRM as modern best-management practice is that they
stereotype the past and idealize the future’.

HRM and Personnel management Differences:

The differences between personnel management and HRM can be seen as a matter of emphasis and
approach rather than one substance or as Hendry and Pettigrew (1990) put it, HRM can be perceived
as a perspective on personnel management and not personnel management itself.

From her literature review, Legge (1989) has identified three features which seem to distinguish HRM
and personnel management:

1. Personnel management is an activity aimed at non managers whereas HRM is less clearly focused
but is certainly more concerned with managerial staff.

2. HRM is more of an integrated line management activity whereas personnel management seeks to
influence line management.

3. HRM emphasizes the importance of senior management being inv9olved in the management culture
whereas personnel management has always been rather suspicious of organization development and
related unitary, social psychology orientated ideas.

Development of SHRM

In late 1980s, Armstrong, started writing more about the approach of SHRM for the management of
people as compared to the traditional methods of industrial relations. SHRM mainly focuses on the long
term objectives of the firm. Instead of focusing on internal human resource matters, the objective is on
addressing and solving the problems that effect people management in the long run and often globally.
Hence the primary goal of strategic human resource is to increase employee productivity by focusing
on business obstacles that occur outside of human resources. The primary actions of a strategic
human resource manager are to identify key HR areas where strategies can be implemented in the
long run to improve the overall employee motivation and productivity.

Strategic human resource management (SHRM) is a strategic approach to manage human resources
of an organization. Compared with technical HRM,

The increasing importance of people to organizational success corresponds with the rise of Strategic
Human Resource Management (SHRM) as a field of study worldwide. Research on SHRM issues has
grown exponentially over the past ten years. Originating as it has, however, across diverse academic
disciplines (for example, psychology, sociology, economics) and geographic regions (although
primarily Europe and the United States), this literature has been in need of integration and synthesis.
Boxall and Purcell’s Strategy and Human Resource Management provides a thorough review of this
eclectic literature in a framework that makes it easy for the reader to grasp the field’s evolution and
current state of thinking and it considers both U.S. and European perspectives on SHRM, which differ
in important ways.
Most researchers in the United States adopt an implicitly managerialist approach, focusing on how HR
can benefit shareholders, while researchers in Europe emphasize the importance of balancing the
interests of multiple stakeholders such as employees, unions, governments, and society. The European
view tends to emphasize the importance of context; the U.S. view, “best practice.” Boxall and Purcell do
an outstanding job of accurately representing these different viewpoints, particularly in how they affect
research and practice and their presentation is both fair and balanced.

The increasing importance of people to organizational success corresponds with the rise of Strategic
Human Resource Management (SHRM) as a field of study worldwide. Research on SHRM issues has
grown exponentially over the past ten years. Originating as it has, however, across diverse academic
disciplines (for example, psychology, sociology, economics) and geographic regions (although
primarily Europe and the United States), this literature has been in need of integration and synthesis.

Wright and Snell (1989) have suggested that in a business, strategic HRM deals with those HR
activities used to support the firm’s competitive strategy.

Walker (1992) defined strategic HRM as the means of alligning the management of human resources
with the strategic content of the business and Boxall (1991) expressed the view that critical concerns of
human resource management are integral to strategic management in any business.

ORIGINS OF THE CONCEPT OF STRATEGIC HRM

The concept of strategic HRM was first formulated by Fombrun et al (1984), who worte that three core
elements are necessary for firms to function effectively.

• Mission and strategy

• Organization culture

• Human resource management

They defined strategy as a process through which the basic mission and objectives of the organization
are set, and a process through which the organization uses its resources to achieve its objectives. But
their most important conclusion was that “HR systems and organizational structure should be managed
in a away which is congruent with organizational strategy.

Strategic Integration and HR Strategies

The whole concept of strategic HRM is predicted on the belief that HR strategies should be integrated
with business strategies. Miller (1989) believes that for this state of affairs to exist, it is necessary to
ensure that management initiatives in the field of HRM are consistent with those decisions taken in
other functional areas of the business and consistent with an analysis of the product-market situation.

Tyson and Witcher (1994) considered that Human Resource strategy can only be studied in the context
of corporate and business strategies.

Startegic integration is necessary to provide congruence between business and human resource
strategy so that the later supports the accomplishments of the former. The aim is to provide strategic fit
and consistency between the policy goals of HRM and the business.

This point was originally made by Fombrun et al (1984) who stated that “ just as firms will be faced with
inefficiencies and they try to implement new strategies with outmoded structures, so they will also face
problems of implementation when they attempp to effect new strategies with inappropriate HRM
systems”

Guest (1989b) has suggested that strategic HRM is largely about integration and he sees this as one
of the key policy goals for HRM.

Walker (1992) has pointed out that HR strategies are functional strategies like financial, marketing,
production or IT strategies. In many organizations, long-range functional planning is a mandated
element of the long-range business planning process.

HRM practically concerned with the functions like recruitment, selection, appraisal, training and rewards
( Fombrun, Deramma, 1984) which describes the general functions of HRM. In fact, there is relative
isolation among these functions; we can say that HRM has evolved at micro level of the organization.

Recently, the researches and practitioners in all related disciplines have attempted to utilize strategy in
the firm, which created strategic development and strategic appraisal (Fombrun, 1984, galdraith and
Nathanson, 1979). All these produce the impact on the HRM which is aligned with the corporate goals
and objectives (Legnock and Hall 1988, Wright and Snell 1991). Now, the concept of HRM is
considered from a l macro-oriented which is more precisely called SHRM (Butler et al, 1991).

Guest (1989) suggested that SHRM is concerned with ensuring that “human resources management is
fully integrated into strategic planning; that HRM policies cohere both across policy areas and across
hierarchies and that HRM practices are accepted and used by line managers as part of their everyday
work”. In other words, SHRM is the macro-organizational approach to viewing the role and function of
HRM in the larger organization (Butler et al., 1991). two important dimensions that distinguish it from
traditional HRM.

Critics on SHRM

The literature has revealed that there is the lack of consensus with respect to the strategy formulation.
Due to changing environment the SHRM finds difficulty in finding the accurate match between the
current situation and the environment which complexity in the implementation of the strategy. Another
major criticism upon the SHRM is that the strategic decisions are not necessarily based on the output
of the rational calculations.

Much of the writing in the field of SHRM has been concerned with either practical advice or
presentation of empirical data. Without good theory, the field of SHRM could be characterized as a
plethora of statements regarding empirical relationships and/or prescriptions for practice that fail to
explain why these relationships exist or should exist. If, in fact, the criticism that the field of SHRM lacks
a strong theoretical foundation is true, then this could undermine the ability of both practitioners and
researchers to fully use human resources in support of firm strategy.

Results and Conclusion

The above mentioned emergence of SHRM clearly shows that there is a transition from PM and HRM.
The history shows that the utilization of human resource was present in different times and playing very
important role. The HR concept is actually redesigned according to the strategic needs of the
environment which becomes the SHRM. .

The fundamental concept of strategic HRM is based on the assumption that human resource strategy
can contribute to the business strategy but is also justified by it. the validity of this concept depends on
the extent to which it is believed that people create added value and should therefore be treated as a
strategic resource. Strategic HRM is only real when it is translated into specific personnel strategies
which are then implemented.

SHRM requires a shift towards a more macro-perspective in which it is applied broader level of the
organization. In fact, there is a need of commitment of the high quality of HR within the organization
which will bring more productivity in the organization. Similarly a strong leadership is required to exploit
the human and non-human resources.

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