Strategic Human Resource Management

Boxall, Peter. "Strategic Human Resource Management."

Strategic human resource management (SHRM) is a major field of human resource
management (HRM) concerned with the ways in which HRM is critical to the
viability of the firm and with the ways in which it may lay a basis for sustained
competitive advantage. A reasonably effective human resource (HR) strategy is a
necessary condition of business viability: All firms need to recruit and motivate
people who have the skills to conceive and conduct the firm's business. Outstanding
HR strategies can help firms to achieve superior performance.

Conceptual Overview
Strategic HRM is interested in relationships among HR activities and in relationships
between patterns of HR activitiesvariously called HR strategies, models, bundles,
styles, or systemsand the firm's internal and external contexts. It is concerned with
mapping the HR strategies firms adopt, with understanding why they do so, and with
building theory on how HR strategy can be used to enhance organizational
effectiveness. Going beyond a shareholder to a stakeholder perspective, it is also
concerned with the links between HRM and employee and societal well-being.
The identification and diagnosis of HR strategy is no easy task. Only the largest firms
tend to have explicit goal statements for their overall HR strategy. Even when they do,
one must be careful in taking them at face value. In HRM, aspirational rhetoric may
mask a more opportunistic and pragmatic reality, and broad policies are always open
to the interpretations of managers, both general and specialist, and sometimes their
active subversion. Furthermore, particular patterns of HRM are laid down at certain
critical moments in an organization's history, and managers find themselves working
within these traditions without necessarily being able to explain how all the pieces got
here. HR goals may not be seriously analyzed unless some kind of crisis emerges in
the firm's growth or performance that forces reconsideration and restructuring. The
complexities are greatest in large, diversified, and transnational firms where HR
strategies typically vary across job categories, workplaces, industries, and countries.
Analysis must start somewhere, however. The field of SHRM gained impetus from
the work of Michael Beer and his colleagues at Harvard Business School who
developed an important conceptual framework in 1984. This framework sees
managers interacting with stakeholder interests (such as those of shareholders,
employees, and, where they exist, unions) and situational factors (such as business
strategy, the labor market, and technology) to develop their own HR choices. These
lead to HR outcomes (such as various levels of employee competence and
commitment), which, in turn, have longer-term impacts on organizational
effectiveness and on societal and individual well-being.
The Harvard framework sought to integrate the huge range of HR choices that might
be adopted by considering the differences between bureaucratic, market, and clan
models of HRM. The fundamental goals of HRM are seen to differ across these styles
or models. The bureaucratic model is concerned with control and efficiency, using
traditional authority and such staples of personnel management as job descriptions

and job evaluation to provide order and equity. This HRM approach is regarded as
relevant to markets with stable technology and employment levels. The market HRM
approach, on the other hand, aims to treat employees more like subcontractors,
fostering short-term exchanges and performance-related pay systems. This is seen as
relevant to fast-changing environments such as high-fashion merchandising,
advertising, and professional sports. Finally, clan HRM systems are seen as building
more diffuse kinship links, fostering shared values, teamwork, and strong
commitment in organizations seeking long-term adaptability. This is seen as relevant
to firms pursuing quality and innovation. Combining aspects of two or even three
models is seen as useful when facing complex environments.
The main message in the Harvard framework is that HRM goals can, and should, vary
based on contextual factors and that firms should aim to develop a relatively
consistent style. This emphasis was echoed in important models developed by Randall
Schuler and Susan Jackson in 1987, by Lee Dyer and Gerald Holder in 1988, and by
James Baron and David Kreps in 1999, among others. External fit, or alignment with
the firm's broader strategy and environment, and internal fit, or alignment within its
portfolio of HR activities, are thus key concepts within SHRM.
In 2003, Peter Boxall and John Purcell noted that achieving these forms of fit is made
more difficult by the fact that cost effectiveness in the current competitive
environment, while extremely important, is only one strategic goal. As many studies
have emphasized in the past 20 years, firms also need a degree of flexibility if they
are to cope with environmental change. In addition, firms need to secure some degree
of social legitimacy. Firms are sociopolitical as well as economic entities; some HR
practices must be adopted to comply with laws and social norms, irrespective of the
firm's competitive posture or its economic performance. Firms experience trade-offs
and tensions among these strategic HR goals.
A key development in the SHRM literature has been the incorporation of ideas from
the resourcebased view of the firm, a major branch of strategic management that is
concerned with how firms can build unique, enviable clusters of resources. As Jay
Barney argued in 1991, desirable resources are valuable and scarce, difficult to
imitate, very hard to neutralize with other resources that will meet the same ends, and
appropriable (capable of providing a superior return to the firm's shareholders).
While nothing is immune to Schumpeterian shocks (radical breakthroughs that
disturb technologies or basic concepts of business in the sector), there is scope for
firms to differentiate themselves in ways that are relatively sustainable in a given
competitive context. Barriers to imitation of a firm's strategic resources include the
historical, path-specific investments needed to develop them, the complexity of a
firm's social networks, and causal ambiguity about what the critical resources are and
how they have evolved. These ideas have been applied to HRM by Patrick Wright,
Gary McMahan, and Abigail McWilliams, among others.
Not all aspects of a firm's HR strategies will be unique because firms need to comply
with societal regulations to secure legitimacy and often adopt similar strategic
recipes to competitors in the industries in which they operate, but there is much
about HRM, both good and bad, that is inevitably idiosyncratic. Firms recruit
different individuals; those that can attract people of exceptional ability are in a

