The Harvard Model of HRM Management Essay

Introduction

The closing of the twentieth century has given rise to a vast debate concerning the response of human resource management to the changing external and internal environment of the firm. The late 1990s found the literature somehow settled on the necessity of strategic HRM, but concerned about the new roles that the HR function should adopt in order to meet contemporary organizational challenges (e.g. Kochan, 1997).The strategic role of the HR function means being involved in strategic planning from the outset and not only during the implementation phase and matching employee resources with business needs. This role is expected to occupy significantly more of the HR practitioner’s time in the future (Anderson, 1997). However, this does not mean that the administrative role will cease to exist, although there is an inherent tension between the outlook required for a strategic HR role and that of the HR specialist in a traditional role (Beer, 1997). One of the important aspects of the changing environment especially relevant to management is the information revolution

HRM MODEL

The early HRM Model Devanna( 1984) emphasizes the interrelatedness’ and coherence of HRM activities. The HRM cycle in this model consists of four key components: Selection, appraisal, Development and rewards. (figure ). These four HR activities aim to increase organisational performance .The weakness of the model is its apparent perspective nature, it ignores the shareholders interest. The strength of the model, however, is that it express the coherence of internal HR policies.

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Figure – Devanna (1984) model of HRM.

The Harvard model of HRM

The analytical framework of the ‘Harvard model’ offered by Beer et al .consists six basic components:

• Situation factors
• Stakeholder interests
• HRM policy choices
• HR outcomes
• Long-term consequences
• Feedback loop through which the output flow directly into the organisation and to the stakeholders

Source: (Beer et al 1984)

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Rationale for HRM evaluation

The notion that HR function should move beyond its administrative and controlling roles and value has been popular in the US management for long time. Druker, theAmerican management guru, suggested , for example that HR Department should behave differently and demonstrate its strategic capabilities , needing itself away from concern with the cost of employees to concern with their yield . According to Phllips (1999) , there are seven points in the management thinking and practices that changed the role HR.

Organisational change

Flexibility and productivity improvements

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The adoption of HR strategies

The increased importance of human capital

Increased accountability

Partnership relationships

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The growing use of HR information systems

HR Strategy –

HR strategies are here taken to mean the patterns of decision regarding HR policies and practices that are used by management to design work and select , train, develop, appraise, motivate and control workers

Resource based model of HR Strategy –

Barney argues that four characteristics of resources and capabilities – value, rarity, inimitability and non- substitutability- are important in sustaining competitive advantage. From this perspective, collective learning in the workplace on the part of managers and non managers, basically on how to coordinate workers diverse knowledge and skills and integrate diverse information technology , is strategic asset that rivals find to difficult to replicate. Figure 3summarizes the relationship between resources and capabilities strategies and sustain competitive advantage

Figure: The relationship between resource endowments, strategies and sustained competitive advantage..

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SHAPE

Firm’s resources and capabilities

Value

Rarity

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Inimitability

Non-substitutability

Strategies

Sustained competitive advantage Source: Barney (1991)

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An integrated model of HR Strategy

Bamberger and Meshoulam (2000) integrate the two main models of HR strategy , one approach focusing on logic of managerial control , other focusing on the acquisitions of employees . These two dimensions have four different ideal types of dominant HR strategy.

Commitment

Collaborative

Paternalistic

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Traditional

Figure: Categorizing human resource management strategies.

Source (Bamberger and Meshoulam, 2000.)

The commitment HR strategy is characterised as focus on the internal development of employee and outcome control

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Traditional HR is focusing on employee competencies and process bases control

The collaborative HR strategy focusing on the organisation subcontracting work and the performance of the company

The paternalistic HR strategy involves the learning opportunities and internal promotion of the company.

HRM and Performance model

For HR measure , demonstrating the link between HRM strategy and organisational performance requires the measurement of some sets of variables. The methodology for ensuring high internal validity would ideally permit a calculation of how different HRM strategies or individual practices affect economic performance while controlling the other factors that might influence those performance outcomes. Figure 4 demonstrates a basic model showing that relationship HRM practices and organisation performance. The HRM value model indicates the overall relationship between three elements.

