Reinventing HRM

Challenges and New Directions

Ronald J. Burke, Cary L. Cooper

• Publisher: Routledge
• Year: 2006
• ISBN:
  9781134363612
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The human resources (HR) field is in a time of format and self-reflection. This significant text directly addresses the reasons why human resource management has not received its due. It asks:

• What can be done about this?
• Why is it critical to continued organizational performance and innovation?
• What are its benefits?

The authors review the most current thinking on HR initiatives associated with organizational performance and investigate how the field will need to mobilize in new ways to meet the demand of this period of time. With contributions from key thinkers, this is one of the most important books on HRM available.

Part I
New directions in Human Resource Management

Chapter 1
The human resources revolution
Why putting people first matters¹

Ronald J. Burke and Cary L. Cooper

The world of work and organization has become increasingly demanding and turbulent (Burke and Cooper, 2004). Ulrich (1997) lists eight major challenges currently facing organizations. These are: globalization, responsiveness to customers, increasing revenue and decreasing costs, building organizational capability, change and transformation, implementing technology, attracting and developing human capital, and ensuring fundamental and long-lasting change. Thus, levels of competition among organizations have increased. Most organizations today can copy technology, manufacturing processes, products, and strategy. However, human resource management (HRM) practices and organization are difficult to copy, thereby representing a unique competitive advantage (Pfeffer, 1994, 1998). To be successful in the future, organizations will have to build organizational capability. HR professionals and HRM practices will be required to create value by increasing organizational competitiveness (Ferris et al., 1999).

Traditional views on competitive advantage have emphasized such barriers to entry as economies of scale, patent protection, access to capital, and regulated competition. More recent views have highlighted a different source of competitive advantage, a firm’s human resources and human capital (Huselid et al., 1997). New demands facing organizations as a result of heightened competition, globalization, and technological advances have put a premium on creativity and innovation, speed and flexibility, as well as efficiency. The critical firm assets do not appear on a balance sheet but reside, instead, in people and management systems (Ichniowski et al., 1996). The role of firm strategy, human resources, and HRM in firm performance is being rethought. Rather than seeing the HR function as a cost, an HRM system that supports a firm’s strategy should be seen, instead, as an investment, a strategic lever for the organization in creating value.

The 1990s witnessed a growth in research interest in examining the link between HRM strategies and practices and a firm’s financial performance (Becker and Gerhart, 1996). Studies have shown a strong positive relationship between the two, and this relationship has been observed in studies of one firm, one industry, and multiple industries (Becker and Huselid, 1998). Becker and Huselid have shown in three separate national surveys (over 2,400 firms) an economically and significant impact on several measures of firm performance. They observed a link between changes in the sophistication of a firm’s HR architecture and dollar change in market value per employee, suggesting three stages of HRM practices on firm performance.

How do we create organizations that add value to investors, customers, and employees? Organizational capability is the key and both HR professionals and line managers need to work together to achieve this. Pfeffer (1998) articulates the reasons why a people-based strategy pays dividends. High-performance management practices (selective hiring, extensive training, sharing of information, etc.) lead to performance results (innovation, productivity) while being hard to copy; in the long run, profitability is maintained.

HRM practices influence employee skills through the acquisition and development of human capital (Wright et al., 1994). Effective recruitment and selection practices can provide the firm with highly qualified applicants. Training and development opportunities contribute to increasing human capital. HRM practices can also influence levels of motivation through the use of performance appraisals, pay-for-performance incentives, and internal promotions systems based on merit (Brown et al., 2003). HRM practices can also influence the design of work so that highly motivated and skilled employees can use what they know in performing their jobs (Wright and Boswell, 2002).

The past decade has produced research evidence supporting the critical role human resource management plays in the success of an organization. This evidence has been generated in a variety of different types of organizations including manufacturing, professional services, and health care (see Liker, 2003).

The human resources function has, for a number of reasons, been typically viewed by executives as peripheral to the successful performance of their organizations. Human resource management, as a course in most MBA programs, is often not seen as useful as offerings in finance, marketing, or information technology. Yet, managers with full-time work experiences report that their major challenges involve people.

