Current Developments in Theory and Research on Human Resource Management

1. Current Developments in Theory and Research on Human Resource Management David Guest Professor of Organizational Psychology and Human Resource Management King’s College, London

2. Aims of presentation • Review progress • Point to areas needing development • Set some research agendas • Start with definition of HRM

3. What is Human Resource Management? “All those activities associated with the management of work and people in organizations” (Boxall and Purcell, 2011) HRM is concerned with a set of practices and their application and can be viewed as a ‘system’ for management of people at work All organizations need HRM; but HRM is only likely to be taken seriously if it can demonstrate impact. This is why the link between HRM and outcomes is so important.

4. The Good News: Impressive Progress After 25 years of ‘contemporary’ research and writing, we are much more knowledgeable about HRM: • Strong evidence of a link between HRM and performance • Advances in understanding role of “external fit” • Advances in understanding “internal fit” • Recognition that HRM operates as some kind of system • Evidence that HRM can have a positive link with employee well-being • Advances in understanding linkages between HRM and performance and determinants of effective implementation • Adoption of multi-level models of analysis and sophisticated research methodology • BUT – still a lot of unanswered questions

5. Recognise the Challenges of a Maturing Field:Stages in the Development of HRM Research • The promise of HRM and mapping the field: concern for strategy and commitment • Early empiricism: demonstration of link between HRM and performance – Huselid, MacDuffie, Arthur etc. • Backlash: conceptual critique (Legge, Keenoy); empirical critique (Dyer & Reeves, Becker & Gerhart) • Conceptual refinement: AMO model: resource-based view; Institutional perspective • Focus on worker: employee accounts of HRM and employee attitudes and behaviour as central to impact • Growing sophistication: complex models and multi-level analysis

6. Research Challenges • Defining the nature of HRM and measuring it • Defining performance and other outcomes and measuring them • Theorising and operationalising the process whereby HRM and outcomes (performance) might be linked • Establishing the evidence

7. The First Research Challenge Defining Human Resource Management and Measuring It • Link between external and internal fit • Deciding on the particular model of HRM • Determining sources of information

8. Linking Strategy and HRM(Schuler and Jackson, 1987) Company mission and values Competitive strategy Required employees and employee behaviours HR practices aligned to requirements Employee behaviour aligned with strategic goals

9. Clarifying HRM Systems • Much contemporary research and writing is trying to describe human resource systems • Special issue of Human Resource Management Review (Vol 22: Issue 1) addresses this. • Posthuma et al (2013) in JoM offer an empirical taxonomy, sorting 61 practices into 9 categories • But all are operating within a high performance work systems paradigm

10. Nature of HRM: Alternative Models • Dominance of concept of HPWS – a misnomer. Need alternatives that recognise range of stakeholders in outcomes • High commitment HRM • High involvement HRM • High partnership HRM • And their opposites; so commitment vs compliance (control in Walton) • Boxall and Macky 2009 distinguish focus on work practices from focus on employment practices; show their link and argue for neglect of many aspects of employment in HPWS • Cultural factors European and Australian legislation requires certain employment practices

11. High Performance Work Systems (HPWS) HRM • Focus on human capital and mechanisms for leveraging it to enhance performance: neglects employee outcomes • Note weakness of measures of human capital and neglect of much of HRM • Tendency to focus on incentives as motivators and controls • Meta-analyses show: • Human capital considered alone has an association with financial performance (Crook et al) • Human capital and incentive based motivation combine additively to affect performance (Jiang et al) • Limited attention paid to ‘Contribution’ dimension – because often neglected in research

12. Recruitment & selection Training & Development Higher employee performance and Higher employee well-being Performance appraisal Financial rewards Feedback Job design Involvement systems Communication Internal promotion Security Fair treatment Met psych. contract High Commitment HRM Employee competence Employee motivation Opportunity to participate Employee commitment

13. High Involvement Work System Workforce Psychological Adjustment Organizational commitment Job satisfaction Intention to quit Business Practices Work design Incentive practices Flexibility Training Goal-setting Organization Effectiveness Turnover Return on Equity High Involvement Work Processes Power Information Reward Knowledge

14. Partnership HRM • Stakeholder approach, recognising the need to accommodate different interests • Focuses on both high performance and high well-being • Can accommodate a wider range of HRM: both work organisation and traditional ‘personnel’ that is neglected in other models (the fairness agenda) • Evidence consistently suggests direct participation through autonomy/job design works well but best of all when combined with representative participation • Close to Nordic/Germanic European model

15. Approaches to theMeasurement of HRM • Individual practices • Bundles of practices – ideally theory-based • Interactions of bundles (and with strategy) • Count of HR practices in place: choice of presence of practice; extent of coverage; application to key employee group • Effectiveness/implementation of HR practices • Question of who provides the information – ideally multiple respondents • Choice depends on theoretical perspective but note that a key feature of HRM is the ‘system’ concept

