Human Resource Management for Organisational Change

Theoretical Formulations

Paritosh Mishra, Balvinder Shukla, R. Sujatha

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000479683
• Edition: 1
• Topic: Business
• Subtopic: Human Resource Management
• Index: Business

Change can take place in various forms, gradual or abrupt, incremental or transformational. It is a requirement in modern day society that everyone, whether at individual or organisational level, understands the softer nuances of this concept and prepares for it. During scenarios of change interventions, the role of human resources (HR) becomes highly crucial, even as the perception towards it becomes ambivalent.

This volume delivers a holistic view on the role of HR in organisational change. It is built on the various theoretical models of change and provides a dramatic sequence of issues in change management to gain a big picture thinking for HR managers and weaves through why, how and what perspectives to change management. Human Resources Management for Organisational Change offers a comprehensive coverage of the changing role of HR as it relates to organisational change theories and models, strategy, changing business environment and implications, organisational culture, leadership, resistance management, and high performance work practices (HPWP) to support change management and cost of no-changers. It is unique in that it covers the entire gamut of organisational change as well as HR.

It will be of value to researchers, academics, professionals, and students interested in learning more about how organisational change can improve productivity and human satisfaction as well as the systematic approach to managing organisational change.

1 Organisational Strategy and Changing Business Environment

DOI: 10.4324/9781003191346-1

Organisational Strategy, business environment and Human Resources have a triangularly impacted relationship – each influencing the other dialectically. This chapter depicts the models of business strategy and changing business environment and their impact on Human Resource Management.

Organisational Strategy

The term strategy is derived from the Greek word, strategos. Originally the term was used in the military parlance. However, “businesspeople have always liked military analogies, so it is not surprising that they have embraced the notion of strategy” (Essentials, 2005, p. xii). Strategy is a “plan that aims to give the enterprise a competitive advantage over rivals through differentiation” (Essentials, 2005, p. xiv). It is a plan, as suggested by Porter (1998, p. 73), focused on “positioning … [and] operational effectiveness”. According to Porter, strategy is the creation of a unique and valuable position, involving a different set of activities. Thus, Strategy involves a common thread of logic that links policies and resources together into a coherent and consistent whole (Andrews, 1971; Ansoff, 1965).

Strategic management characterises an academic turf, where consensual meaning of strategy may not be feasible. Asking strategic management scholars to describe the field could result in divergent responses (Nag, Hambrick, & Chen, 2007). Despite the seeming discordance, Nag et al. (2007) believe that the connotation still has a consensual identity, even as there may be some obscurity about its formal definition.

Nag et al., (2007) espouse an academic definition of strategy which they believe incorporates all the relevant elements of the construct. Their definition (Nag et al., 2007, p. 944) is: “The field of strategic management deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilisation of resources, to enhance performance of firms in their external environments”.

According to Ketchen (2003, p. 95) strategic management deals with three levels of strategy. Strategy at the corporate level dwells on the answers to the question “In what industry or industries will we compete?” Business-level strategy answers the question “How will we compete in each of our chosen businesses?” The task of functional-level strategy is to explore “How will each of the organisation’s functional areas support our business and corporate level strategies?”

Changing Business Environment

Several factors, internal and external, working in unison, affect organisational strategy. Selznick (2011) has introduced the need to bring an organisation’s ‘internal state’ and ‘external expectations’ together for creating goals and plans.

External force can be understood as the factors that influence the organisation from outside, such as dynamic changes in technology, society, market environment, and politics (Joseph, 2013). These forces have the capacity to bring changes in the production process, management relations, nature of competition, organisational methods, etc. Among external forces, technology plays a vital role in modern organisations, since it determines the entire structural working. Equally important are the market conditions, since the rise and fall of the market affects the success of the organisation (Joseph, 2013).

