Strategic Human

Resource Management

The second edition of this popular shortform book provides a concise

expert summary of key issues in the theory and practice of the
management of human resources (HR) – one of the most crucial drivers
of organizational performance.
As human resource management strategies evolve over time, this new
edition pays special regard to the HR challenges arising from radically
altering contexts – economic, social, and technological. For example, the
book examines research reports on the impact of the COVID pandemic
and other disruptions to the global world of work. It assesses recent HR
initiatives and priorities such as Equality, Diversity and Inclusion (EDI)
and the HR implications of remote and hybrid working. The book
evaluates contemporary critiques that HR practice and research can be
part of the problem. In sum, the book offers a route map through the
extensive terrain of contemporary research project findings.
Serving as a unique researcher’s guide, this concise book enables
readers to develop their own ideas for future research and such is
essential reading for management scholars and reflective practitioners.

John Storey is a Professor of Human Resource Management at The

Open University, UK.

Patrick M. Wright is the Faculty Director of the Center for Executive

Succession in the Darla Moore School of Business at the University of
South Carolina, USA.
State of the Art in Business Research
Series Editor: Geoffrey Wood

Recent advances in theory, methods, and applied knowledge (alongside

structural changes in the global economic ecosystem) have presented re­
searchers with challenges in seeking to stay abreast of their fields and
navigate new scholarly terrains.
State of the Art in Business Research presents short form books which
provide an expert map to guide readers through new and rapidly evol­
ving areas of research. Each title will provide an overview of the area, a
guide to the key literature and theories and time-saving summaries of
how theory interacts with practice.
As a collection, these books provide a library of theoretical and
conceptual insights, and exposure to novel research tools and applied
knowledge, that aid and facilitate in defining the state of the art, as a
foundation stone for a new generation of research.

Emergency Services Management

A Research Overview
Paresh Wankhade and Peter Murphy
Cultural Management
A Research Overview
Chris Bilton
Ethical Consumption
A Research Overview
Alex Hiller and Helen Goworek
Strategic Human Resource Management, 2e
A Research Overview
John Storey and Patrick M. Wright

For more information about this series, please visit: [Link]/

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Strategic Human
Resource Management
A Research Overview
Second Edition

John Storey and

Patrick M. Wright
Second edition published 2023
by Routledge
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and by Routledge
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© 2023 John Storey and Patrick M. Wright

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All rights reserved. No part of this book may be reprinted or

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First edition published by Routledge 2019

British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data

Names: Storey, John, 1947- author. | Wright, Patrick M., author.
Title: Strategic human resource management : a research overview /
John Storey and Patrick M. Wright.
Description: 2nd edition. | Abingdon, Oxon ; New York, NY :
Routledge, 2023. | Series: State of the art in business research |
Includes bibliographical references and index.
Identifiers: LCCN 2023008678 (print) | LCCN 2023008679 (ebook)
| ISBN 9781032427836 (hardback) | ISBN 9781032427850
(paperback) | ISBN 9781003364276 (ebook)
Subjects: LCSH: Personnel management. | Strategic planning.
Classification: LCC HF5549 .S8786 2023 (print) | LCC HF5549
(ebook) | DDC 658.3/01‐‐dc23/eng/20230303
LC record available at [Link]
LC ebook record available at [Link]
ISBN: 978-1-032-42783-6 (hbk)
ISBN: 978-1-032-42785-0 (pbk)
ISBN: 978-1-003-36427-6 (ebk)
DOI: 10.4324/9781003364276
Typeset in Times New Roman
by MPS Limited, Dehradun
Contents

List of figures vi
Acknowledgement vii

Introduction to the Second Edition 1

1 Mapping the field of strategic human resource

management 4

2 Strategic human resource management and

performance outcomes 18

3 Key practice areas and the key levers 32

4 HR competences and the HR function 48

5 The changing contexts of strategic human

resource management 62

6 Fit, flexibility, and agility 75

7 A stock-take and promising avenues for future

research 88

References 98
Index 120
List of figures

3.1 The cycle of HR practices 33

3.2 Idealized model of HR planning 35
3.3 Key elements of a performance management system 39
4.1 HR competency model for HR professionals 54
4.2 Nine dimensions of an effective HR department 57
4.3 Waves of HR value creation 60
Acknowledgement