16. The Second Research Challenge: Measuring Outcomes • Focus has been mainly on performance • In the case of performance, need to distinguish proximal and distal outcomes • Need to broaden to consider a stakeholder perspective

17. Approaches to the Measurement of Performance • Standard performance indicators: financial, productivity quits etc – both proximal and distal • Goal-based perspectives – manage a merger • Resource acquisition models – unions and universities • Bench-marking and ratios – popular but limited • Process models; effectiveness of policies • Stakeholder perspectives – subjective outcomes

18. What Outcomes do Workers Want? • Job satisfaction • Work-related well-being • Work-life balance • Adequate and fair rewards • Good employment relations • High quality of working life • Health • Life satisfaction Raises the question of what employers are obliged to provide – what is the psychological contract?

19. The Third Research Challenge Understanding and Exploring the Implementation of HRM • Extent of implementation • Influences on implementation • Key actors in implementation

20. Exploring the Linkages: HRM and the Role of Employee Responses Background factors Sector Size Ownership Strategy Human resource practices HR practices Employment relations practices and climate Employee attitudes and behaviour Job satisfaction Organizational commitment Motivation OCB Individual performance Internal performance indicators Productivity Quality of goods and services Labour turnover Absence Accidents External performance indicators Sales Financial performance

21. HRM Practices at Company Level in the UK: Counting the Practices Number of HR practices in UK companies (N=610) FofW data

22. Why the Low Adoption of Practices?(Guest and King, 2004) • Not aware of the evidence/message • Don’t believe the message • Don’t believe it is relevant to them • Already do it all/do enough • More important priorities • Sceptical of HR fad and fashions and gurus • Don’t know how to implement high commitment HR/where to start

23. The Implementation Challenge • Khilji and Wang (2006) highlighted a gap between intended and implemented practices • Implies that it is not enough to have good HR policy and practice • Guest & Conway (2011) show that implementation/effectiveness is more strongly associated with performance than HR practices • Draws attention to the roles of HR specialists, top management and line managers

24. A Case Study of Implementation • Specific case of practices versus implementation • Context of healthcare in the UK • Levels of reported bullying and harassment of staff by staff higher than in most other sectors • Considerable pressure to reduce reported levels

25. A Process Theory of HR Implementation • Stage 1: Decide to introduce a practice • Stage 2: Determine the quality of the practice • Stage 3: Line managers agree to implement the practice • Stage 4: Line managers implement in a quality way • Stage 5: Staff accept rationale for practice and respond appropriately • Stage 3-5 cannot occur without 1 and 2 • Board/HR responsible for 1-2: line for 3-5?

26. Definitions of Bullying and Harassment Harassment “Unwelcome words, actions, or physical contact that frightens, intimidates or otherwise discomforts another person”. Can involve an isolated incident. Bullying “Harassing, offending, socially excluding someone or negatively affecting someone’s work tasks”. Must occur repeatedly over a period. NHS Staff Survey “In the past 12 months, have you personally experienced harassment, bullying or abuse at work?”

27. Bullying and Harassment in the UK Healthcare. Regional Comparisons

28. Bullying and Harassment at a London Acute Hospital 2004-2008

29. Bullying and Harassment by Care Group in the Hospital

30. Evidence on Bullying from Staff Surveys and Interviews • Bullying associated with increased stress /reduced job satisfaction/higher intention to quit • Bullying affects PSSQ through reduced motivation and concern to do a good job • Bullying by staff associated with unsupportive work environment and lack of faith in effectiveness of relevant HR systems • How does this relate to HR policy and practice in the hospital?

31. Best Practice in Management of Bullying Implementation of a Formal Bullying Policy Zero Tolerance Approach Selection of Staff Implementation of Awareness Campaigns Address Environmental Problems Training and Development for Managers and for Staff Providing Informal Advisory Services Data monitoring Support for Victims of Bullying All are in place at this hospital

32. Implications for HRM The hospital has all the right policies and practices in place but B&H still very high. Why? Clear gap between ‘intended’ and ‘implemented’ practice In this context, seemingly good HR can get bad results because of a poor implementation climate Implementation may be particularly challenging in public sector professional bureaucracies Implies need to focus in implementation on roles of key actors – line, senior and HR management

33. The Boundaries of HR Functional Responsibility What can the HR function be expected to contribute? The function has the promise of exerting distinctive influence through three main routes • Through the Ulrich model of structure and function • Through promoting the link between HR and performance • Through the traditional role of ensuring fair treatment The evidence suggests that the HR function has failed on all three counts, partly because of problems of implementation As a result, it is unrealistic to expect a major independent HR contribution. The HR function cannot do it on its own.

