CHAPTER 5

THE FOUNDATIONS OF SHRM

 Learning Objectives

By the end of this chapter you should be able to:

● Appreciate how the field of SHRM has developed over the past 30
years.
● Outline the differences between personnel management, HRM,
and SHRM.
● Explain the core features of universalist (best-practice)
approaches to SHRM.
● Understand the diverse ways in which contingency theory (best-
fit) has been applied to SHRM.
● Critically evaluate the universalist (best-practice) and
contingency (best-fit) perspectives on SHRM.
 About this Chapter
In this chapter we will examine:
1. What is SHRM?
2. The historical development of the SHRM field
3. Definitions of SHRM
4. Universalist theories of SHRM
5. Contingency theories of SHRM
 The development of SHRM
• Kaufman (2007) notes that ‘Human resource management’ as
a concept originated in the US and first appeared in the 1960s
• Until 1980s, the term was used interchangeably with the term
‘personnel management’.
• In the1980s, the field expanded considerably following two
highly influential studies often frequently termed as:
• The Harvard framework
• The Michigan Model
 What is SHRM?
• The first issue that we need to consider is what is meant by the term
‘strategic human resource management’?
• Is it the same as ‘human resource management’?
• Or, other terms that include:
• personnel management
• personnel administration
• people management
• employee relations
• human capital management
• industrial relations, and
• employment management.
 What is SHRM?

• Each of the terms shown in the last slide reflects the diverse
antecedents of HRM and they also reveal aspects of the
different ideologies associated with these approaches.
• HRM to be focused on the management of line managers,
management of culture, and organizing resources towards
achieving profit.
• HRM was essentially unitary in perspective, built on the notion
that employee-employer interests could be reconciled.
 What is SHRM?
• Similarly, some early forms of personnel management had a
‘welfare’ parentage.
• Personnel management was felt to be more administrative,
developing policies, rather than any notion of the link between
people-performance
• The terms ‘industrial relations’ and ‘employment relations’ reflect
the collectivist (pluralist) approach to employee-employer relations
• Each of these terms, in varying degrees, broadly correspond to
the predominant term ‘HRM’.
 What is SHRM? Definitions

CIPD (2009) define SHRM as

“A general approach to the strategic management of
human resources in accordance with the intentions
of the organization on the future direction it wants to
take………”.
 What is SHRM? Definitions
• SHRM is an overarching approach to people management in a
broad, strategic sense.

• The focus is on the longer-term strategic needs of the organization

in terms of its people, rather than day-to-day HR policies and
practices.

• SHRM can be regarded as encompassing a number of individual

HR strategies, for instance a strategy for rewards, for
organizational development, and for performance management.
Wright and Boswell (2002) typology of
Research in SHRM
 Two major approaches on SHRM
• How to manage people? Research in the field of
SHRM offers two perspectives:
• The universalist approach, which is based on the idea
that there is ‘one best way’ of managing people
applicable to all organizations.
• The contingency perspective, which argues that the best
way of managing people is likely to vary according to
organizational circumstances.
 Two major approached on SHRM
• Universalist approaches to SHRM
• Universalist approaches to SHRM are based on the
assumption that there is ‘one best way’ of managing people
in order to enhance organizational performance
• It is the task of the researcher to identify what this ‘one best
way’ is
• The task of the HR professional is to implement it
 Two major approached on SHRM
• Universalist approaches to SHRM
• Best-practice approaches
• One of the best-known proponents of the universalist
approach is Jeffrey Pfeffer
• Pfeffer outlines 13 interrelated ‘best practices’ that are
derived from his reading and discussions with HR executives,
which are discussed next.
 Two major approached on SHRM
• Universalist approaches to SHRM
• Best-practice approaches

