2nd Edition STRATEGIC HUMAN RESOURCE MANAGEMENT An INTERNATIONAL PERSPECTIVE Edited by Gary Rees & Paul E. Smith 00_Rees_Smith_Prelims.indd 3 4/22/2017 5:17:07 PM SAGE Publications Ltd Gary Rees and Paul E. Smith 2017 1 Oliver’s Yard 55 City Road First edition published 2014, reprinted 2014, 2016. London EC1Y 1SP This second edition published 2017 SAGE Publications Inc. Apart from any fair dealing for the purposes of research or 2455 Teller Road private study, or criticism or review, as permitted under the Thousand Oaks, California 91320 Copyright, Designs and Patents Act, 1988, this publication may be reproduced, stored or transmitted in any form, or by SAGE Publications India Pvt Ltd any means, only with the prior permission in writing of the B 1/I 1 Mohan Cooperative Industrial Area publishers, or in the case of reprographic reproduction, in Mathura Road accordance with the terms of licences issued by the Copyright New Delhi 110 044 Licensing Agency. 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Smith, 2017 Assistant editor: Lyndsay Aitken Production editor: Sarah Cooke Copyeditor: Sharon Cawood Proofreader: Tom Hickman Indexer: Martin Hargreaves Library of Congress Control Number: 2016956218 Marketing manager: Alison Borg Cover design: Shaun Mercier British Library Cataloguing in Publication data Typeset by: C&M Digitals (P) Ltd, Chennai, India Printed in the UK A catalogue record for this book is available from the British Library ISBN 978-1-47396-931-5 ISBN 978-1-47396-932-2 (pbk) At SAGE we take sustainability seriously. Most of our products are printed in the UK using FSC papers and boards. When we print overseas we ensure sustainable papers are used as measured by the PREPS grading system. We undertake an annual audit to monitor our sustainability. 00_Rees_Smith_Prelims.indd 4 4/22/2017 5:17:07 PM 13 THE FUTURE OF HR Linda Holbeche Chapter Overview This chapter addresses the perennial question: what is the future of HR? In addressing this question, the author considers perspectives from leading HR writers and provides a personal perspective on some of the themes discussed earlier in this book. These include some key elements in the development of HRM theory and the reported gaps between theory and prac- tice (Legge 2005). The author re-evaluates the added value debate in the light of contemporary contextual changes, arguing that these developments, to a large extent, may determine the outcome of the ‘future of HR’ debate. This, she argues, highlights the need for theorists and practitioners to develop a more coherent and critical approach to the development of theory and practice, together with a shared understanding of the purpose of this applied discipline and an HR agenda that better supports mutual gains for both the organization and its employees. Learning Objectives • Explore key milestones in the development of HRM theory and HR functional practice • Consider the implications of changes in the global business environment for the definition of ‘added value’, drawing on key findings from eminent HR writers across the globe • Consider where HR goes from here in the light of these developments Introduction In this final chapter, I shall argue that it was a combination of economic and political factors in the 1980s that led to the development of human resource management (HRM) theory and practice. Since then, HRM has also emerged as a pervasive 13_Rees_Smith_Ch-13.indd 532 4/22/2017 5:18:51 PM theme in the literatures of organizational behaviour, strategic management, business policy, international and intercultural management. These context factors also led to calls for greater accountability in all functional areas of business, including what was previously known as ‘Personnel’. As an applied discipline, HRM is therefore still relatively ‘young’ and as yet the nature of HRM is contested, with various traditions and multiple perspectives and no overall theory of HRM. There is, however, some consensus that HRM is a business concept reflecting a mainly managerial view of the employment relationship, with theory, policies and practices geared to enabling organizations to achieve flexibility, competitive advantage and high performance through people. Ulrich (1997), for instance, emphasizes the role of the HR function in creating ‘value’ for business and its stakeholders (see Chapter 4). Almost since HRM came to prominence as the preferred international dis- course to frame employment management issues and as a field of practice within organizations, ‘it is nearly unanimous that HR can and should add more value to corporations’ (Lawler 2005: 165). In recent times, pressure on HR functions to create added value has led to the outsourcing of many of HR’s basic transactional functions (Cascio 2005) in order to save costs and to free up HR functions for more strategic contributions which are slow to materialize. Moreover, the process of HR transformation often tends to be expensive and poorly executed. This has led many commentators to question whether HR’s future is essentially transactional, or whether HR is capable of a more strategic contribution and what value this would bring. In reviewing the question of HR’s ‘added value’, the author will consider contemporary debates about the nature of added value required from HR in the light of today’s context trends, pressures and challenges. The intention is to respond to Janssens and Steyaert’s plea for reflexivity in HRM, ‘to make the plurality of HRM visible by pointing out various paradigmatic, theoretical and empirical communities of practice that partly are connected, partly overlap and partly avoid each other’ (2009: 152). REFLECTIVE ACTIVITY 13.1 1 What are your perceptions of the HR profession and its strategic capabilities? 2 Think of an organization with which you are familiar. To what extent is the HR function perceived as a strategic asset? Key milestones in the development of HRM Since this chapter considers the ‘future of HR’, it is perhaps fitting to set this in context by reconsidering HRM’s origins, journey and current stage of devel- opment before making predictions based on contemporary trends. THE FUTURE OF HR 533 13_Rees_Smith_Ch-13.indd 533 4/22/2017 5:18:51 PM Jacques (1999) argues that the origins of HRM can be found in the ideas which emerged between 1900 and 1920 from the historical conjunction of scientific management, the employment managers’ movement and industrial psychology. Over the last 30 years, HRM has emerged as a global discourse and has become a recognized semiotic for ‘modern people management’ (Paauwe 2007: 9). It is now a pervasive theme in the literatures of organizational behav- iour, strategic management, business policy, international and intercultural management. Critical scholar Keenoy (2009: 466) argues that HRM, which began as a local US cultural artefact, has emerged as a global naturalized dis- course which informs the social practice of international corporations. In recent years, there has been a growing contribution to HRM theory develop- ment from various European and international centres of scholarship, especially in Australia and India. Within the pervasive dominant perspective in HRM theory, termed main- stream HRM, the implicit predominant view, especially in American models of HRM, is unitarist, i.e. it assumes that employees and employers are united in the common endeavour of achieving business success. Influential US think- ers on HRM include Beer et al. (1985) and Fombrun et al. (1984) whose prescriptive and normative ‘matching model’ emphasized the importance of a tight fit between human resource strategies and the overall (and predomi- nantly short-term) strategies of the business (see Chapter 3). This model proposes that employees are a resource that should be treated as other busi- ness resources, to be managed in line with, and for the benefit of, the business. Moreover, this model suggests that the management of human resources is a stand-alone function which reacts to the needs of the business as opposed to taking a shaping role and planning growth. In terms of employee relations, this US-based HRM mostly favours individual rather than pluralist perspectives. While the Harvard model (Beer et al. 1985) recognizes the need to address the concerns of various stakeholders, in practice it has proved complex to opera- tionalize and has perhaps been less influential than the matching model on practice or later theories. The gradual consolidation of HRM (in organizations) into the general rep- ertoire of managerialism is the outcome of a complex and paradoxical cultural process. On the one hand, HRM appears to have become less coherent, less centred, more dispersed and insubstantial when compared with other techni- cal specialities of management such as strategy or marketing. In spite of this appearance, though, HRM has become a very strong