We want to thank Dave Ulrich for his valuable contributions – most

especially to the analysis of HR competencies and the HR function in
Chapter 4.
Introduction to the Second Edition

The main aim of this second edition of Strategic Human Resource

Management: A Research Overview is to provide a succinct analytical
guide to the extensive body of research in the named field. We have
used our experience to survey and evaluate the significant contributions to
the main research journals and international conference proceedings. We
seek to equip readers with a helpful guide and route map through an ex-
tensive terrain of research projects and findings. In sum, this short volume
provides the reader with an accessible overview of the field and serves as a
guide to developing ideas for future further research.
Theorizing and practice in strategic human resource management do
not happen in a vacuum but always within a context, often a dynamic
context. Political, economic, legal, and social environments greatly affect
the conduct of, and thinking about, SHRM. Since the publication of the
first edition of this book in 2019, the turbulence in these multiple con-
texts has been experienced on an enormous scale. Much commentary in
the intervening years has frequently referred to the ‘unprecedented’
nature of the scale and nature of the unfolding events. Indeed, the short
period between the publication of the first edition of this book (2019)
and this current edition (2023) has been a period of exceptional turbu-
lence. The effects of a whole series of interrelated changes in context
have yet to be worked through and these uncertainties present interesting
challenges for new research. Significant developments in the domain of
work and employment have included disruptions to the global order
stemming from the war in Ukraine, economic turbulence, industrial
unrest, political turmoil, and a global pandemic.
The coronavirus (COVID-19) which swept the globe did indeed trigger
unprecedented policy and behavioural responses. The pandemic spread
with such speed and with such intensity that governments worldwide were
impelled to introduce numerous and extensive restrictions on movements
and gatherings – known in general as lockdown laws. These laws led to
empty places of work, working from home (or indeed ‘working from

DOI: 10.4324/9781003364276-1
2 Introduction to the Second Edition

anywhere’) in cases where that was feasible, and ultimately, to many

workers re-evaluating their attitudes to work and employment.
A great deal has been written about the impact of COVID-19 on jobs,
work, the economy, and society. We review this body of research in Chapter 5
which focuses on the changing contexts of human resource management. The
repercussions were many and varied. They include disruptions to supply
chains not least because of prolonged and extensive lockdowns in China
which were imposed over a number of years. The war in Ukraine exacerbated
international supply chain disruptions and generated a crisis in energy sup-
plies with extensive consequences for trade and inflation across the globe.
Talk of a ‘new normal’ suggests potential for lasting changes. There have been
a number of new research contributions which have sought to interpret these
and similar issues and in this new edition, we report on these.
A notable strand of new research has focused on the HR implications
of diverse forms of financing. This has especially been the case with
regard to business start-ups, but it is also relevant in cases of takeovers
and mergers. Recent research data offer new insights into the role of
public and private equity finance, angel investors, venture capital, hedge
funds, leveraged buyouts, peer-to-peer lending, green financing, Islamic
finance, and so on. Representative of this avenue of research is the work
of Di Pietro et al. (2022). They explore different kinds of entrepreneurial
financing and their implications for HR practices. A kind of counter-
factual can be found in employee-owned businesses and partnerships
such as the John Lewis Partnership where managers, claimed that
freedom from the demands of the stock market gives them extra scope to
take a longer-term perspective (Salaman and Storey 2016). Indicative of
the turbulent environment, John Lewis directors in March 2023, began
to consider disrupting the 100% employee owned model by seeking some
degree of private equity.
Another development has been a series of recent articles in HR
journals which critique the role of HRM itself. A number of these sug-
gest that HR has been at times part of the problem rather than part of
the solution. A related line of critique, not new but resurgent in the past
two or three years, has been the idea of placing HR in the wider frame of
multiple layers of economics and politics. This perspective leads to new
analyses of conflict and of industrial relations.
Not all changes impacting on work can be placed at the door of
COVID. Advances in technology alongside wider social changes find
expression in new forms of work and by implication in the management
of such work. For example, remote working presents challenges for HR.
Ideas about a universal basic income and shifts in psychological con-
tracts carry significant implications for HR. Extensive data and analysis
from across Europe have recently become available and merit close
analysis – for example, Living and Working in Europe (Eurofound 2022).
 Introduction to the Second Edition 3

