1.2 Un poco de historia
1.2.4 Inicios de UNIX
One view of strategic HRM taken by some academics and practitioners is generally referred to as the "best fit" school of strategic HRM. This assesses the degree to which there is vertical integration between business strategy, policies and practices, and HR strategies, policies and practices. It implies “the notion of a link between business strategy and the performance of every individual in the organisation” (Golding, 2004).
Vertical integration therefore ensures an explicit link or relationship between internal people processes and policies and the external market or business strategy, and thereby (at least in principle) ensures that competencies are created which have a potential to be a key source of competitive advantage.
Note that "fit" as a concept is relevant not just in the strategy formulation stage – it may also apply at the implementation stage.
Cultural fit
If "fit" describes the relationship between an organisation’s HR strategy and its mission, vision, values, plans and goals, then vertical integration occurs when the human resource strategies are congruent with the culture of the organisation and fit with the business strategy.
Strategies which fit with the culture of the organisation are not only more readily acceptable, to both senior management and the workforce, but their implementation tends to go more smoothly too. If the intention is to change the culture, or adopt an initiative that does not fit the organisational culture, then there are likely to be difficulties in the implementation stage.
To ensure cultural fit, it is necessary to analyse the existing culture. Coke and Lafferty, writing in Organisational Culture Inventory in 1989, suggested that analysis on the following 12 points would provide information on how human resource strategies should be shaped:
Humanistic-helpful – organisations managed in a participative and person-centred way
Affiliative – organisations that place a high priority on constructive relationships
Approval – organisations in which conflicts are avoided and interpersonal relationships are pleasant, at least superficially
Conventional – conservative, traditional and bureaucratically controlled organisations
Dependent – hierarchically controlled and non-participative organisations
Avoidance – organisations that fail to reward success but punish mistakes
Oppositional – organisations in which confrontation prevails and negativism is rewarded
Power – organisations structured on the basis of the authority inherent in members' positions
Competitive – a culture in which winning is valued and members are rewarded for out-performing one another
Competence/perfectionist – organisations in which perfectionism, persistence and hard work are valued
Achievement – organisations that do things well and value members who set and accomplish challenging but realistic goals
Self-actualisation – organisations that value creativity, quality over quantity and both task accomplishment and individual growth.
Analyse your own organisation or one that you are familiar with. Which of the twelve points identified by Cooke and Lafferty does the organisation fit into? What evidence is there to support your view?
How Far Should Vertical Integration Go?
The extent to which organisational strategy and human resource strategy is integrated varies according to the type of organisation. Torrington and Hall identify a range of different
relationships, as shown below:
Separation model
In this model, there is no relationship at all between organisational strategies and human resource strategies. This is the model commonly used to describe the approach to human resource management up to the mid 1980s and in many organisations (particularly smaller ones) it is still apparent today. In fact, it is arguable that a human resource strategy does not exist in such organisations.
Fit model
This model recognises the importance of people in the achievement of organisational strategy. Employees are seen as key in the implementation of the declared organisational strategy and human resource strategy is designed to fit the requirements of the
organisation's strategy. (Note that this model requires the organisation's strategies to be developed on a top down planned approach – the "rational" method). We shall look at this model in more detail below.
HR Strategy Organisational
Strategy
HR Strategy Organisational
Strategy
The dialogue model
This model takes the relationship between organisational strategy and human resource strategy one stage further by introducing the need for two-way communication and debate.
Theoretically, the requirements of the organisational strategy may not be possible or desirable and some adjustment may be needed. In practice, however, the debate is more likely to be limited, particularly where the negotiating parties are not of equal status. This might occur, for example, at functional level where one department may have more
perceived power than another to the extent that its requirements are accommodated at the expense of another. A negotiation appears to take place but there is not mutually agreed outcome.
The holistic approach
This model represents where people within the organisation are recognised as key to competitive advantage, rather than just the way of implementing organisational strategy, i.e.
human resource strategy is not just the means of achieving business strategy (the ends) but an end in itself. Human resource strategy becomes critical. In practice, Storey found in 1989 that few organisations achieve this degree of integration, although research by Kelly and Gennard in 1996 suggested that many are beginning to approach this model.
The human resource driven model
This final model places human resource strategy in the driving seat. The argument here is that if people are the key to competitive advantage, then we need to build on our people strengths. The potential of employees will affect the achievement of any planned strategy so it is argued that it would be sensible to take account of this in developing strategic direction.
What are the Benefits of Vertical Integration?
We need HR issues to be on the boardroom agenda
Until the twenty-first century, it was a continual irritant to senior HR practitioners and their representative organisations in the western world, that they aspired to have more influence on board-level decision-making but did not attain it. Whilst some claimed this was ambition and vanity, the research was beginning to emerge to show the links between the seriousness paid to HR issues by boards and organisational success. Vertical integration became one of the levers to get boards to take HR issues more seriously and therefore, give HRM the time
HR Strategy Organisational
Strategy
HR Strategy Organisational
Strategy
HR Strategy Organisational
Strategy
and financial resources it required. If HRM is clearly supporting the implementation of top-level corporate strategy (downward integration) and HR strategists are having an influence on the formulation of corporate strategy (upward integration) then HR is and is seen to be adding value.
