The "Classical Model" for practising Human Resource Management

Table of Contents

Table of Figures

Table of Abbreviations

1. Introduction

2. Models of Organisational Strategy
2.1 Definition of ‘Strategy’
2.2 The ‘Classical Approach’ to Organizational Strategy
2.3 The ‘Processual Approach’ to Organizational Strategy
2.4 The ‘Systemic Approach’ to Organizational Strategy

3. Definition of Theoretical Approaches to SHRM
3.1 The ‘Closed Matching Model’
3.2 The ‘Open Matching Model’

4. Critical Evaluation of the Selected Concepts

5. Conclusion

References

Table of Figures

Figure 1: Main Influence Factors on HRM Decision-Making

Table of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1. Introduction

During recent years an efficient Human Resource Management (HRM) has become more and more important for companies to achieve and sustain both competitiveness and economic success. Leopold, Harris and Watson (2005) mentioned that Human Resources became matters of considerable competitive advantage. Human Resources, respectively the skills and knowledge of an organisation’s staff, as Hamel and Prahalat (1994) called it, has transformed through massive changes in the economical, technological, sociocultural, judicial and political conditions to one of the most important strategic factor of success for companies these days. HRM, as a reaction to these changes in ‘Personnel Management’, attempts to find various methods of resolution for practice. If ‘Personnel Management’, ’HRM’ or ‘SHRM’, they all have a common goal: obtaining the achievement potential of all organisational members best as possible. But the ‘HRM’ approach goes beyond the traditional approach of ‘Personnel Management’, having a broader focus on the necessary interdependence of all components with each other as well as the connection to other compartments of companies, whose success is seen in straight connection with personnel measures.

Thereby Strategic Human Resource Management (SHRM) can be seen as extension of HRM, and following the definition of Boxall (1996) it deals with the relationship between the strategic management of an organisation and the management of its human resources within this strategic context. In that case the focus is on long-term personnel decisions as well as on the question how an interaction of corporate and personnel strategy can be achieved.

Initially this work is going to introduce and define different organizational strategies as well as key human resource strategies. This shall be followed by a critical evaluation of the concepts by opposing the pros to the cons. Therein the difficulties and between Organisational Strategy, Human Resource Strategy and the Organizational Environment shall be shown. The work results in a final conclusion.

2. Models of Organisational Strategy

2.1 Definition of ‘Strategy’

Before starting the discussion of organizational strategies it could be helpful to define the term ‘strategy’ generally. There are a great many definitions in literature for ‘strategy’ and authors agree only in that way that strategy is a very hard to define term, which mostly depends on the context it is used. A definition in the useful sense of ‘corporate strategy’ was given by Andrews: “Corporate strategy is the pattern of objectives, purposes or goals and essential policies or plans for achieving those goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be” (1971, p. 28). Derived from that definition as van Donk and Esser (1992) stated, it was clear that corporate strategy tells us something about the today’s standing of an organization, where it wants to be in the future and what steps it is going to undertake to get there.

2.2 The ‘Classical Approach’ to Organizational Strategy

The initial point of the analysis is represents by the ‘Classical Approach’ of organisational strategy. This approach was developed in the 1960s by different Anglo-American researchers. Key features of this approach were described by Millmore, Lewis, Saunders, Thornhill and Morrow (2007) and contain the ‘cold’ analysis of the organisation’s environment and its internal resources, followed by identifying and evaluating strategic options, derived from further analysis and as third step the implementation of the chosen strategy. Important for that approach was the work of Porter (1980) in which he argued that organisational strategy only can be chosen from three types of strategy: ‘cost leadership’, ‘differentiation’ and focus. From Whittington’s (2001) view this approach is a linear top-down-process, highly rational, deliberate and planned in its nature. This approach distinguishes also clearly between strategy formulation, which should be the terrain of top managers, from those who are responsible for the strategy implementation in certain divisions, the operational managers.

2.3 The ‘Processual Approach’ to Organizational Strategy

The ‘Processual Approach’ is somewhat different from the ‘Classical Approach’ and emerged in the 1970s. Strategies are formed by an emerging process in an organisation. Whittington (2001) called it ‘strategic flexibility’. Formulation and implementation of strategy occur in an integrated manner, thus in a more fluid process and through action as Millmore et al. (2007) stated. This is what Mintzberg (1987) called a ‘Crafting Strategy’. It was in his opinion closer to reality than the ‘Classical Approach’ because organisational strategies emerge from the work of people in small incremental steps at different levels of an organisation and are not planned straightforward from the top. This would be quite useful in Mintzberg’s (1987) view if an organisation operates in unstable environments accompanied by uncertainty and where creativity and expertise is needed. He argued: “The crafting image better captures the process by which effective strategies come to be” (1987, p. 66).

2.4 The ‘Systemic Approach’ to Organizational Strategy

This approach takes into account the difference of social systems in which an organization is located “…and challenges the universality of any single model of strategy” (Whittington, 2001, p. 37). Emerged in the 1990s, the main theorist of this approach is Whittington, who critically argued that the ‘Classical Approach’ could be valid for its Anglo-American environment where it was developed and where personal profit-maximization was the superior aim. But it has its limitations in countries with different social and cultural systems. Millmore et al. (2007) described the class structure, the operation of the market, the role of the state and the underpinning beliefs and values as crucial factors in the nature of strategy making. For that purpose Whittington (2001) compared continental Europe - where key factors were the role of state and social responsibilities in strategy-making - with the Anglo-American environment, where individualism and the pursuit of profits were superior. Millmore et al. (2007) considered that these factors have an enormous impact to strategy-making and the strategy itself.

3. Definition of Theoretical Approaches to SHRM

3.1 The ‘Closed Matching Model’

Now emphasising the inspection more on integration of organisation’s HRM activities and the link between organisational and HR strategy on the basis of certain selected SHRM models. At first there is the ‘Closed Matching Model’. It was summarized by Millmore et al. (2007) as approach which specified HR policies and practises which were relevant to specific organisational situations. In their theoretical thinking there was a clear and mutually supportive relationship between organisational strategy and HR strategy. This almost prescribed certain HR strategies to specific types of organisational strategies. The model was divided into four main strands, each developed and influenced by different researchers. In this work there is a limitation to the models of Schuler and Jackson and Miles and Snow.

Schuler and Jackson (1987) regarded on the three generic organisational strategies, termed by Porter (1985) as ‘innovation’, ‘quality enhancement’ and cost reduction. They argued that each strategy needed certain employee behaviours which needed to be provided by certain HR practices. Schuler and Jackson (1987) defined twelve needed employee behaviours of knowledge, skills and abilities.

Miles and Snow (1984) in contrast developed their own model of corporate strategies. Their work concentrated on either a ‘defender’ or ‘prospector’ strategy, each required a certain HR strategy to be chosen from a list of major strategic HR choices. While the organisations with the former strategy were located in a highly stable, formalized environment, dominated by provided job security and an upward career path through the ranks for the employees as Gómez-Mejía, L. R., Balkin, D. B., and Cardy, R. L. (2007) called it, the latter strategy is controlled by innovation, development, growth and searching for entries in new market areas or niches. This all occurred in an unstable, rapidly changing environment with decentralized and flexible organisation structures and required more emphasis on the external labour market and broader skills of employees.

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