The interrelated themes of Equality, Diversity and Inclusion (EDI)

have continued to attract research attention since the publication of the
first edition. Indeed, they have grown in intensity especially with regard
to issues of race and gender. Likewise, increasing attention has also been
given to the place of neuroscience in HRM and to the implications and
role of HRM in relation to the green and sustainability agenda (see
Chapter 5).
High-performance work systems have been a key concept in SHRM
and as such were covered in our first edition; in this, we review the latest
contributions to the literature. One aspect to note is that in the inter-
vening years, the concept has been reassessed often with an even more
critical eye – examples include Kirkpatrick and Hoque (2022) and Kim
et al. (2021) and yet the same period has seen some interesting refine-
ments to this theme as we reveal in Chapters 2 and 6.
Signalling theory has been, and is, influential in microeconomics but
it is new to HRM. It suggests that HRM policies only really have
salience when signals sent by managers are coherent and consistent and
that these signals are appropriately received by workers. This line of
research seeks to dig deeper into the actual processes of HR action and
impact. For example, it is argued that ‘signals will have greater strength
and effectiveness if they possess the qualities of salience for receivers,
clarity, consistency, frequency and intensity’ (Guest et al. 2021). Signals
have long been recognized as important in the area of recruitment and
selection, but recent research extends the approach to the wider domain
of HRM.
Most HR research has tended to focus on managers and their strat-
egies and practices. A recent strand of research has switched focus to
view the phenomenon from the employee perspective. Examples include:
Beijer et al. (2019) ‘The turn to employees in the measurement of human
resource practices: A critical review and proposed way forward’, and
Gold and Smith (2022) Where’s the ‘Human’ in Human Resource
Management? Managing Work in the 21st Century. Related aspects of
this call for refocusing include requests for increased attention to be paid
to disability (Bacon and Hoque 2022) and the analyses of bullying at
work (Hu et al. 2022).
In summary, the themes outlined above indicate how the second
edition of Strategic Human Resource Management: A Research Overview
is enhanced and brought up to date with the inclusion of new research
reflecting new emergent theorizing in the context of key social and
economic changes relevant to SHRM.
1 Mapping the field of strategic
human resource management

Human Resource Management (HRM) has become the predominant term

to describe the theory and practices relating to the way people are man-
aged at work. In previous times (and indeed even now in some places),
other terms have been used which, in varying degrees, broadly correspond.
These other terms include personnel management, personnel administra-
tion, people management, employee relations, human capital manage-
ment, industrial relations, and employment management. Each of these
terms reflects the diverse antecedents of HRM, and they also reveal aspects
of the different ideologies associated with these approaches. For example,
some early forms of personnel management had a ‘welfare’ parentage,
while others carried traces of a social-psychological ‘human relations
movement’ history (Mayo 1949). Each of these traditions reflected a pri-
mary focus on individuals and small groups. Conversely, the terms
‘industrial relations’ and ‘employment relations’ reflect the collectivist
(pluralist) approach to management–worker relations which, at times and
in places, were dominant throughout much of the 20th century in Europe,
North America, and beyond (Clegg 1979; Dunlop 1958; Flanders 1964,
1970; Fox 1974). This tradition was taken forward and extended in North
America and elsewhere with ideas about mutual gains and union-
management partnerships (Kochan and Osterman 1994). The disciplinary
roots of the field include aspects of labour economics, industrial sociology,
psychology, and law. Some recent reviews of the field have provoked
controversy about the appropriate emphases to be given to these disci-
plines (Troth and Guest 2020; Kaufman 2020). Thus, while Troth and
Guest seek to defend the contribution of psychology, Kaufman in his
commentary mounts a critique of the negative consequences of the ‘psy-
chologisation’ of the field – especially in relation to strategic human
resource management (SHRM).
The term ‘SHRM’ is used to emphasize the strategic character of a
particular approach to talent and organization management – though
some commentators would argue that HRM itself is inherently

DOI: 10.4324/9781003364276-2
 Mapping the field of strategic human resource management 5

strategic in nature. Hence, the terms HRM and SHRM are often used
interchangeably.
Two broad streams of research and analysis developed from the 1980s
onwards: ‘employer strategies’ and ‘labour movement strategies’ (Doellgast
et al. 2021). As these reviewers noted:

While many of the same researchers contributed to both streams, each

placed a distinct analytical focus on employer or labor strategies and
actions. Both streams also continued to develop through an ongoing
debate between pluralist and radical or critical perspectives.
(Doellgast et al. 2021: 559)

The field of HRM/SHRM has burgeoned over the past 30 years. Its roots
can be found in American literature of the 1980s, which re-framed people
issues away from conceptions that cast people management as an after-
thought that could be handled in an ad hoc, reactive way, or managed
through formal institutions such as collective bargaining and regulation
(Beer et al. 1985). In place of this traditional conceptualization, there was a
shift towards a strategic conception that posited workers as ‘assets’ rather
than ‘costs’ (Storey 1992). The workforce from this perspective was
therefore a ‘resource’ and recognized as a key source (arguably the key
source) of competitive advantage. As such, these assets were to be treated
seriously: the composition planned with care, selected with care, trained
and developed, and above all, induced to offer commitment. Indeed, the
overall shift was memorably described as a journey ‘from control to
commitment’ (Walton 1985). Alongside all of this, and indeed providing
an economics underpinning to it, the concept of ‘human capital’ came to
the fore (Becker 1964).
This reconceptualization coincided with the emergence of the ‘resource-
based view’ in the strategy domain (Wernerfelt 1984; Grant 1991; Peteraf
1993). Emphasis was given to the importance of maintaining a link
between business strategy and human resource strategy. The human
resource approach displaced ‘personnel management’ and gave emphasis
to the importance of establishing both vertical and horizontal alignment in
HR policies and practices.
In the 1980s, influential new models and frameworks were developed
including the Harvard Model (Beer 1985), which established a flow from
the environment to business strategy and to human resource choices and
onwards to outcomes. In parallel, important contingency models and
frameworks emerged (Fombrun et al. 1984; Kochan and Barocci 1985;
Schuler and Jackson 1987), which made links between appropriate
HR strategies and a firm’s location in relation to such contingencies
as business stages and variations in product/service characteristics (e.g.,
low cost, innovation, or service quality). Empirical research traced how
6 Mapping the field of strategic human resource management

major mainstream companies and public sector organizations were re-

sponding to these ideas (Storey 1992). The role of general managers and
line managers alongside human resource and personnel/IR specialists was
assessed.
This theme of the nature of the HR function’s profile was elaborated
and developed by Ulrich in a series of influential publications (Ulrich
1997, 1998; Ulrich et al. 2017). Based on global research, his classifica-
tion of the HR function into different segments: business partners,
shared services, and centres of expertise became the dominant model
among practitioners. A related development in the field has been the
impact of SHRM on firm performance (Wright and Snell 1998).
A reincarnation of many of the underlying premises of HRM can be
found in the influential work of economists investigating the sources of
productivity (Bender et al. 2018; Bloom and Van Reenen 2007; Bloom
et al. 2012; Sadun et al. 2017). This body of work takes a step back and
asks which, if any, ‘management practices’ impact on productivity.
They use the World Management Survey which has been administered
across 34 countries (see [Link] They
make the case for recognizing the vital importance of management
competence, central to which is the competent management of human
resources. The key practices are identified as: target setting, the use of
incentives, monitoring of performance, and talent management.
Achieving managerial competence ‘requires sizable investments in
people and processes’ (Sadun et al. 2017, p. 122). This new wave of
research and associated practical interventions replays many of the
core themes in classic HRM.
Some recent research has begun to switch the focus from a unit of
analysis based around individual firms, to a framing that brings into
focus wider ‘eco-systems’ comprising networks of interdependent in-
dividuals and organizations (Roundy and Burke-Smalley 2022; Snell
et al. 2023). These networks may operate as hybrids of market and firm
relationships.
The above paragraphs give a synoptic view of the emergence and
development of the field. Now, we proceed to dig deeper.