Thus, the benefits of vertical integration are:
Corporate business plans and strategies reflect the HR reality of the organisation (and are therefore, more likely to be accepted, understood and succeed)
HR activities will cascade from the corporate business plans and strategies and will, therefore, support them.
We need to note, though, that there are various types of corporate business plans and strategies depending on the type of organisation, the environment within which it operates and the particular goals being pursued. The HRM response to this will also, therefore, vary.
Competitive Strategies and Human Resource Strategies
Competitive strategies are a strong feature of most commercial level strategies. Using Porter's competitive strategies, we can identify the human resource practices that "fit" with those competitive strategies:
Differentiation
You may recall that organisations adopting a strategy of differentiation aim to achieve competitive advantage by doing something that is different from their competitors. To be effective, such organisations need employees who are:
Creative
Able to focus on the long term implications of strategies
Able to share information and work together
Risk takers
Able to tolerate unpredictability and ambiguity.
Human resource strategies, to support a strategy of differentiation, therefore, need to include strategies to promote:
Creativity, for example, by designing an appraisal system that rewards an innovative approach
Co-operation and working together, for example, by using a team based approach to job design, using appraisals to recognise long term and group based achievements
Experimentation, perhaps by fostering a culture where mistakes are viewed as learning opportunities and encouraging open communication
Broader jobs and career paths that reinforce the development of a wider range of skills.
Cost Leadership
Organisations adopting a low cost leadership strategy need people who are:
Able to focus on the shorter term
Risk averse
Concerned for quantity of output, to some extent over quality (although there are cost implications for quality failures).
Human resource strategies to support a strategy of cost leadership might include:
Narrowly designed jobs and strict job descriptions
Short term, results-oriented performance appraisals
Limited training
Close monitoring of employee activities
Short term, low cost employment practices such as short term contracts.
Porter is not the only writer to have attempted to define competitive strategies. We noted in the last chapter that Miles and Snow also addressed competitive strategies in terms of defining types of organisation as:
Defenders
Prospectors
Analysers
Reactors
Similarly, we can identify types of behaviours that such organisations will require from their employees:
Defender organisations tend to follow a low cost leadership strategy where stability, high volume low cost production and strict controls are adopted. Human resource strategies to support this approach might include a policy to recruit/promote from within, a centralised approach to structure design and a reward system that is based upon internal consistency.
Prospector organisations seek new opportunities so a differentiation strategy tends to be followed. Emphasis is on creativity, information sharing, multi-skilling etc. Human resource strategies such as those identified above, for a differentiation approach, would "fit" for prospector organisations.
Analyser organisations operate in at least two different product market areas so need a broader range of skills and attitudes from their employees. Human resource strategies here are likely to be more diverse or mixed.
Reactor organisations are companies that lack a consistent strategy-structure-culture relationship and human resource strategies are similarly disassociated.
You should note at this stage that, although Michael Porter's work is much respected, it is not universally accepted as the only route to competitive advantage. Indeed, at the CIPD
National Conference in 2000, many well-respected captains of industry disagreed with Porter's definition of competitive advantage, let alone the methods of achieving it!
What Effect has Globalisation had on HR Strategy?
The last quarter of the twentieth century saw an explosion in technology and in particular the use of Internet technology and the growth of the global economy. We will look at how the global economy impacts on aspects of human resource management when we look at situational analysis and human resource planning later in the manual, but for the purpose of considering the achievement of strategic fit between human resource strategies and
organisational strategies, there are clear implications for the multinational organisation.
The impact of national culture is an important facet of forming human resource strategies, because of the impact of national culture on human behaviour. This is easiest to see where differences are most marked, although we must be aware of stereotyping. National
approaches to, for example, religion, the family and education can impact in the application or acceptability of certain human resource strategies. The Japanese, for example, have great difficulty with any course of action where they might be perceived as losing face.
Japanese children are taught to conform, to work within a group and to develop team spirit.
Strategies where individual performance is emphasised are at odds with this background.
Similarly, attitudes towards gender differences vary accordingly to national culture. Research suggests that where men are assertive and have dominant roles, so organisations tend to emphasise generating profits, performance and achievement. Where there is a larger role for women, who are more service oriented, so the emphasis tends to be on quality issues, interpersonal relationships and concern for the environment.
What are the Strategic Pressures on Public Sector Organisations?
One of the key differences in strategy in public sector organisations is the impact of the political view of accountability. At one time, public sector organisations were simply required to provide a public service, whatever the cost. The view then changed to requiring public service operators, at the very least, to meet certain financial targets aimed at ensuring the taxpayer receives a certain amount of value for money. Successive governments have built upon this view, to the extent that public service providers now have to meet stringent
government-set targets and publish how successful they are at meeting those targets.