Internal factors are mainly concerned with changes brought about in the organisation by internal organisational elements. Internal changes can occur from implementation of new technology, changes in the behaviour of the workforce, decline in performance of the employees, merger and acquisitions of departments and induction of new employees, among other factors. (Armstrong, 2006; Durai, 2010; Lientz & Rea, 2004). Many a time, technological change brings turbulence in the organisation (Collins, 2005). Employees need to get attuned to the changing technological skills to maintain their jobs and status.

Internal changes are also experienced by the organisation when the workforce or employees change their attitude towards work (Collins, 2005; Lientz & Rea, 2004). This can happen due to change in working environment, changes in skillsets, or onset of negativism.

Internal changes are also encountered when new employees are hired, inducted and managed. The Michigan School of thought put this as the human resource cycle, consisting of four conceptual functions performed by every company: selection (or recruitment process); appraisal; rewards; and development (Armstrong, 2006). The efficacy of these functions determines whether the employees will bring development, growth, and change to the organisation.

Several Models have been conceptualised by managerial thinkers to study strategy making in organisations. It is expedient to study a few such models.

The Six-Box Model

Marvin Weisbord (1976), has espoused a diagnostic model, popularly known as the Six-Box Model. It seeks to capture all essential features of organisational performance determinants that can help organisations adapt to change (Palmer, 2005).

In the context of organisational life, Weisbord (1976) suggests six broad categories for organisational diagnosis: Purpose; Structure; Relationship; Rewards; Helpful mechanisms; and Leadership. The Model is described herewith.

The Six-Box Model represents the interaction between internal organisational structure and external environment, with ‘Purpose, Structure, Relationship, Rewards, Helpful mechanisms and Leadership’ representing internal organisation structures. These structures impact one another dialectically as inputs and outputs (Rothwell, 2013), and in turn are encircled by the broader external environment. As a diagnostic tool, this model cautions that giving too much emphasis to only one box of internal structure while ignoring the others or concentrating too much on the internal structures while not giving attention to the external mileau, brings downfall of the organisation. All the variables overlap with one another, helping and diagnosing problems when necessary, and thus ultimately condition organisational progress and development. According to this model, if the organisation faces problems, questions need to be asked with respect to each internal variable to diagnose the gap and find solutions (Rothwell, 2013; Weisbord, 1976).

Weisbord (1976) Model has remained a good organisational diagnostic framework often adapted by researchers (e.g., Hamid, Ali, S. S., Reza, Arash, Ali, N. H., & Azizollah, 2011; Ihsani & Syuhada, 2020; Lok & Crawford, 2000).

Strengths, Weaknesses, Opportunities, and Threats (SWOT)

The origin of the term “SWOT” is not clear. Wikis credit SWOT’s origination to Stanford University Professor Albert Humphrey, but no academic reference to support this claim is available (King, 2004). Haberberg (2000) states SWOT is an idea initially used by Harvard academics in the 1960s, while Turner (2002) credits SWOT to Ansoff (1987). SWOT analysis links the firm’s capability to its pertinent competitive environment. It focuses on assessing the strategic position of a firm by analysing its strengths, weaknesses, opportunities and threats (Jobber, 2004).

SWOT analysis assists in identification of environmental relationships as well as development of suitable growth paths for organisations (Proctor, 1992). Valentin (2001) observes that SWOT analysis is the traditional means for looking into ways of designing and maintaining a profitable fit between a commercial venture and its environment. It is one of the most respected, often used and prevalent tools of strategic planning (Glaister & Falshaw, 1999; Omer, 2019).

Porter's Diamond Model

The concept of competitive advantage epitomizes the key element of the strategy definition developed by Porter (1985). Porter espouses that competitive advantage is “at the heart of a firm’s performance in competitive markets” (Porter, 1985, p. XV) and “grows fundamentally out of the value a firm is able to create for its buyers that exceeds the firm’s cost of creating it” (Porter, 1985, p. 3).