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HRM

HR performance measures at both individual employee and work team levels

Organisational performance measure

Figure Human Resource management-organisation performance model

(Source; Phillips 1999)

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SHRM –

SHRM and Organisational performance link

HR strategy, through a diverse range of best practices, shapes employee knowledge and skills, enhances work motivation and provides the opportunity and the means for employees to contribute. These three interrelated processes are shown in figure. Central to the model is the notion that HRM research is required to monitor and evaluate the effectiveness of SHRM in order to ensure its contribution and value added to the organisation.( Bratton and Gold 2007)

Figure 2. A general theory of SHRM -organisation performance link

Source :Bratton and Gold 2007, p 552

Strategy:

A strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage. In the sense, strategies are purposeful and precede the taking of actions to which they apply (Slevin and Covin, 1997). Business-level strategy is designed to provide value to customers and gain a competitive advantage by exploiting core competencies in specific, individual product markets (Dess et al., 1995). Thus, a business-level strategy reflects a firm’s belief about where and how it has an advantage over its rivals. Business strategies are concerned with a firm’s industry position relative to competitors (Porter, 1985). Thus, favourably positioned firms may have a competitive advantage over their industry rivals

Hierarchy of strategy:

Another aspect of strategic management in the multidivisional business organisation concerns the level to which strategies issues apply. Various authors identify different level of strategy. See figure

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Corporate

Business

Functional

Figure: Hierarchy of strategy decision making. (Bratton and Gold 2007)

Corporate level strategy – describes a corporation’s overall direction in terms of its general philosophy towards the growth and the management of its various business units. Such strategies determine the types of business a corporation wants to be involved in and what business unit should be acquired, modified or sold.( Bratton and Gold 2007)

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Business level strategy – deals with decision and actions pertaining to each business unit, the main objective of a business level strategy being to make the unit more completive in its marketplace. Therefore, Porter (1985) formulates the frameworks that describe three competitive strategies: cost leadership, differentiation and focus. (see figure)

Figure: Porter’s competitive strategies.

Strategy-HRM fit

The link between strategy and human resource practice has been discussed by a number of researchers. Devanna et al.1984 state that the strategy- HRM relationship is essentially an extension of Chandler’s “structure follows strategy” thesis. They argue that management theorists and practitioners begin to realize the importance of human resources as they grapple with the problem of strategy implementation. It was realized that besides establishing a compatible structure, the successful implementation of a strategy also has to be supported by an appropriate human resource system.

Relationship between business strategy and HRM

According to contingency theory ( Porter, 1985; Schuler and Jackson, 1987), HRM practices must be combined with specific business strategies if they are to enhance organizational performance. Firms that use a cost-reduction strategy must rigorously control and minimize expenses, and strive for greater economies of scale. Efficiency is important for firms to succeed. Behaviour control increases predictability by routinizing the transformation process, this includes the following HRM practices: standard operating procedures, behavioural performance appraisal, close supervision, and feedback. By attempting to regulate action, this approach to HRM focuses on issues such as reliability and efficiency.

These arguments lead to the following hypothesis:

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HRM based on behaviour control is positively related to performance for firms emphasizing cost-reduction as business strategy.

HRM based on input control is positively related to performance for firms emphasizing innovation as business strategy

HRM based on output control is positively related to performance for firms emphasizing quality-enhancement as business strategy

Organisation change perspective

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SHRM SPERSPECTIVE

HRM and TQM

According to Dale (1999, p. 9), “TQM is the mutual cooperation of everyone in an organization and associated business processes to produce products and services which meet and, hopefully, exceed the needs and expectations of customers”.

According to Dessler (2000, p. 678), HRM is “the policies and practices one needs to carry out the ‘people’ or human resource aspects of a management position including recruiting, screening, training, rewarding and appraisals”

Linkage between HRM and TQM

HRM and TQM tend to focus on creating such a high performance culture or system. This can be done by the introduction of so-called “Best Practices” or high performance work practices (HPWP’s) that will deliver sustainable competitive advantage towards the organization. In other words, both HRM and TQM focus on creating sustained competitive advantage through high performance work practices such as leadership, empowerment, teamwork, employee development, rotation and pay for performance. Thus, TQM and HRM both underline the existence of forms of HPWS that drive organizations towards excellent performance (Boselie and van der Wiele,2002).

Many commentators argue that in order to be fully successful and self-sustaining TQM requires an extensive refashioning of “HRM” practices (e.g. Dale et al., 1994;), whose elements consist of essentially dimensions of human resource management.

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Empowerment

Empowerment is one of the HRM/TQM’s powerful instruments for a quality culture that encourages employee involvement, motivation, satisfaction, deliberate wilfulness to stay and loyalty towards the organization (Geralis and Terziovsky, 2003). One way of empowering employees is to give them the resources, responsibility and authority to plan, organize, implement, measure their work and make decisions that are necessary for them to maximize their contribution towards the organization with efficient and effective operation

Training and development

Training and development have been recognized as essential to the implementation of HRM/TQM (Snape et al., 1995). It leads to increase employees’ job involvement, facilitates the updating of skills, leads to an increased sense of belonging, well-being and benefit, increase commitment towards the organization and strengthen the organization’s competitiveness (Acton and Golden, 2002). According to Cherrington (1995), a successful training and development program would create more favourable employee attitudes; loyalty and help employees in their personal development and job involvement. Moreover, Zhang (1999) stressed the importance of training and development for continual updating and improvement, identifying one source of human motivation at work as intrinsic motivation and involvement; growing; learning and developing one’s self.