Defining the field

Based on a review of SHRM theorizing and research, Wright and
McMahan (1992) defined SHRM as ‘the pattern of planned human
resource deployments and activities intended to enable an organization to
achieve its goals’ (p. 298). They noted that this entails vertically linking the
strategic management process to HRM practices, and horizontally cre-
ating coordination and congruence among those HRM practices. They
suggested that the major variables of concern in SHRM are,
 Mapping the field of strategic human resource management 7

the determinants of decisions about human resource practices, the

composition of the human capital resource pool (i.e., skills and
abilities), the specification of required human resource behaviors, and
the effectiveness of these decisions given various business strategies
and/or competitive situations.
(pp. 298–299)

It is important to emphasize that currently the term ‘HRM’ is used in

two different ways. In one usage, which we can term the generic, it is
used to encompass all of the forms of employment management in its
infinite variety. In this first sense, it is just a new label for personnel
management or employment management in general. But there is a
second usage. In its second form, the term has at times denoted a par-
ticular approach to employment management. Thus, the term in this
second sense refers to one of the many ways of managing labour and is
used to demarcate it from other ways. Not surprisingly, the existence of
two different usages has caused considerable confusion in the academic
literature with commentators often talking at cross-purposes.
So, what is this second, more specific and narrow meaning? In this
particular sense, it has been defined as follows:

Human resource management is a distinctive approach to employ-

ment management which seeks to achieve competitive advantage
through the strategic deployment of a highly committed and capable
workforce using an array of cultural, structural and personnel
techniques.
(Storey 2007, p. 7)

The definition points first of all to the distinctive means through which
objectives will be sought. These include, crucially, the element of a
‘strategic’ approach. This means that the management of people and of
the workforce in general is approached not in an ad hoc, tactical, and
merely reactive way but in a manner which regards this aspect of man-
agement as of central importance. HRM practices helped deliver stra-
tegic objectives. Different strategies require different employee skills. As
with other aspects of the definition, the interesting features are in noting
not only what this form of HRM is, but also what the meaning suggests
HRM is not. The counterfactual is important. For the HRM, debate and
the emergence of HRM only makes sense when it is recognized as part of
the history of its time.
HRM emerged at a time when labour management, in broad char-
acterization, might be described as a secondary, Cinderella-like, man-
agement practice (‘Personnel Management’ was often described in these
terms). Markets were defined, finance arranged, and production plans
8 Mapping the field of strategic human resource management

drawn up – and only then was the request for certain units of labour
issued, often at short notice. Similarly, as industrial conflict was of
concern in the post-second world war period, the skills in subduing and
‘managing conflict’ were to the fore in the then field of personnel/IR
management. It was into this climate when western product markets
were coming up against the international competition – and often losing
out – that this ‘new’ approach to managing labour emerged and pre-
sented a challenge to existing assumptions and practices.
Second, the definition refers to the deployment of a ‘highly committed
and capable workforce’. This is an important feature of the distinctive
approach. As we know, very large sections of the economy operate on
very different principles. The high-commitment approach is relatively
unusual in large swathes of the employment scene. Hire and fire, short-
term contracts, even zero-hour contracts, outsourcing, agency work, and
many other such methods to treat labour as a mere transaction are
relatively commonplace. Recent talk of ‘employee engagement’ or ‘em-
ployee experience’ can be seen as a latter-day attempt to (re)capture
some of that high-commitment agenda. The distinctive high commitment
mode of HRM equates with what is termed the ‘High Road’ approach to
employment management. The ‘Low Road’ approach relates to the
precarious forms of employment (Osterman 2018). The links between
high pay/high productivity versus low pay/low productivity models have
been explored in the disciplines of economics (Abowd et al. 1999) and
employment relations (Holzer et al. 2004). HRM, in the distinctive sense,
is expressive of the High Road approach. This high road/high commit-
ment perspective is likewise integral to the theory of ‘High-Performance
Workplaces’ (Appelbaum et al. 2000) and High-Performance Work
Systems (HPWS) (Becker and Huselid 1998) along with the idea of
identifiable ‘bundles’ of HR practices (MacDuffie 1995).
Third, the ‘array of cultural, structural and personnel techniques’
refers to the mutually reinforcing ways in which a truly thought-out
strategic approach can deploy a wide range of methods that would have
an internal ‘fit’ and would complement each other (a further instance of
the strategic nature of the idea). These techniques include attempts to:
‘win hearts and minds’ rather than merely enforce a contract; to
deemphasize custom and practice in favour of instilling values and
mission; pluralism is also downplayed in favour of an implied unitary
perspective where employers, managers, and employees are seen to share
at least one similar interest: to keep the enterprise in business. Thus, a set
of beliefs and assumptions underpin this distinctive form of HRM. Other
dimensions stress the role of strategy in that the business plan becomes
pertinent to the way that employees and workers in general are managed;
and an emphasis on the role of line managers as crucial to the practice
and experience of HR policies. Then there is a set of key levers such as
 Mapping the field of strategic human resource management 9