REINVENTING HRM

The human resources field is, itself, in a time of ferment and self-reflection. For example, the Human Resources Division within the US Academy of Management had a pre-conference workshop at the 2002 Annual Meeting in Denver (August 9) titled “HR Education: Is it dead or just sleeping?” This example reflects efforts to reposition human resources in a more relevant way.

Ulrich (1997) depicts the role of the HR department in a new light. HR professionals must create policies and practices that make employees more competitive. They need to have both HR theory and practice in their tool box. HR initiatives must have a measurable impact on business results. These efforts should increase intellectual capital and add value. Managers need to implement these best practices. HR professionals need to position HRM as a competitive advantage that adds business value.

Line managers need to understand that HRM practices build up organizational capabilities which, in turn, become a critical source of competitive advantage. In addition, managers need to invest time and resources in expanding organizational capability.

Lengnick-Hall and Lengnick-Hall (2003) advocate that HRM focus on the role of human capital steward. This would include deciding on the investments in human capital, developing flexible individuals and organizations able to respond to changing demands and use human capital effectively to reach organizational goals.

For too long, organizations have increasingly become short-term, bottom-line focused with more attention paid to cost cutting than training and development. The trade-off between profits and people is, in fact, an unnecessary opposition. The most successful companies balance an interest in people and productivity (Cameron et al., 2003; Waterman, 1987; Katzenbach, 2000). This collection endorses this balance: healthy people and healthy organizations go together.

It is also important to consider the contemporary context. Organizations, facing increased needs for innovation, speed, and productivity are demanding more of their employees— both their hearts and minds. In turn, the most highly educated workforce the world has ever seen is demanding more of their organizational employers. They want challenge, influence, recognition, development, and ownership.

IS HRM ANOTHER FAD?

It is easy to view much of the HRM writing on new approaches to managing people and organizations as faddish. Ulrich (1997, p. 63) lists the characteristics of HRM practices likely to be “cute, popular and faddish HR trends.”

1. It is simple and claims to solve complex problems.
2. It claims to apply to and help everyone.
3. It is not anchored or related to any known and generally accepted theory.
4. Proponents hesitate to present it in academic settings or write about it in refereed journals.
5. Proponents cannot tell you exactly how it works.
6. It is a “track” topic at 75 percent of the conferences you attend.
7. Its proponents claim that it has changed their lives and that it can change yours too.
8. Its greatest proponents are those with the least experience in the field.
   1. Proponents claim that the only way to really understand it is to try it personally.
   2. It cannot be explained or demonstrated.
9. It is just too good to be true.

While amusing, these statements ring all too true. For too long, HRM practices have been adopted as “quick fixes” and implemented in a rushed and superficial manner (Whitney and Tesone, 2001). When expected immediate benefits were not evident, organizations jumped to the next “one-minute” solution (Micklethwait and Wooldridge, 1997).

Pfeffer argues (1994) that HRM practices that are likely to be successful are not faddish, hard to understand, or hard to understand why they work, or contingent on a firm’s particular organizational strategy. But to be effective, these HRM practices must be interrelated and internally consistent.

Although we are beginning to understand more about effective HRM practices, significant challenges remain in the application of this knowledge. It takes significant time to achieve a competitive advantage through the workforce. Organizations doing well may feel no need to change; organizations doing poorly may face immediate pressures making it, too, unlikely to change. Managers may not use the knowledge they have about effective HRM (Pfeffer and Sutton, 2000). There also may not be enough communication of best-practice knowledge. In addition, managers may know something that researchers do not. Finally, some HRM practices may be risky and often fail.

However, Pfeffer estimates that only about one-eighth of efforts to change management and organizational approaches will introduce HRM practices that lead to organizational success. Of those who read about these concepts, one half won’t believe the evidence, one half (of the other half) will attempt a quick fix, and only one half of those undergoing substantial change will persist in their efforts.

WHY DON’T WE USE HRM BEST PRACTICES?

Considerable research has shown that organizations do not use current or innovative HR best practices (Johns, 1993; Rynes et al., 2001). In fact, very few HR practitioners even read the research literature (Terpstra and Rozell, 1997, 1998). HR research has become increasingly technical, making it more difficult to keep up with the literature. It may also be that HR practitioners do not see the HR research as being relevant or useful in meeting their needs (Adams, 2003; Ford et al., 2003).

