Strategic HRM or managing the employment relationship? (human resource management)(Human Resources Management in Australasia)

Introduction

The past ten to 15 years in the human resource management (HRM) literature has seen a great emphasis being placed on a "strategic" approach to the development and implementation of HRM policies and practices (Collins, 1988; Dyer and Holder, 1988; Legge, 1995; Miles and Snow, 1984; Storey, 1995; Wright and McMahan, 1992). Although the details vary, the basic prescription for a strategic approach to HRM tends to parallel the process shown in Figure 1. Both the external and the internal environment are considered in light of the organization's mission and purpose (which may in turn be influenced by corporate headquarters where the organization is a part of some larger entity). As a result of this analysis, organizational strategies and objectives are determined. HRM strategy should represent an integral part of achieving this broader organizational strategy, with strategy in the various sub-fields or areas of HRM supporting the overall HRM strategy. Thus, rather than HRM policies and practices representing direct reactions to the various external and internal forces, these forces are considered in light of organizational strategy and objectives and then, if appropriate, changes are made to the overall HRM strategy which may affect various HRM policies and practices.

Actual models of strategic HRM are usually more elaborated. A number of writers, for example, have listed various types of organizational strategy, such as the defender, prospector, analyser, reactor typology suggested by Miles and Snow (1984), and then attempted to spell out the HRM policies and practices which would support such a strategy (Collins, 1988; Kramar, 1992). Others have applied a strategy typology to a particular sub-area of HRM such as staff appraisal (Dunphy and Hackman, 1988) or career development (Fandt, 1988). Although Figure 1 focuses on the strategic (or "hard") aspects of HRM, critics based in the UK, such as Legge (1989, 1995) and Storey (1995) have pointed out that most descriptions of HRM also include what they refer to as a "soft" side which emphasizes the need to build up employee commitment, flexibility and dedication to quality.

In spite of these variations, the basic strategic HRM model as portrayed in Figure 1 has been accepted widely in the HR literature. Even critics such as Hendry and Pettigrew (1990), Legge (1995) and Storey (1995) appear to see it as the mainstream view.

On the other hand, when studies are carried out to investigate HRM policies and practices which have actually been implemented, the results typically indicate that only a minority of organizations appear to have adopted the major elements of a strategic approach to HRM. For example, in a recent survey responded to by 377 Australian managers, employees and HRM staff, only 33 per cent believed their organization's HRM policies and practices adopted a long-term perspective, only 37 per cent saw HRM policies and practices in the various areas of HRM as closely integrated, and only 43 per cent saw these policies and practices as designed in line with the organization's strategy and objectives (Kane, 1994). In the UK, Legge concluded recently that "There is only patchy and sometimes contradictory evidence on HRM's strategic implementation" (Legge, 1995, p. 36).

Studies focusing on specific HRM sub-fields such as staff appraisal (Collins and Wood, 1990), human resource planning (Kane and Stanton, 1991), management development (Midgley, 1990) and training and staff development (Kane et al., 1994) have also found significant "gaps" between strategic prescriptions and actual practice.

There are a number of possible explanations as to why the majority of organizations do not appear to adopt the strategic HRM model portrayed in Figure 1. Most of these explanations question the assumption in the model that an HRM strategy is typically used as a kind of filter on the other external and internal forces shown in the model. An alternative viewpoint is that a range of factors may impact on HRM policies and practices more directly than portrayed in Figure 1. Thus, the aim of this study is to determine which factors appear to have major direct effects on HRM policies and practices, and particularly the extent to which an HRM strategy has a major effect as outlined in Figure 1.

Determinants of HRM policies and practices

At a theoretical level, writers from the USA such as Jain and Murray (1984) and Tsui and Milkovich (1987) have suggested a number of competing theoretical explanations as to what determines HRM policy and practice. Perhaps most useful here is the analysis by Tsui and Milkovich (1987). First, they contrasted three theoretical perspectives: the structural functionalism perspective, which suggests that HRM departments and their activities are a result of organizational growth and/or the need to perform activities which require specialists; the strategic contingency perspective, which sees HRM as a reaction to critical external pressures such as legal requirements and union activity; and the strategic HRM perspective, where HRM activities are designed to foster the achievement of the organization's objectives (Tsui and Milkovich, 1987, p. 520). They then argue for a multiple constituency approach, wherein a large number of interested parties or constituents, both within and outside the organization, exert varying levels of influence on HRM policies and practices which they perceive are relevant to their interests (p. 521).

A generally similar approach underlies much of the criticism of the US model of HRM which has emerged in the UK. Legge (1989), for example, has contrasted US and British definitions of personnel management and of HRM and noted that US writers tend to assume a "unitary" frame of reference; that is, in the long term all stakeholders have a common interest in the survival and growth of the organization. Where unions exist, their support for organizational strategy and HRM strategy should be co-opted. In contrast, most of the British writers are seen as adopting a "pluralist" perspective, in which efficiency is contrasted with …