serious attention to selection (in place of hire and fire), performance-

related pay, an attempt to move from ‘temporary truces’ in labour
negotiations to management through culture, and shared goals.
When viewed holistically, is this package to be regarded as a ‘soft’,
‘human relations’, approach with employee welfare at its core? There are
facets such as an emphasis on training and development and the winning
of hearts and minds that might lean in that direction. But there are also
‘hard’ aspects to this model of HRM (Storey 2007). Labour is seen as a
strategic resource. As such it is to be planned for, measured carefully,
and used as an asset. HRM sits alongside the resource-based view of the
firm as strategic perspective on how to manage the employment rela-
tionship (Storey 1992, 2007).
What about practice? While the HRM label has become so ubiquitous
and has, in the main, replaced personnel management in many organiza-
tions (contrary to expectations and indeed contrary to empirical evidence
during its early days – as revealed by the Workplace Employment Relations
Survey (WERS) surveys), the management of work has, over the past
couple of decades, not been a steady journey to the wider diffusion of the
best practice HRM model. In the wider, generic sense, HRM continues, but
the nature of its practice is very varied. This variation is reflected in terms
such as ‘High Road and Low Road’ practices, ‘polarized work’, and in the
metaphor of the ‘hourglass economy’. These variations might seem to
suggest the degree of strategic choice facing HR professionals. Yet, research
across major economies indicates that, for many workers, the erstwhile
trend towards good practice has shifted into reverse (Kalleberg 2013; 2018).

Theory and practice

As currently conceived, HRM is constituted by both research and
practice. These two are related, but they are not the same. It is a truism
that practice often differs from theory in the sense that everyday prac-
tices do not always live up to some theoretically derived prescription of
an ideal or a ‘best’ way. But the practice-research distinction can be
exaggerated. Much research in HRM is simply the identification and
cataloguing of practice. For example, they include statistical and
descriptive summaries of the state of play with regard to what human
resource specialists do, how they are distributed, what influence they
exercise, and so on, which are research-based mirrors of practice. The
same can be said for those examples of HR research that draw a picture
of recruitment and selection practices, appraisal methods, reward sys-
tems, and the like. This type of research reflects practice. It is descriptive.
But there is another type of research that seeks to identify ‘good
practice’ and even ‘best practice’. This type tries to identify the causal
links between context, practices, and outcomes. For example, this goes
10 Mapping the field of strategic human resource management

beyond describing what HR professionals do and moves on to study the

impact of what they do on key outcomes such as employee well-being or
business performance. The theory then explains why these outcomes
might occur by building conceptual frameworks. As a result, it follows
that in many instances, actual practice will often differ from ‘theory’. Yet
additionally, many practitioners pay regard to research when seeking to
develop their practice and so theory and practice can become closer as a
consequence.
Thus, the question ‘what is HRM?’ can then be answered in terms of
both theory and practice.

The nature of strategy in HRM

A strategic approach to HR could normally be expected to include
elements such as a longer-term perspective; a concern with big issues that
go beyond operational detail; an approach which scans, and factors-in,
relevant information about the environment and about changes within
it; the construction of policies which seek to align HR practices to the
needs of the business often expressed as mission, vision, strategy, or
goals; and the construction of HR policies which bring each of the ele-
ments of HR into mutual, reinforcing, and alignment. Thus, decisions in
relation to recruitment and selection priorities should be consistent with
priorities in the areas of goal setting, performance management, reward,
training and development, and promotion and exit.
So, whereas an operational decision might be confined to a one-off
interaction with an employee (for example, how to handle a particular
appraisal interview) and may require some tactical skill, SHRM is
concerned with the wider issues and usually involves making choices
about matters which will have longer-term consequences and will affect
the success or otherwise of the business.
The alignment of HR components has been termed ‘internal fit’, while
the alignment of HR with business strategy and the wider business en-
vironment has been termed ‘external fit’. Strategic HR should aspire to
both types of fit (Miles and Snow 1994).
SHRM is concerned with both policies and practices. Ideally, these
work in tandem, but appropriate policies can be undermined by poor
practices, and conversely, good practice may, to some extent, compen-
sate for defective policies. It is a field that comprises practice, prescrip-
tion, and empirical study. Although one might desire and assume a
strong connection between these, in reality, there is sometimes a con-
siderable disconnect between these three elements.
An important question is who generates HR strategy? It might be a
specialist HR Director and team but not all organizations have these.
Even if the senior business team has created a separate HR function (in
 Mapping the field of strategic human resource management 11