Funding is frequently dependent upon the successful achievement of such targets, which are often criticised for being based upon general criteria that do not take into account local conditions.
More recently, initiatives such as "best value" within local authorities have been designed to give local people greater say over the way in which local services are delivered. Local councils aiming for "best value" status are required to prepare and publish comprehensive annual performance plans that set out overall objectives and establish performance reviews.
All services must be reviewed over a five year period and must:
Ask why the council provides a service at all and ask whether someone else could do it better
Compare performance with other providers of similar services
Consult with those who are partners in or recipients of the services
Demonstrate that they can compete with other potential providers of the service.
Best value, therefore, goes much further than the original principles of compulsory competitive tendering, which aimed at getting the best price for any item or service purchased. Best value also has huge implications for human resource strategies.
For example, if a best value review concludes that the running of local authority retirement and nursing homes would be more appropriately handled by another service provider, what implications do you think this might have on human resources management?
The move towards a more commercial approach to management in the public sector has led to greater emphasis on the strategic approach to human resource management and towards initiatives such as high commitment management. John Storey, writing in Public Money and Management in 1989, noted that local authorities and public sector organisations such as the NHS were being forced to adopt human resource practices that are integrated with business plans and to aim for "committed" employee behaviour, rather than mere compliance with rules. He also noted some of the difficulties faced by local authorities and the public sector generally, not least of which is the short-term nature of the political processes in the UK.
Directed by locally elected representatives, for example, local councils in the UK stand for re-election every four years. Thus, virtually overnight, a local authority can change political persuasion, resulting in the need/push for a complete change of emphasis in terms of policies and objectives which human resource management must adapt to. John Storey illustrates this with the case of Bradford Council that had to reverse its social strategy and attendant human resource management approach, when support ceased when an
alternative political party gained control of the council.
What are the Strategic Pressures on the Not For Profit Sector?
As with the public sector, the not-for-profit sector has seen great change in the way its organisations are managed over the last two decades. In the late 1980s, Peter Drucker studied the management of the non-for-profit sector in the United States (reported in Harvard Business Review in 1989) and found that management techniques in the not-for-profit sector were superior to those found within business.
Drucker found that the not-for-profit sector started with a mission that focused the
organisation on clear action-based goals and unlike most commercially based organisations who focus on planning and financial returns, the focus for not-for-profits was the performance of the mission.
To a large extent, the not-for-profit sector has led the way with the soft approach to human resource management. By not paying volunteers, the voluntary sector have long supported the view that volunteers must get satisfaction from their endeavours, so strategies aimed at turning well-meaning amateurs into trained, professional, unpaid staff members are a vital part of the overall strategy of the organisation. A strong sense of mission is a vital starting point, which generates high commitment amongst volunteers who, after all, can leave at any time. This is backed up by a clear commitment to providing training and using the individual skills and expertise of those who volunteer. Even if an individual proves unsuitable for a particular role, efforts are concentrated on moving that individual and finding something to which they are suited, rather than simply dispensing with their services. Once volunteers are trained, that knowledge and expertise is continually developed and used so that volunteers continue to get satisfaction from their role. Some not-for-profit organisations have created career ladders for their volunteers, so that performance is repaid by increased responsibility.
Drucker argued that many businesses could profit from the strategies developed by the not-for-profit sector in the field of human resource management. He cites, as an example, a number of students he has taught, all middle to senior executives in a variety of businesses and many of whom are also active in the voluntary sector for several hours a week. When he asked why they did it, he found the reply was always the same: "because in my job there isn't much challenge, not enough achievement, not enough responsibility; and there is no mission, there is only expediency".
Business Level Strategy and Human Resource Management
There has been much written about the links between human resource strategy and business level strategy.
Kydd and Oppenheim, writing in Human Resource Strategy Journal in 1990, classify a range of links along a proactive-reactive continuum. At the proactive end of the scale, human resource professionals take an active part in strategy formulation at all levels. At the reactive end of the scale, the human resource function is very much subservient to corporate and business level strategy. Once corporate and business strategies have been determined, the role of human resource management is to support those strategies through policies,
programmes, practices and philosophies designed to reinforce employee behaviours appropriate for the chosen competitive strategies.
Some of the models have been criticised for ignoring the impact of environmental influences on human resource management. Those that have attempted to incorporate environmental influences have been criticised for being too vague, abstract or generalised.
John Purcell, writing in New Perspectives on Human Resource Management in 1989,
identifies what he calls "upstream" and "downstream" types of strategic decisions. Upstream strategic decisions are concerned with the long-term direction of the corporation. Upstream
identifies what he calls "upstream" and "downstream" types of strategic decisions. Upstream strategic decisions are concerned with the long-term direction of the corporation. Upstream