1. Employment security 7. Participation and empowerment

2. Selective recruitment 8. Self-managed teams
3. High wages 9. Training and skill development
4. Incentive pay 10. Cross-utilization and cross-training
5. Employee ownership 11. Symbolic egalitarianism
6. Information sharing 12. Wage compression
13. Promotion from within
 Two major perspectives on SHRM
• Universalist approaches to SHRM
• Configurational Approaches
• Some researchers, within universalistic approach, have explored
the interrelationships between various HR policies and practices
• They suggest that configurations (bundle of similar interrelated) of
practices impact more on organizational performance than do
others HR policies and practices.
• High-performance work practices
• High-commitment work practices
• High-involvement work practices
 Critiques of the universalist approach
• The best-practice view of SHRM is very persuasive,
and also very appealing to practitioners, however, the
approach has attracted a considerable amount of
criticism on several counts.
• Implementation
• Theory and method
• Broader societal considerations
 Critiques of the universalist approach
• Implementation
• Little agreement among researchers as to which
practices are the most important
• Potential cost to the firm of implementing such practices
• Lack of clear HR strategy guiding its activities
• Differences among organisations, industry, supply of
labour, etc.
 Critiques of the universalist approach
• Theory and methods
• The universalist approach has been criticized for being a
theoretical one
• No account is taken of context. For example, industrial
setting or sector may be an important factor in determining
what approach to HRM may be most effective.
• No consideration to corporate strategy
• Methodology – reliant on factor analysis/quantitative
surveys
 Critiques of the universalist approach

• Broader societal considerations

• Best practices for ‘whom’?
• Mutual gains perspective
• Potential for work intensification
• Insidious forms of control
• The notion of a best-practice approach to HRM is
culturally specific.
 Contingency approaches to SHRM
• What is the best way to manage people?
• The answer, according to contingency, or best-fit
approaches, is “it depends”
• It depends on factors such as organizational size,
location, sector, strategy, and the nature of work
• Whereas the universalist perspective suggests that
there is one best way of managing people.
 Contingency approaches to SHRM
• Over the years, various contingency approaches have
been explored.
• Baird and Meshoulam’s (1988) model suggests that
appropriate HRM approaches will vary according to the
different lifecycle stages from start-up to maturity.
• Kochan and Barocci (1985) propose a three-phase
model of start-up, maturity, and decline.
 Contingency approaches to SHRM
• More often, though, it has been argued that HRM is
contingent upon the strategic direction of the
organization.
• The underlying assumption is that the stronger the
degree of alignment between strategy and HR strategy,
the higher the level of organizational performance will
be.
• This idea lies, in many ways, at the heart of SHRM
 Contingency approaches to SHRM
• Miles and Snow (1984) similarly link HR approaches
with the three strategic options:
• Defender: operating in a stable market and concerned
with defending their position
• Prospector: with a strategy of innovation and operating
in a dynamic market
• Analyser: in an intermediary position.
 Contingency approaches to SHRM

• Researchers within the contingency perspective have argued that

there are two forms of fit, or alignment, that are relevant: vertical
fit, or the linkage between HRM and corporate strategy, and
horizontal fit, or the inter-linkages between the various elements
of the HR strategy.

• Wright and Snell (1998) suggest that flexibility to enable the

reconfiguration and redeployment of resources is also a desirable
organizational feature, and that approaches that enable both a
degree of fit and the option of flexibility are the most desirable.
 Critiques of the contingency approach

• There is little empirical evidence to support the idea that

matching HR practices to business strategy leads to positive
outcomes
• Not clear which contextual aspects may be most important and
relevant for HRM in terms of creating a ‘fit’
• Matching HR and business strategies implies that all
organizations have an articulated strategy, which is frequently
not the case
 Critiques of the contingency approach

• A disconnect between intended HR strategy and implemented

HR strategy is to be expected
• Organizations are complex and comprise different employee
groups. In some cases, these may require different HR
approaches and strategies
• Contingencies do not determine the specific approach to HRM;
managers make decisions, therefore issues about decision-
making, bounded rationality, and politics come into play