the form of a unit or department), it is possible that they may not nec-
essarily devolve all big decisions in this area to that department. Indeed,
the choices about whether to have such an HR department can be seen
as one of the strategic decisions we are talking about here.
Research evidence suggests that key integrated business decisions
(which include HR and finance and marketing strategies) are formulated
by executive groups (not Boards) and that the members of these groups
multitask and are most effective when they adopt a business orientation
and not a functional orientation. A business orientation ‘makes strategic
decision makers comfortable to deal with issues outside their business
function’ (Kelly and Gennard 2007, p. 114).
Classic definitions include the idea that ‘business strategy’ is:

The determination of the basic long-term goals and objectives of an

enterprise and the adoption of courses of action and the allocation of
resources necessary for those goals.
(Chandler 1962, p. 13)

Thus, from one perspective, strategy requires systematic rational assess-

ment of contexts and resources.
Some approaches to doing strategy focus mainly on finding the
optimal space or location in a market. So, these approaches tend to look
outwards to the characteristic features of a market such as price, quality,
and the distinctiveness of offers for goods or services.
A business strategy (and by extension an HR strategy) that focuses
more on utilizing internal resources than on locating the best market
position is known as ‘the resource-based view’ (RBV). This was advanced
most fully by Prahalad and Hamel (1990) and Grant (1991). These ana-
lysts were mainly talking about business strategy but their approach has
profound implications for HR. The re-focusing on internal resources is an
approach that is closely aligned with the idea of an HRM strategy because
it gives emphasis to the importance of leveraging resources to gain a
competitive advantage. As noted above, it regards labour as assets rather
than in the conventional accounting view as costs. And, of course, one
implication of this is that one tends to invest in and to nurture assets,
whereas one normally tends to try to cut costs. This idea of the workforce
as assets gets to the heart of many approaches to SHRM. It involves
seeking to build human capability and to gain competitive advantage from
workforce skills, creativity, and commitment.

Strategy as plan?
Another issue that has been central to debates in business strategy and
also has much relevance to HR strategy is whether a ‘strategic approach’
12 Mapping the field of strategic human resource management

requires a formal plan. There is often a tendency to think about strategy

as requiring the compilation of information and as a formal process of
decision-making that culminates in a series of plans. But there is another
view; the view that suggests strategy can be inferred from a pattern that
emerges from a long series of decisions, even in the absence of a formal
written plan or strategy document. This could be termed a ‘de facto
strategy’. This idea of an ‘emergent strategy’ is normally associated with
Henry Mintzberg (1978).
So, an enterprise may have no formal strategy document and yet still
have a de facto emergent strategy. Or it may even be that an enterprise
has a formal and lengthy strategy document that is largely ignored in
practice while a different de facto strategy is pursued.
A de facto strategy which has been built up incrementally and found
to ‘work’ (in the sense that the organization has proved to be sustainable
and no major chronic problems are occurring) may add up to a coherent
strategy.
But not all ad hoc approaches have such optimal outcomes. ‘Ad ho-
cery’ may result in a lack of forethought, inconsistencies, short-term
thinking, and waste and can be very costly and lead to an uncompetitive
position (e.g., paying redundancies as a reaction to economic downturn
and then facing recruitment difficulties and training costs when upturn
occurs). The word ‘rudderless’ is sometimes used to describe this kind of
drift and lack of direction. Hence, this particular approach would be
considered as non-strategic.
So, what would an approach to HR look like if it was not ad hoc,
rudderless, and reactive? The implied alternative is some kind of strategic
approach – that is, one which:

• tries to build a big picture

• has a sense of direction of travel
• has some coherence and consistency
• has mutually reinforcing elements