Rynes et al. (2002) surveyed HR managers to determine whether their beliefs about HR best practices were consistent with the latest research findings. It was assumed that HR professionals were the ones responsible for spreading information about effective HRM to their organizations and helping line managers develop HRM strategies to achieve business objectives. They concluded that HR practitioners lacked knowledge about best practices supported by research evidence.

Rynes et al. (2003) conducted a study of business recruiters’ espoused preferences for students with both technical skill and behavioral skill. Students tend to believe that recruiters favor technical skill. Although recruiters indicated a preference for students that combined both, they gave the same employability rating to students who only took functional/technical course work. There is considerable evidence that business students are skeptical about the value of courses in HRM and Organizational Behavior (OB) (Rynes and Quinn, 1999).

Yancey et al. (2003) believe that HR practitioners and HR researchers move in different circles (i.e., belong to different professional associations, read different publications, attend different conferences). They surveyed 45 industrial-organizational psychologists, examining where they published, what conferences they attended, and what they knew about the HR practitioner community. Their findings indicated that industrial-organizational psychologists shared their research ideas with each other rather than with HR practitioners.

What can be done about this state of affairs? Rynes and her colleagues (2003) believe the first step is to see this crisis in HRM/OB legitimacy as a systemic, not a local, problem. Other suggestions include: more clearly defining the HRM/OB knowledge base, forming alliances with other teaching disciplines having greater legitimacy, doing better research on the teaching of HRM/OB, being more critical of negative practices and proposing even more positive organizational futures (see Cameron et al., 2003, for examples).

THE GAP BETWEEN RESEARCH AND PRACTICE

Case studies and research projects conducted over the past two decades have shed considerable light on the characteristics of successful and satisfying work places. We know what needs to be done to satisfy both human and business needs (Katzenbach, 2000). If you accept these statements to be true, why are so few organizations implementing best practices?

Some of the reasons for the gap between research and practice lie with the researchers themselves (Mohrman et al., 2001; Dossahoy and Berger, 2002). They spend most of their time communicating with other researchers and little time conversing with practitioners (Blanton, 2000; Boehm, 1980). Much of the scholarship of the research community is not read by most practitioners or even most academic researchers.

One must also look at the teaching programs of most MBA courses. Many of the professors in schools of business are, themselves, researchers, or the consumers of research findings. Few business schools teach OB or HRM in ways that illustrate the usefulness of this knowledge to increase organizational health and performance. Traditional OB texts review countless motivation theories and leadership theories which, if entertainingly presented, can be interesting to students, but the link between these concepts and bringing about peak performance is thin at best. Few business schools address the implementation of concepts, models, and research findings.

One might expect that line managers would not be aware of the current thinking on unleashing potential of staff but that HR specialists would. The evidence does not bear this out. Most HR specialists do not read the more research-oriented HRM journals. Rynes et al. (2002) report that fewer than one percent of their sample usually read the academic literature while 75 percent reported that they never do so. Yet, Terpstra and Rozell (1993) found that firms whose HR managers read and used the academic literature had higher financial performance than those that did not.

Latham and Latham (2003) write that the gap between researchers and practitioners creates “two solitudes.” Managers are either unaware or unconvinced of the value of HRM research findings. They offer eight ways to break down the two solitudes:

1. Set mutually interdependent goals. Researchers and practitioners have to be on the same team.
2. Act like an insider.
3. Identify a champion who is an influential member of the other solitude.
4. Build an alliance of a researcher with an HR manager. Learn to speak the language of the other solitude.
5. Write in practitioner outlets.
6. Support the education of both solitudes by the other.
7. Fund collaborative ...

Table of contents

• Cover Page
• Half Title page
• Title Page
• Copyright Page
• Contents
• List of illustrations
• List of Contributors
• Acknowledgements
• Part I New directions in Human Resource Management
• Part II New Challenges For Human Resource Management
• Part III Human Resource Management, Development and Employee Well-Being
• Part IV Human Resource Management and Organizational Effectiveness
• Index