Michael Armstrong

3rd Edition
Chapter # 01

Prof. Basharat Naeem

Lecturer – Institute of Business Administration
University of the Punjab
Mobile # 0323 – 4551589
Email: [email protected]
Learning Objectives:
In this chapter you will learn:
 The Concept of Human Resource Management (HRM)

 Various Models of HRM

 Aims and Characteristics of HRM

 Reservations about HRM and

 The Relationship between HRM and Personnel Management.

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Definition of Human Resource Management (HRM)

A strategic and coherent approach to the management of an organization’s

most valued assets – the people working there who individually and
collectively contribute to the achievement of its objectives.

John Storey (1989) believes that HRM can be regarded as

A ‘set of interrelated policies with an ideological and philosophical
underpinning’.

He suggests four aspects that constitute the meaningful version of HRM:

 A particular constellation of beliefs and assumptions;
 A strategic thrust informing decisions about people management;
 The central involvement of line managers;
 Reliance upon a set of ‘levers’ to shape the employment relationship.

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 HR
HRManagement
Management
Activities
Activities

Figure 1–2
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1–6
(PU)
Models of HRM:

Following are the different models of HRM:

1. The Matching Model of HRM

2. The Harvard Framework

3. Warwick Framework

4. Guest Framework

5. Storey Framework

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Models of HRM – Matching Model of HRM
 First explicit statements of the HRM concept was made by the Michigan
School (Fombrun et al, 1984)

 This model was developed by Fombrun, Tichy & Devanna

 HR systems and the organization structure should be managed in a way

that is congruent with organizational strategy.

 Emphasizes the interrelatedness and the coherence of HRM activities

 Prescriptive

 Ignores stakeholder interests, situational factors and notion of strategic choice

 Expresses the coherence of internal HR policies and the importance of

‘matching’ them to external business strategy

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Models of HRM – Matching Model of HRM
 Explained the HR cycle (an adaptation of which is illustrated in Figure) which consists of
four generic processes or functions that are performed in all
organizations. These are:
 Selection – matching available human resources to jobs;

 Appraisal (performance management);

 Rewards – ‘the reward system is one of the most under-utilized and

mishandled managerial tools for driving organizational performance’; it
must reward short- as well as long-term achievements, bearing in mind that
‘business must perform in the present to succeed in the future’;

 Development – developing high-quality employees.

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Prepared By: Basharat Naeem - Lecturer at IBA (PU)
Models of HRM – The Harvard Framework
 The other founding fathers of HRM were the Harvard school of Beer et
al (1984) who developed what Boxall (1992) calls the ‘Harvard
framework’.

 Beer and his colleagues believed that ‘today, many pressures are
demanding a broader, more comprehensive and more strategic
perspective with regard to the organization’s human resources’.

 These pressures have created a need for:

 A longer-term perspective in managing people and consideration of people as

potential assets rather than merely a variable cost’.

 They were the first to underline the HRM tenet that it belongs to line managers.

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Models of HRM – The Harvard Framework (cont.)
 They also stated that: ‘HRM involves all management decisions and
action that affect the nature of the relationship between the organization
and its employees – its human resources’.

 Following factors include in this framework

 Situational factors

 Stakeholder interests

 HRM policy choices

 HR outcomes

 Long-term consequences

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Models of HRM – The Harvard Framework (cont.)
 Classifies inputs and outcomes at both organizational and societal level.

 Absence of a coherent theoretical basis for measuring the relationship

between HR inputs, outcomes and performance

 The Harvard school suggested that HRM had two characteristic features:
1. Line managers accept more responsibility for ensuring the alignment
of competitive strategy and personnel policies
2. Personnel has the mission of setting policies that govern how
personnel activities are developed and implemented in ways that
make them more mutually rein-forcing

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Models of HRM – The Harvard Framework (cont.)
According to Boxall (1992) the advantages of this model are that it:

 Incorporates recognition of a range 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;

 Acknowledges a broad range of contextual influences on management’s

choice of strategy, suggesting a meshing of both product market and
socio-cultural logics;

 Emphasizes strategic choice – it is not driven by situational or environ-

mental determinism.
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Models of HRM – Warwick Framework

 Extends the Harvard framework.

 Maps the connections between the outer and inner contexts and
explores how HRM adapts to changes in context.

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Models of HRM – Guest Framework
 Reflects view that a core set of integrated HRM practices can
achieve superior individual and organizational performance.

