An introduction to human resource management: strategy, style or outcome
Some assumptions about human resource management
Figure sets out the four perspectives on HRM discussed above, and locates key aspects of the HRM focus within its framework. Such a schematic presentation not only demonstrates the breadth of these operational assumptions, but also underlines their ambiguity. Within many organisations the circumstances in which human resource management is pursued will be critically determined by the state of the labour market at any particular time: it is thus perfectly understandable for an organisation to be moving towards a strategic dimension of HRM in its own terms, but to find it necessary to revert or regroup to a modified version of its original policy.
A case in point here might be that of British Airways, which deployed both the developmental and strategic/ international models of HRM throughout the 1980s in order to support its ‘Customer Care’ business plan, but found itself increasingly relying on the restatement and fusion models as it sought to reorganise its Gatwick operations (including Dan-Air) in the 1990s. This gave rise to industrial relations difficulties, with strong residual problems over wage levels for cabin staff leading to strike threats in 1996, which were realised in 1997. At a cost of some £125 million BA sustained strike action by cabin crews, worldwide, over pay and conditions.
One outcome of the dispute was that BA hired new staff for a startup company Go on contracts that were 20 per cent cheaper than those for BA staff, thus further emphasising the cost-minimisation model of hard HRM and linking this with the fusion model. By 2002 BA’s corporate and HR strategies were in disarray. In the wake of 11 September and the collapse of transatlantic travel BA announced its ‘future shape and size’ strategy which involved two aspects: firstly, a concentration on first and business class travellers, an aspiration that renewed its customer care plan pioneered in the 1980s, and secondly, rationalisation of services at, or withdrawal from, some regional airports, an announcement that in effect conceded BA’s inability to compete with lowcost carriers on some routes.
This admission appears all the more painful owing to BA’s recent sell-off of Go to a management buy-out. In effect, BA’s lack of competitiveness in a period of global downturn in international travel, combined with the emergence of low-cost airlines which have outperformed the market (increased market share), forced the company to revert to harder HRM, further emphasising the cost reduction model.
Four perspectives on human resource management
If further evidence were needed of the shifts in HRM that can occur when businesses come under pressure, then BMW’s handling of the Rover group sale and Barclays’branch closure programme, both in the spring of 2000, provide ample evidence that approaches to HRM are prone to severe buffeting, whatever the original intent of the business. In BMW’s case it sought to fuse a European style of communication and involvement with the Japanese style already existing within Rover as a result of the latter’s Honda collaboration over the previous decade; in Barclays’ case it saw the need to maintain its role as a ‘big bank in a big world’ by cutting 10 per cent of its branch network in one operation.
Competitive product and service market pressures can quickly overwhelm the best of HRM intentions. More recently, closure announcements by Corus (formerly British Steel), motor manufacturers Ford and General Motors and relocation decisions made by the Prudential, British Telecom and Massey Ferguson demonstrate the UK’s exposure to MNCs. Here an emergent pattern of strategic decision-making, sometimes made on a pan-European basis, illustrates some embedded characteristics of the British business system, such as comparatively loose redundancy laws, to demonstrate that host country characteristics need not constrain MNCs.
In each case the competitive pressures associated with the value of sterling, comparative labour costs, skill levels and unit labour costs, or delayed investment decisions overrode softer developmental aspects of HRM. This pattern illustrates how European consolidation in MNCs and the more general pursuit of ‘shareholder value’ further consolidate the cost-minimisation model of hard HRM. Although these four interpretations of HRM each contain strong distinguishing characteristics, they are by no means mutually exclusive: indeed, it would be surprising if that were so.
In this sense they constitute not a model of HRM but a set of perspectives on HRM that organisations bring to bear on the employment relationship. A more useful approach to interpreting these perspectives might be to recognise that many organisations may display at least one of these principal perspectives but will also rely on several characteristics drawn from at least one and probably more of the other three constructs. In this sense HRM, as a set of issues as well as a set of practices, contains ambivalence and contradiction quite as much as clarity and affirmation.
In many organizations the tension that arises from this outcome is part of the internal process of the management of uncertainty. With the privatisation of British Rail and the multiplicity of operating companies, there has been a distinct move away from the business-led strategies of the former BR operating divisions to a more traditional pattern of collective agreements involving negotiations between the unions and the individual owners of the new companies. A further discussion of some of these aspects of HRM can be found in Guest (1989a).