Firms quite often do an assessment of their competitive advantage vis-à-vis the external environment based on the five forces model (Porter, 1980, 1985). The ‘five forces’ of competitive position of Porter’s diamond model, which is a simple framework for measuring and evaluating the competitive strength and position of a commercial organisation, has been viewed as the major analytical framework of competitive positioning paradigm.

Porter defines the competitiveness of a market as the productivity that companies located there can achieve (Cairncross, 2001). There are five forces that regulate such competitive strength and appeal. Porter’s five forces help ascertain where power lies in a business scenario and can be suitably leveraged not only in identifying the strength of an organisation’s extant competitive position, but the strength of a scenario that an organisation may aspire to move into. The five forces under consideration are: threat of new entrants or their barriers to entry; bargaining power of suppliers; threat of substitute products and services; bargaining power of buyers; and rivalry among competitors (Porter, 1985).

Porter’s model has certain limitations. It presupposes a characteristically perfect market and a stationary market structure, which are seldom found in today’s uncertain world. Further, some industries are intricate, having manifold interrelationships. This makes Porter’s model difficult and incomprehensible to be used (Wang, 2004). Moreover, as Rumelt (1991) points out, the critical factors of profitability are often firm-specific rather than industry-specific. Prahalad and Hamel (1990) suggest that resource-based competitive advantage, rather than one based purely on products and market-positioning, is more significant and sustainable.

VRIO Framework

‘VRIO framework’, initiated by Barney (1991), represents a counterbalance for the method centred on external causality related to firm’s competitiveness. VRIO (value-rarity-imitability organisation) technique (Barney, 2002) has assumed wide-spread advocacy for assessing a firm’s resources. In this framework, strategic assets are Valuable (economically significant, i.e., these make money for the company), Rare (unique, i.e., few other companies may have these resources), Inimitable (unmatched, meaning that it would be expensive to duplicate them and tough to ascertain what practices other companies are adopting to have such strategic assets), and have Organisational Support (strong management support and processes and systems to back these assets).

Such Resource Based View (RBV) is criticised for focusing solely on internal resources, ignoring the nature of market demand (Hooley et al., 1996). Andrews (1971) and Chandler (1962) have contended that external and internal factors cannot be dissociated. Maier and Remus (2002, p. 107) bring out the conceptualisation of fit, as a fine balance between Market Based View (MBV) and RBV. Dyer and Singh (1998) as well as Wang (2004) espouse that in the interconnection between the firm and the environment is embedded the obtaining of competitive advantage. Nason and Wiklund (2018) advocate versatility in resources and argue that valuable, rare, inimitable and non-substitutable (VRIN) resources support firms to exploit unique opportunities, while versatile resources bring in novelties in recombining the resources of the firms to promote growth.

PESTEL Framework

The success or failure of an organisation is determined by the level of efficacy of interaction with its environment. Kotler and Armstrong (2004) state that various kinds of limitations are imposed on organisations by the environment. An environmental analysis should categorize important external factors that require organisational action. Several frameworks exist to carry out environmental analysis; however, Johnson, Scholes, and Whittington (2008) prefer the PESTEL framework, which classifies factors into political, economic, social, technological, environmental and legal. The PESTEL framework, which is a mnemonic for the factors just enumerated, groups macro-environment factors for assisting strategists to look for sources of general opportunity and risks (Witcher & Chau 2010, p. 91).

Political Factors

Political factors...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Contents
• Acknowledgements
• Preface
• Introduction
• 1 Organisational Strategy and Changing Business Environment
• 2 Changing Role of Human Resource Management
• 3 Organisational Change
• 4 Models of Organisational Change
• 5 Resistance to Change
• 6 Organisational Culture and Organisational Change
• 7 Leadership and Organisational Change
• 8 Human Resources and Organisational Change
• 9 High Performance Work Practices (HPWPs) to Support Change Management
• Conclusions
• References
• Appendix: Comparison of Change Models
• Index