Reward and recognition

Reward and recognition can be defined as benefits, such as increased salary, bonuses and promotion resulting from the annual review of performance, which is conferred for public acknowledgement of superior performance with respects to goals (Juran and Gryna, 1993). Rewards for quality efforts appear to have a significantly positive relationship to employee morale (Kassicieh and Yourstone, 1998). According to Herzberg’s (1996) hygiene/motivator theory, recognition is one of the four motivators, which can contribute to employee attitudes (i.e. job involvement) when it is present. Reward and recognition activities are valued by employees, and therefore provide motivation or incentives, if executed appropriately, can, to a certain degree, secure employees’ involvement to their jobs and make their jobs more enjoyable and thus, creating an overall involvement within the respective organization.

Organizational communication

Organizational communication can be defined as the process of sharing information with other individuals (Troutt et al., 1995). It is critical within organizations for connecting employees and permits organizations to function, as well as an essential element to the implementation of HRM/TQM (Gray and Laidlaw, 2002)

Employee participation

Employee participation is a process for empowering members of an organization to make decisions and to solve problems appropriate to their levels in the organization. Cassar (1999) reported employee participation is one of the most researched contemporary management practices, primarily because it is often associated with enhancing employees’ positive attitudes and behaviours in the workplace. Also, through participation, employees will envision their jobs as more enjoyable, resulting in increasing levels of job involvement towards the organization

Customer focus

According to Philips (1995), customer focus can be defined as the degree to which a firm continuously satisfies customer needs and expectations. Morrow (1997) reported that customer focus is evident in the job design principle, which emphasizes on (among other things) establishing client relationship and feedback and, in turn, is associated with higher levels of job satisfaction, communication, job involvement and more favourable perceptions of the work outcome.

SHRM AND CULTURE

SHRM-

CULTURE

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FEXIBILITY

RECREMENT AND SELECTION

VALUE ANAYSIS

HR PLANNING

JOB DESIGN

EMPLOYEEMENT RELATION

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TQM

INNOVATION

Flexibility – Rapid advance in technology and the pressure exerted to respond to global markets are said to be having a significant effect on work patterns, work location and work times ,although some survey evidence suggests such claims may be exaggerated ( Taylor 2002) . In planning how to respond, many organisations involve the idea of flexibility .

Type of flexibility –

The flexible firm by Atkinson 91985) identifies four types of flexibility;

Functional : a firm’s ability to adjust and deploy the skills of its employee to match the tack required by its changing workload and production methods

Numerical: a firm’s ability to adjust the level of labour inputs to meet fluctuations in output.

Distancing strategies: the replace of internal workers with external subcontractors, referred to as outsourcing

Financial: support for the achievement of flexibility through the pay and reward structure.

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Employment flexibility and HRM

Flexibility is an ambiguous and ill-defined concept ( Mayne et al., 1996). The flexibility debate tends to concentrate on the notions of functional and numerical flexibility and the implications of adopting either one or the other. Functional flexibility is usually seen as the ability to respond to changes in business needs by having multi-skilled, adaptable and internally mobile employees (Blyton and Morris, 1992). It requires a skilled and committed workforce that can only be achieved by investing in training and long-term employment relationships and is, therefore, connected with the establishment of internal labour markets and primary sector employment. Numerical flexibility, on the other hand, is the ability of the firm to vary the quantity of work employed to match changes in the business needs. It represents a cost-cutting approach that looks to externalise the employment relationship, and is associated with short-term and precarious employment conditions in the secondary labour market segment, under which workers have little incentive or opportunity to be functionally flexible.

Flexible working – Stredwick and Ellis(2005) suggest key advantages of flexing working .

For business, there is the chance to exploit the 24 hours economy and open new labour markets that avoid traditional working hour’s patterns. Employee seem to like flexible working too, achieving far more in the flexible mode with no desire to go back traditional working patterns.

According to the (Department of Trade and Industry, 2003, P 12) there are ranges of possible ways of working hours. They are as bellow.

Annualized hours

Compressed hours

Flexitime

Home working

Job- sharing

Shift-sharing

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Staggered hours

Term-time working

INNOVATION