The theoretical underpinnings of HRD although frustratingly difficult to define (Lee 2010; McGoldrick et al. 2001; McLean and McLean 2001) are understood as derived from three distinct applied philosophical domains.Swanson’s (2001: 306) ‘three legged stool’ metaphor describes the economic, systems and psychological genesis of HRD theory and is important for a number of reasons. First, it highlights why there are often tensions inherent in balancing the needs of people, organization and shareholders (Bierema 2009; McGuire et al. 2007). While economics provides a sense of credibility to the practice of HRD; that is, the traditional performance-based position that seeks to achieve goals and objectives through utilization of the organization’s human capital, it is of limited applicability in understanding the humanist aspect of HR. The economics orientation which is primarily concerned with performance and efficiency can and does undermine the people role of HRD practice resulting in tension and a return to shareholder primacy during turbulent times (Bierema 2009; Fenwick and Bierema 2008). Second, the systems theory perspective allows practitioners to utilize their understanding of process and interconnection within the organization so as to shape alternative futures utilizing human resources to do so. Although, the systems approach is not
without its limitation (see Yawson 2013) it does view the organization as a diverse eco system of human behaviors and interactions – in this sense, the whole is certainly greater and more complex than the sum of its parts, capable of incredible feats of ingenuity and at the same time prone to failures of almost unimaginable impact. Finally, the psychological principles help illuminate behavioral intentions and cognitive processes of the organization’s human capital so that they can be developed and harmonized to achieve the organization’s goals and objectives. Although the psychological principles that underscore HRD theory form only part of the ‘three legged stool’ metaphor, arguably it is the psychological principles that are the most critically important to both the study and practice of HRD. Given that the psychological leg is concerned with the behavioral and cognitive processes of the organization’s human interface; understanding this dimension becomes critically important when explored in the context of the financial crisis and the intellectual and knowledge failures central to its emergence.
The traditional orientation of HRD practitioners and scholars has been towards aligning human intellectual capital with the organization’s goals and objectives to achieve and sustain competitive advantage (Garavan 2007; Garavan et al. 2004; Hung et al. 2009; Kuchinke 2000; May et al. 2003): or perhaps, more specifically – the conversion of human talent and ingenuity into economic and financial output. As seen from a more strategic perspective, HRD has achieved legitimacy through the conversion of human talent into economic and financial returns for the benefit of organization. The financial crisis however, has illuminated features of organizational behavior that are often mooted in more circumspect debate and illustrate limitations in economic centric theories of HRD or what can be referred to as the economic asymmetric orientations of HRD scholarship and practice. Whilst a debate about all the theoretical underpinnings of HRD is beyond the scope of this chapter (see previous chapters on HRD theory) it is important to recognize that economic theory has had a
significant influence on the practice of HRD and to a lesser degree, the scholarship of HRD (Kuchinke 2000; Wang and Holton 2005). And, while it is fair to say that HRD practice plays a role in the pursuit of sustained competitive advantage, on the whole the HRD profession has consistently faced challenges of legitimacy and credibility (MacKenzie et al. 2012; O'Donnell et al. 2006) in justifying its worth to the organization.
One theory that has been both extensively utilized by HRD scholars and is recognized by HRD practitioners as a way to contribute to sustaining competitive advantage is the resource- based view (RBV) of the firm (Penrose 1995; Wright et al. 2001). The resource-based view of the firm posits that internal [human] resources are considered potential sources of competitive advantage (Wright et al. 2001) so the attraction of this theoretical lens to HRD scholars and practitioners is understandable. The RBV then focuses on how the organization [firm] might develop unique bundles of human and technical resources in an effort to achieve superior performance (Lado et al. 2006; Wright et al. 2001). The oft cited statement that people are the most important asset in the organization (Boxall and Purcell 2008; Porter 1985) illuminates why the RBV is so attractive to many HR practitioners but perhaps is considered most important to HRD specialists tasked with developing the organization’s human intellectual capital.
The appeal of RBV to HRD specialists is borne out in its ability to capture the ‘capabilities’ (Garavan 2007; Peterson 2008) of the organization’s intellectual capital for the benefit of its shareholders [assuming a profit seeking orientation]. However, if we consider this ‘economics’ based theory purely on its merits, then its central tenet is that human capital is an organizational resource to be exploited in a means ends manner (O'Donnell et al. 2006) thus calling into question the truth about HRD’s ‘people’ responsibilities and the rhetoric that people are the organization’s most important asset. The RBV from a human resources perspective suggests that individual human capital is embedded within a socially constructed
and dynamically complex arrangement, responsive to and reflective of a multitude of human emotions and behaviors. To suggest that human beings can be detached from their emotions, cognitions and behaviors ignores their very human frailties and questions whether HR is developing people or products. As Fenwick (2011) trenchantly asked - for whom and for what are HRD professionals developing resources? The financial crisis might suggest an answer to this probing question. Dave Ulrich (2014: 1) recently suggested that a successful organization can be characterized by ‘three domains: individuals [talent] capabilities [culture] and leadership. These ‘domains’ Ulrich (2014) argues, are central to organizational success and the delivery of the organization’s strategy. Whilst it is difficult to disagree with some of what Ulrich has suggested – the overreliance on utilizing the resource-based view as a theoretical lens to underscore the organization’s capabilities has [most recently in the context of the financial crisis] highlighted the significant limitations of economics-based theories when dealing with human behavior and cognition. It is precisely because of our overreliance on economics-based theories that we may have become somewhat desensitized to the dark side behaviors found to have played a central role in the financial crisis.
It is difficult to argue with the position that viewing the organization’s most valuable ‘human assets’ as a form of ‘economic capital’ provides ample justification for ‘absolving managers from any responsibility’ (Stacey 2010: 44) when those human assets fail. As the previous sections have illuminated – the dynamics of human cognition and behavior can only really be understood when one is prepared to explore their operation from a ‘sociological imagining’ that allows us to ‘understand our biography in the context of the wider social, economic, cultural and historical dimensions that shape and often determine reality’ (Gold and Bratton 2014: 6). Anything less is looking for answers to a different set of questions.