Managing Employee Performance and Reward Concepts, Practices, Strategies 2nd edition

1. Managing Employee Performance and Reward Concepts, Practices, Strategies 2nd edition

2. Being strategic • What is strategy? • ‘Best practice’ vs strategic alignment • External alignment • Internal alignment • Internal/external alignment • Competitive or business strategy • Organisational structure • Management culture • What aligns with what?

3. Strategy in human resource management Strategy: • A plan of action for identifying goals and establishing how to achieve them Strategy-making: • ‘Intended’: premeditated, planned, envisioned, holistic, long-term, driven • ‘Enacted’: emergent, evolutionary, short-term, reactive, iterative, negotiated, partial, derived HRM strategy: • An integrated ‘bundle’ of human resource principles, policies and practices associated with how human resources can best be utilised within an organisation to ensure organisational effectiveness and support organisational success

4. The ‘best practice’ approach Basis: • There is one set of superior human resource practices that can be applied in virtually any context to achieve competitive advantage and deliver ‘win-win’ for all parties Versions and exponents: • Theory Y (McGregor) • 1980s Harvard School (Walton, Beer, Spector, Lawrence) • High-involvement management (Lawler, Pfeffer, Guest, Long & Shields) • Mutual gains model (Kochan, Osterman) • High-performance work systems (Appelbaum, Cappelli, Huselid, Becker)

5. The ‘best practice’ approach Which practices? The Pfeffer-digm (Jeffrey Pfeffer, 1998) • Employment security • Selective hiring • Self-managed teams or teamworking • High pay contingent on company performance • Extensive training • Reduction of status differences • Information sharing

6. The ‘best practice’ approach Strengths: • Consistency of practice • ‘Off the shelf’ • ‘Best practice’ benchmarking • Wide agreement as to what constitutes ‘worst practice’ • Some evidence that it does work

7. The ‘best practice’ approach Weaknesses: • Human resource policies alone cannot deliver overall competitive advantage • Ignores organisational specifics/differences • Insensitive to contextual factors, including national differences • Internal inconsistencies, e.g. selective hiring vs egalitarianism • Disagreement about which practices are ‘best’; e.g. group vs individual incentives • Prone to ‘faddism’

8. External contingencies Product market competition and conditions Labour market conditions Social and political factors Opportunities ‘External alignment’ Threats Competitive/business strategy External alignment

9. HRM strategy, policies and practices Strengths Weaknesses ‘Internal alignment’ Internal contingencies Organisational structure, size, age, technical base Management culture/style Workforce profile Internal alignment

10. External Product market competition and conditions Labour market conditions Social and political factors Opportunities ‘External alignment’ Threats Competitive/business strategy HRM strategy, policies and practices Strengths ‘Internal alignment’ Weaknesses Internal Organisational structure, size, age, technical base Management culture/style Workforce profile Internal/external alignment

11. COMPETITIVE STRATEGY ORGANISATIONAL STRUCTURE MANAGEMENT CULTURE PERFORMANCE AND REWARD SYSTEMS Four key elements of strategic alignment

12. Competitive or business strategy (Miles & Snow, 1978) ‘Defender’ • Defend market from competitors • Operate in stable product/service markets • Narrow product/service range • Risk-averse, reactive • Compete on basis of low cost or high quality • Maximise efficiency of existing technical methods

13. Competitive or business strategy (Miles & Snow, 1978) ‘Analyser’ • Cautious diversifiers, typically in related product/service markets • Market followers

14. Competitive or business strategy (Miles & Snow, 1978) ‘Prospector’ • Market opportunists and aggressive diversifiers • Operate in changing product/service markets • Market-wide range of often unrelated products/services • Proactive; first movers • Compete on basis of innovation • Flexible and agile • Strategic risk-taking

15. Organisational structure (Burns & Stalker, 1961) Organisational structure: The framework of roles, relationships and rules that provide organisational cohesion and integration.

16. Organisational structure (Burns & Stalker, 1961) ‘Mechanistic’ • High formalisation • High centralisation • Narrow span of control • High standardisation Examples: • Military • Multi-divisional firms • Bureaucratic government departments • Unions • Centrally controlled franchises (e.g. McDonald’s)

17. Organisational structure (Burns & Stalker, 1961) ‘Organic’ • Low formalisation • Low centralisation • Wide span of control • Low standardisation Examples: • Decentralised networks/franchises (IGA, Amway, community banks, eBay) • Joint venture projects (movies, software development) • Employee-owned firms/collectives

18. Management culture ‘Traditional’ • Detailed division of labour • Vertical communications • Strong technical or bureaucratic control systems • Hierarchical/top-down decision-making • Labour as a ‘factor of production’ • Task compliance • Internal labour market/promotion/training • Commitment to employer • Unionised • Relational psychological contract

19. Management culture ‘High involvement’ • Fluid division of labour • Lateral communications • Shared decision-making • Devolved/consultative • External recruitment • Employees seen as high-value ‘contributors’ • Commitment to profession • Non-unionised • Transactional psychological contract

20. Aligning strategy, structure, culture, espoused contracts and performance requirements