34. Adoption of the Ulrich Model in the UK • CIPD survey: responses from 787 out of 12,000 senior HR figures • 53% have re-structured HR roles in the previous year • 81% have re-structured in the past five years • Of those who have re-structured, over half say their current structure fully or partly reflects the Ulrich model • In practice, only 18% have all three elements in place • Restructuring of the function continues at the same pace (King’s Speechly Bircham survey). No consensus on the right structure.

35. Evaluating the Ulrich Framework:Evidence from the CIPD/IES Survey • No evidence that organisations using the full model report better performance • Some indication that those concentrating on the use of business partners have poorer performance • Issues of cause and effect; are poorer performing organisations more likely to adopt a new model?

36. Are HR Managers HR Champions and HR Innovators? Analysis of 25 years of WERS (Guest and Bryson) reveals: • No association between presence of a specialist role and greater use of innovative HR practices • No association between presence of qualified HR specialist and greater adoption of innovative HR practices • Association between adoption of innovative HR practices and ratings of workplace performance • No association between presence of HR specialist and workplace performance HR managers are still not championing innovative HR

37. Kochan’s (2007) USA Evaluation “The human resource management profession faces a crisis of trust and a loss of legitimacy in the eyes of its major stakeholders. The two-decade effort to develop a new ‘strategic human resource management’ role in organizations has failed to realize its promised potential of greater status, influence and achievement” (p.599.

38. The Challenge of Implementation: The Role of Line Managers • Consistent gap between ‘intended’ and ‘implemented’ practices (Khilji and Wang) points to failures by line managers • UK research suggests line managers “are neither capable nor motivated to take on these (HR) issues” (Hope Hailey et al) • Dutch evidence more positive about line managers; main challenge is pressure of time • Line management role illustrated by case of bullying and harassment in NHS hospitals

39. The Challenge of Implementation and the Role of A Strong HR System Bowen and Ostroff (2004): implementation a function of the strength of the HR system: • High consensus; agreement among key stakeholders; fairness of HR systems • High distinctiveness: visible, legitimate, relevant and understandable • High consistency: consistent, integrated HR policy and practice, instrumental for goal achievement Some provisional testing (Stanton et al, 2010) but highly and imprecise complex model Role of top management likely to be crucial

40. Developing Linkage Research Strategy Climate Leadership Implementation Role of HR Function Role of Line FINANCIAL PERFORMANCE PROXIMAL BEHAVIOUR HRM AMO Individual differences Attribution

41. The Fourth Challenge Establishing the Evidence • Ideally longitudinal multi-level, multi-respondent • Most research is cross-sectional • Varied measures, especially of HRM, challenge the accumulation of evidence • Need to differentiate outcomes • Key challenge it mutual gains versus transaction/ exploitation

42. HRM and Performance: The Starting Point: The Simple Model HRM Organizational Performance

43. HR Practices and Profit per Employee in the UK Private Sector

44. HR Practices and Labour Turnover

45. HRM and Performance: Reviewing the Evidence Around 1995, a series of studies appeared all showing an association between a combination of HR practices and workplace or organizational performance • Huselid (1995) – top US organizations • Arthurs (1994); Ichniowski et al (1994) - strip steel mills • Delery and Doty (1996) - banks • MacDuffie (1995) - auto industry A decade later, major reviews confirmed an association across many studies • Boselie, Dietz and Boon (2005) • Combs, Liu, Hall and Ketchen (2006) Also highlighted research challenges and issue of causality

46. Bringing Employees Centre-Stage • Linkage model confirms that HRM has its impact on performance through the way it affects employee attitudes and behaviour. • So if employees like experiencing HRM and respond positively to it, we may get happy productive workers

47. Work-Related Well-Being 1 Grant, Christianson and Price (2007) suggest well-being has three dimensions in workplace settings: • Health: includes physical well-being, health and safety • Happiness: includes job satisfaction, contentment, enthusiasm/engagement • Relationships: fairness, trust , openness, friendship, freedom from bullying and harassment Most of the research on HRM and well-being focuses on happiness

48. Work-Related Well-Being 2 Warr views employee well-being in terms of positive mental health: Warr’s (2007) model has three dimensions Job satisfaction - Dissatisfaction (Pleasure) (Displeasure) Contentment - Anxiety Enthusiasm - Depression Satisfaction is a component of well-being

49. HRM and Well-Being: Evidence from the Psycones Study • Seven country, three sector European study with 1981 temporary workers and 3307 permanent workers from over 200 organizations • Obtained measures of HRM practices from managers and employees and standard measures of well-being from workers. • Key finding: temporary workers report higher well-being than permanent workers • Also explored factors associated with well-being including HRM (though both self-report here) Guest, Isaksson and De Witte (2010) Employment Contracts, Psychological Contracts and Employee Well-Being (OUP)

50. HRM & Work-Related Well-being