 HRM differs from personnel management

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Models of HRM – Storey Framework
 Demonstrates the differences between the ‘personnel and
industrials’ and the HRM paradigm by creating an ‘ideal’ type.

 Characterizes HRM as ‘an amalgam of description, prescription,

and logical deduction’.

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Prepared By: Basharat Naeem - Lecturer at IBA (PU)
Prepared By: Basharat Naeem - Lecturer at IBA (PU)
Aim of HRM
 The overall purpose of HRM is to ensure that the organization is able to
achieve success through people.

 As Ulrich and Lake (1990) remark: ‘HRM systems can be the source of
organizational capabilities that allow firms to learn and capitalize on new
opportunities.’

 Specifically, HRM is concerned with achieving objectives in the areas

summarized below:
1. Organizational Effectiveness
2. Human Capital
3. Knowledge Management
4. Reward Management
5. Employee Relations
6. Meet Diverse Needs

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Aim of HRM (cont.)
1. Organizational Effectiveness
 Distinctive HR practices shape the core competencies that determine
how firms compete’ (Cappelli and Crocker-Hefter, 1996).

 Extensive research has shown that such practices can make a

significant impact on firm performance.

 HRM strategies aim to support programs for improving organizational

effectiveness by developing policies in such areas as knowledge
management, talent management and creating ‘a great place to work’.

 This is the ‘big idea’ as described by Purcell et al (2003), which

consists of a ‘clear vision and a set of integrated values’.

 More specifically, HR strategies can be concerned with the

development of continuous improvement and customer relations
policies.

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Aim of HRM (cont.)
2. Human Capital

 Human capital has been defined by Bontis (1999) as follows: ‘Human capital
represents the human factor in the organization; the combined
intelligence, skills and expertise that gives the organization its distinctive
character.

 The human elements of the organization are those that are capable of
learning, changing, innovating and providing the creative thrust which if
properly motivated can ensure the long-term survival of the organization.’

 Human capital can be regarded as the prime asset of an organization, and

businesses need to invest in that asset to ensure their survival and growth.

 HRM aims to ensure that the organization obtains and retains the skilled,
committed and well-motivated workforce it needs.

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Aim of HRM (cont.)
2. Human Capital
 This means taking steps to assess and satisfy future people needs and
to enhance and develop the inherent capacities of people – their
contributions, potential and employability – by providing learning and
continuous development opportunities.

 It involves the operation of ‘rigorous recruitment and selection

procedures, performance-contingent incentive compensation systems,
and management development and training activities linked to the
needs of the business’ (Becker 1997).

 It also means engaging in talent management – the process of

acquiring and nurturing talent, wherever it is and wherever it is
needed, by using a number of interdependent HRM policies and
practices in the fields of resourcing, learning and development,
performance management and succession planning.

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Aim of HRM (cont.)

3. Knowledge Management

 Knowledge management is ‘any process or practice of creating,

acquiring, capturing, sharing and using knowledge, wherever it
resides, to enhance learning and performance in organizations’
(Scarborough et al 1999).

 HRM aims to support the development of firm-specific knowledge

and skills that are the result of organizational learning processes.

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Aim of HRM (cont.)

4. Reward Management

 HRM aims to:

 Enhance motivation
 Job engagement &
 Commitment

By introducing policies and processes that ensure that people are valued and
rewarded for what they do and achieve, and for the levels of skill and competence
they reach.

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Aim of HRM (cont.)

5. Employees Relations

 The aim is to create a climate in which productive and harmonious

relationships can be maintained through partnerships between
management and employees and their trade unions.

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Aim of HRM (cont.)

6. Meet Diverse Needs

 HRM aims to develop and implement policies that balance and

adapt to the needs of its stakeholders and provide for the
management of a diverse workforce, taking into account individual
and group differences in employment, personal needs, work style
and aspirations, and the provision of equal opportunities for all.

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Aim of HRM (cont.)
7. Rhetoric & Reality

 The research conducted by Gratton (1999) found that there was

generally a wide gap between the sort of rhetoric expressed above
and reality.

 Managements may start with good intentions to do some or all of

these things, but the realization of them – ‘theory in use’ – is often
very difficult.

 This arises because of contextual and process problems: other

business priorities, short-termism, lack of support from line
managers, an inadequate infrastructure of supporting processes, lack
of resources, resistance to change and lack of trust.