position to develop valuable and unique intellectual capital. In 1996, Boxall noted that
when such people are managed through superior organizational processes (such as
highly productive forms of cross-functional teamwork), then firms can develop
sources of human resource advantage that are deeply embedded and hard to
replicate.

Critical Commentary and Future Directions

Research in SHRM is dominated, as it should be, by studies of the relationships
between HR systems and organizational performance. This has been made difficult by
lack of consensus on how HR systems should be defined; lists of practices to be
included vary enormously. It helps, as Brian Becker and Barry Gerhart argued in
1996, if HRM systems are defined in terms of their underpinning principles and key
processes rather than solely at the level of specific practices (such as different types of
pay, appraisal, and training practices), which are inevitably affected by the specific
contexts of firms, industries, and societies.
While some writers continue to argue for the universal applicability of their list of HR
practices, most are skeptical about indiscriminate advocacy of any HR model that is
culturally bound (such as models developed in the lightly unionized and highly
individualistic U.S. context). Different societies regulate HRM in different ways, and
workforces in different countries exhibit different capabilities and cultural norms, as
is widely recognized in the literature on international HRM.
Universalism at a deeper level should not, however, be written off. While specific HR
practices and institutions vary across contexts, Becker and Gerhart, and Boxall and
Purcell, among others, argue that research is capable of highlighting principles of
more general applicability in terms of how work should be designed and people
management processes developed if particular effects are desired in a given context.
In terms of research and practitioner interest, an important line of enquiry centers on
the impacts and desirability of high-performance work systems (HPWSs, also
variously defined as high-involvement work processes and high-commitment
management). HPWSs contain a mix of practices designed to enhance employee
abilities, motivation, and opportunity (the AMO framework) to contribute. In 1995, a
U.S.-based study by Mark Huselid of around 1,000 firms found that HPWSs
improved financial performance, largely through positive impacts on employee
retention and productivity.
He did not, however, find much evidence that these associations were enhanced by
external and internal fit. This is most likely due to the ways in which these concepts
were theorized and measured. Huselid's work helped to spark a major methodological
debate. While it included objective data on company performance, data on the firm's
competitive strategies and HR practices were obtained from a single respondent (the
senior HR manager). No data were obtained from line managers (who may variously
interpret, apply, and subvert HR policies) or from employees (who may variously
comply with, be motivated by, or resist the overtures of their managers). As Purcell
noted in 1999, this means that vital information on processeson how effectively
policies have been implementedis missing.

Responses to these sorts of criticisms have lead to improved model building, spelling
out more fully the linkages involving line managers and employees within the black
box of the firm, as shown in work in 2003 by Purcell and his colleagues. Models of
intervening variables are important in the theorization of how HR systems work, and
are essential if we are to understand when and how costly investments in human
resources can become sources of sustainable competitive advantage. The best studies
available have ensured that employee responses to HR practices are measured. For
example, work in 1999 by Robert Vandenberg, Hettie Richardson, and Lorrina
Eastman incorporated employee perceptions of high-involvement work processes and
showed that higher levels of these processes were associated with better
organizational performance in a sample of insurance companies. In the line of
research concerned with HPWSs, progress depends on both theoretical improvement
and on dealing with tough methodological challenges. The general challenge in
SHRM research is to improve the understanding of the HR strategies firms actually
adopt, why they do so, the key processes involved in making them work, and the
implications of particular HR models for organizational effectiveness and employee
and societal well-being.
Peter Boxall

Entry Citation:
Boxall, Peter. "Strategic Human Resource Management." International Encyclopedia
of Organization Studies. 2007. SAGE Publications. 15 Apr. 2010. <http://www.sageereference.com/organization/Article_n505.html>.