Transcript The Strategic HRM Debate and the Resource

Chapter 4
The Strategic HRM Debate
and the
Resource-based View of the
Firm
Peter Boxall
Two broad strands of meaning in the academic
discourse on HRM
– commitment-oriented model of labor management
– relationship between strategic management and
employee relations in the firm
This article defines HRM as including all styles of
labor management, including the high commitment
variant.
• Managers are typically engaged in managing the
‘strategic tension’ between ends and means in an
external environment characterized by risk,
change, complexity and ambiguity and an internal
environment characterized by bounded rationality,
endemic co-ordination problems, inertial
tendencies and political trade-offs.
• Intensification of competition presented incentive
to develop a strategic HRM approach to the
management of their staff, placed cost control at a
premium, and meant that the implementation of a
consistent HRM approach was difficult.
‘Levels’ of strategy
• First order - long-term direction of the firm
• Second order - internal structure, connections
and reporting relationships
• Third order - critical questions of functional
management/employee relations
‘Matching model’, ‘behavioral perspective’,
contingency hypothesis’-‘fitting’ HR strategy to
the firm’s choice of competitive strategy, although
there are variations which add or (sometimes)
substitute other contingencies such as life cycle
stage and structure
Theoretical critique
Strategy and Strategy Making
– It is better to conceive of business strategy as a
systemically connected mix of strategic choices,
incorporating competitive strategy and a variety of
other strategies in such areas as HRM, structure,
technology and finance.
– The most resilient firms are good at everything: they
are superb ‘all rounders’
Employment Relations
– The need for compromise with worker rights and
interests is overlooked.
– Fail to take into account the widely observed tendency
of firms to segment their workforces and adopt
different HR strategies for each major segment.
– Employing a core of ‘strategic employees’ on more
favorable terms than other staff groups.
Empirical SHRM Studies
• A high commitment model of labor management lays
the basis for all kinds of fruitful strategizing and
strategic implementation
• A ‘fit’ hypothesis predicts that either mass or flexible
production plants with a good fit between their HR
and production strategies will perform well
• Qualitative studies measuring the extent of strategic
choice are lacking
• There is a widespread failure to structure studies
around the phenomenon of workforce segmentation.
• Only when all questionnaires and/or interviews allow
respondents to reply for each workforce segment will
the surveys give us a more accurate snapshot of
human resource strategy.
The Resource-Based View
• ‘Physical’ and ‘human’ resources, including
knowledge/experience of the management team
• Competition does not eliminate all ‘differences
among firms in the same line of business’
• Some factors of production can be traded but there
are various productive capabilities which can only
be internally developed
• To generate sustained advantage, resources must
meet the criteria of value, rarity, imperfect
imitability and non-substitutability
• Firm’s ability to learn faster and apply its learning
more effectively than its rivals, gives it competitive
advantage
Strengths of the Resource-Based View
• The models are sensitive to history
– Competitive success from distinctive capabilities
– Performance depends on industry structure and
history the firm has been through
‘Resources are not valuable in and of themselves,
but because they allow firms to perform activities
that create advantages in particular markets’.
Strengths of the Resource-Based View
• Implies the need to build strategic management
processes, although this depends somewhat on
how theorists treat the notion of ‘casual ambiguity’
– Importance of intelligent, proactive leadership in firms
– Dynamic capabilities’ as ‘the capacity of a firm to renew,
augment an adapt its core competencies over time’
– Firms which combine high levels of competence in
multiple modes of strategy-making appear to be the
higher performers’
Implications
1. Provides a conceptual basis for asserting that
key human resources are sources of competitive
advantage.
2. Stresses the value of the complex
interrelationships between the firm’s human
resources and its other resources: physical,
financial, legal, informational and so on.
3. HRM can be valued not only for its role in
implementing a given competitive scenario, but for
its role in generating strategic capability
Implications Continued
4. Firms have the possibility of generating human
capital advantage through recruiting and retaining
outstanding people, through capturing a stock of
exceptional human talent, latent with productive
possibilities.
5. Human resource advantage might be conceived
as the product of its human capital advantage and
human process advantage.
6. Outcomes in one context cannot readily be
translated to another if the typical ‘critical success
factors’ are lacking
7. Isolating mechanisms-attributes that make
replication difficult
The Resource-Based View
and Existing HR Research
1. The problem of survival has involved restructuring
through ‘delayering’ and ‘rightsizing’.
2. We have witnessed the growth of more contingent
models of labor management
3. More stress on ‘performance management’ and
de-emphasized or abandoned explicit or implicit
promises of lifetime employment.
4. Create new forms of work organization without an
explicit pledge of employment security legitimated
by the extent of corporate restructuring and
unemployment and the waning of union power.
The Resource-Based View
and Existing HR Research
5. Striking a balance between long-run, resourcebased investment on the one hand and short-run,
cost containment, on the other.
6. HRM’s position on the ‘strategic agenda’ of senior
management is lower than it ought to be.
7. Survival anxiety has generated delayering,
rightsizing and increasingly contingent forms of
employment.
Conclusion
The resource-based perspective opens
up an array of research opportunities
Identifying and analyzing sources of
human resource advantage within the
context of firms, industries and nations
will be a complex, challenging task.