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Characteristics of HRM

The characteristics of the HRM concept as they emerged from the

writings of the pioneers and later commentators are that it is:

 Diverse
 Strategic, with an Emphasis on Integration
 Commitment - Orientated
 Based on the Belief that People should be Treated as Human Capital
 Unitary rather than Pluralist, individual rather than collective, with
regard to employee relations
 A management - driven activity – the delivery of HRM is a line
management responsibility
 Focused on business values

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Characteristics of HRM – Diversity

 The characteristic of HRM are by no means universal.

 There are many models, and practices within different

organizations are diverse.

 Hendry and Pettigrew (1990) play down the prescriptive element

of the HRM 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.

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Characteristics of HRM – Diversity (cont.)

 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’.

 Storey (1989) was made distinction between

 The ‘hard’ versions of HRM

 The ‘soft’ versions of HRM

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Characteristics of HRM – Diversity (cont.)
 Hard Version of HRM:

 The hard version of HRM emphasizes that people are

important resources through which organizations achieve
competitive advantage.

 These resources have therefore to be acquired, developed and

deployed in ways that will benefit the organization.

 The focus is on the quantitative, calculative and business-

strategic aspects of managing human resources in as ‘rational’
a way as for any other economic factor.

 As Guest (1999) comments: ‘the drive to adopt HRM is…

based on the business case of a need to respond to an external
threat from increasing competition.
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Characteristics of HRM – Diversity (cont.)
 Hard Version of HRM:

 HRM ‘reflects a long-standing capitalist tradition in which the

worker is regarded as a commodity’.
 The emphasis is therefore on the
 Interests of Management
 Integration with Business Strategy
 Obtaining Added Value from People by the Processes of Human
Resource Development
 Performance Management &
 the Need for a Strong Corporate Culture Expressed in Mission and
Value Statements and Reinforced by
 Communications
 Training &
 Performance Management Processes

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Characteristics of HRM – Diversity (cont.)
 Soft Version of HRM:
 The soft version of HRM traces its roots to the human-relations
school.

 It emphasizes communication, motivation and leadership.

 Storey (1989) it involves ‘treating employees as valued assets, a

source of competitive advantage through their commitment,
adaptability and high quality of skills, performance and so on

 The soft approach to HRM stresses the need to gain the commitment
– the ‘hearts and minds’ – of employees through involvement,
communications and other methods of developing a high-
commitment, high-trust organization.

 Attention is also drawn to the key role of organizational culture.

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Characteristics of HRM – Diversity (cont.)
 Hard vs. Soft Version of HRM:

 In 1998, Karen Legge defined the ‘hard’ model of HRM as a process

emphasizing ‘the close integration of human resource policies with
business strategy which regards employees as a resource to be managed
in the same rational way as any other resource being exploited for
maximum return’.

 In contrast, the soft version of HRM sees employees as ‘valued assets

and as a source of competitive advantage through their commitment,
adaptability and high level of skills and performance’.

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Characteristics of HRM – Diversity (cont.)
 Hard vs. Soft Version of HRM:

 It has been observed by Truss (1999) that, ‘even if the rhetoric of

HRM is soft, the reality is often hard, with the interests of the
organization prevailing over those of the individual’.

 A research carried out by Gratton et al (1999) found that, in the eight

organizations they studied, a mixture of hard and soft HRM approaches
was identified.

 This suggested to the researchers that the distinction between hard and
soft HRM was not as precise as some commentators have implied.

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Characteristics of HRM – Strategic Nature

 Perhaps the most significant feature of HRM is the importance

attached to strategic integration, which flows from top
management’s vision and leadership, and which requires the full
commitment of people to it.

 David Guest (1987, 1989a, 1989b, 1991) believes that a key policy
goal for HRM is strategic integration, by which he means the
ability of the organization to integrate HRM issues into its strategic
plans, to ensure that the various aspects of HRM cohere, and to
provide for line managers to incorporate an HRM perspective into
their decision making.

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Characteristics of HRM – Strategic Nature (cont.)

 Karen Legge (1989) considers that one of the common themes of the
typical definitions of HRM is that human resource policies should be
integrated with strategic business planning.

 Keith Sisson (1990) suggests that a feature increasingly associated with

HRM is a stress on the integration of HR policies both with one another
and with business planning more generally.

 John Storey (1989) suggests that: ‘the concept locates HRM policy
formulation firmly at the strategic level and insists that a characteristic of
HRM is its internally coherent approach’

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Characteristics of HRM:
Commitment – Orientated Nature

 The importance of commitment and mutuality was emphasized by

Walton (1985) as follows:

 ‘The new HRM model is composed of policies that promote

Mutuality – Mutual Goals
Mutual Influence
Mutual Respect
Mutual Rewards
Mutual Responsibility.

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Characteristics of HRM:
Commitment – Orientated Nature (cont.)

 David Guest (1987) wrote that one of the HRM policy goals was
the achievement of high commitment – ‘behavioral commitment to
pursue agreed goals, and attitudinal commitment reflected in a
strong identification with the enterprise’.

 It was noted by Karen Legge (1995) that human resources ‘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’.

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Characteristics of HRM – People as Human Capital
 The notion that people should be regarded as assets rather than
variable costs, in other words treated as human capital, was
originally advanced by Beer et al (1984).

 HRM philosophy, as mentioned by Karen Legge (1995), holds that

‘human resources are valuable and a source of competitive
advantage’.

 Armstrong and Baron (2002) stated that: ‘People and their

collective skills, abilities and experience, coupled with their ability
to deploy these in the interests of the employing organization, are
now recognized as making a significant contribution to
organizational success and as constituting a significant source of
competitive advantage.’
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Characteristics of HRM – Unitarist Philosophy
 The HRM approach to employee relations is unitarist not pluralist
– it is believed that employees share the same interests as
employers.

 Gennard and Judge (1997), organizations are assumed to be

‘harmonious and integrated, all employees sharing the
organizational goals and working as members of one team’.

 Guest (1987, 1989a, 1989b, 1991) considers that HRM values are:
unitarist to the extent that they assume no underlying and
inevitable differences of interest between management and
workers; and individualistic in that they emphasize the individual–
organization linkage in preference to operating through group and
representative systems.
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Characteristics of HRM – Focus on Business Values
 The concept of HRM is largely based on a management and
business orientated philosophy.

 It is concerned with the total interests of the organization – the

interests of the members of the organization are recognized but
subordinated to those of the enterprise.

 Hence the importance attached to strategic integration and strong

cultures, which flow from top management’s vision and leadership,
and which require people who will be committed to the strategy,
who will be adaptable to change and who will fit the culture.

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Characteristics of HRM – Focus on Business Values (cont.)

 By implication, as Guest (1991) says: ‘HRM is too important to be

left to personnel managers.’

 In 1995 Karen Legge noted that HRM policies are adapted to drive
business values and are modified in the light of changing business
objecttives and conditions.

 She describes this process as ‘thinking pragmatism’ and suggests

that evidence indicates more support for the hard versions of HRM
than the soft version.

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HRM & Personnel Management

 A debate about the differences, between HRM and personnel

management went on for some time.

 The terms HRM and HR are now in general use both in their own
right and as synonyms for personnel management, but
understanding of the concept of HRM is enhanced by analyzing
what the differences are and how traditional approaches to
personnel management have evolved to become the present-day
practices of HRM.

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HRM & Personnel Management (cont.)

 Some commentators (Legge, 1989, 1995; Keenoy, 1990b; Sisson,

1990; Storey, 1993; Hope-Hailey et al, 1998) have highlighted the
revolutionary nature of HRM.

 Others have denied that there is any significant difference in the

concepts of personnel management and HRM.

 Torrington (1989) suggested that: ‘Personnel management has

grown through assimilating a number of additional emphases to
produce an even richer combination of experience… HRM is no
revolution but a further dimension to a multi-faceted role.’

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HRM & Personnel Management (cont.)

According to Armstrong
 HRM is regarded by some personnel managers as just a set of initials or old
wine in new bottles.

 It could indeed be no more and no less than another name for personnel
management, but as usually perceived, at least it has the virtue of
emphasizing the virtue of treating people as a key resource, the management
of which is the direct concern of top management as part of the strategic
planning processes of the enterprise.

 Although there is nothing new in the idea, insufficient attention has been paid
to it in many organizations.

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HRM & Personnel Management (cont.)

 The similarities and differences between HRM and personnel

management are summarized in Table

 The differences between personnel management and human

resource management appear to be substantial but they can be seen
as a matter of emphasis and approach rather than one of substance.

 Or, as Hendry and Pettigrew (1990) put it, HRM can be perceived
as a ‘perspective on personnel management and not personnel
management itself’.

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