Coherence is about fit and integration. In other words, it suggests that

the parts or elements fit together smoothly rather than contradict each
other or lean in different directions. A classic example of HR decisions
that tend towards contradiction is where ‘team focus’ is urged and
policies are put in place to promote that, but where the remuneration
system is based on individual performance-related pay.
But in addition to alignment and coherence of the individual policy
components, HR strategy design requires attention to contexts – both
inner and outer contexts. A recent special issue of HRMJ places
context front and centre of international HRM research (Farndale
et al. 2023).
 Mapping the field of strategic human resource management 13

The nature of the design, and the range of factors to be taken into
account when attempting this design, is a matter of some debate. The
skill involved in making these decisions may be a matter of good judge-
ment – an essential quality for a competent strategist in HR. Some analysts
recommend an approach that amounts to a ‘design’ or ‘decision science’
(Boudreau and Ramstad 2009) with an associated emphasis on systematic
concepts, frameworks, and measurement, while others lean more towards
an approach based on aspects of leadership and social intelligence.

Why is SHRM important?

The arguments relating to the importance of SHRM tend to be con-
structed around the claim that ‘people make the difference’. The point
being made here is that other resources are available and purchasable
(capital, new plant, and new equipment, etc.) on a relatively open
market, but it is the creative utilization of these resources and ideas by
people (singularly and in combination) which lies at the root of creating
a competitive advantage.
These arguments are in some ways similar to those that stress the
importance of the resource-based view or of the role of knowledge and
the importance of organization capability (Ulrich 1997) or ‘dynamic
capability’ (Teece et al. 1997). The dynamic capability was defined by
Teece et al. (1997) as a ‘firm’s ability to integrate, build and reconfigure
internal and external competences to address rapidly changing en-
vironments’ (p. 516). It suggests that intangible assets, including the
knowledge and skills of the workforce, can be configured so that tradi-
tional routines do not hamper responses to rapidly changing environ-
ments. Instead, more flexible, meta-routines can be created which enable
organizations to be capable of a higher state of responsiveness to
inherently unpredictable forces. Failure to attract, retain, and motivate
the right numbers and right kinds of people mean that opportunities are
missed and that other resources are wasted.
In general, the available studies appear to reveal impressive evidence
of robust impacts and outcomes (e.g., Huselid 1995; Becker and Gerhart
1996; Ichniowski et al. 1997; Becker and Huselid 1998; Ichniowski and
Shaw 1999). An influential idea has been that appropriate ‘bundles’ of
HR practices make the real difference (MacDuffie 1995). These classic
studies were mainly conducted in the USA and in the mid-1990s. They
suggest that those firms which used ‘bundles’ of HR interventions were
more likely, on a statistical basis, to enjoy better financial performance.
This issue of the links between policies and performance outcomes is
explored more fully in Chapter 2.
The importance of dynamic capabilities and a strategic mind-set in
an innovation-oriented economy heightens the need to attend to the
14 Mapping the field of strategic human resource management

management of human resources and other intangible assets (Davenport

et al. 2006). And resource-based theories suggest that sustainable com-
petitive advantage stems from unique bundles of resources that com-
petitors cannot, or find extremely hard to, imitate (Wernerfelt 1984;
Barney 1991). Ironically, it has tended to be economists and others who
have argued the case that human assets in particular can fulfil this cri-
terion (Polanyi 1966; Davenport et al. 2006; Teece et al. 1997). Such
accumulating evidence has helped advance the idea of ‘human capital’
management.

Contingency models and frameworks

In contrast to the best practice models considered in the previous section,
contingency models of SHRM are based on the premise that what is
required is a skilful alignment between HR policies and various organi-
zational and contextual characteristics. Thus, best-fit approaches can be
located within this category. The word ‘contingency’ here refers to those
theories which explain organizational behaviours and outcomes as highly
dependent on some inner or outer environmental variable such as country,
technology, organizational size or industry type, or the fit with a particular
business strategy. In some versions of contingency theory (the more
deterministic ones), the interpretation would seem to challenge the idea of
strategic choice. In less deterministic versions, strategic choice occurs when
HR policies and practices uniquely align to a particular business strategy.
Or a contingency such as an organizational context where safety is para-
mount (Kellner et al. 2023) or special types of workers such as freelancers
who require tailored HR practices (van den Groenendaal et al. 2023).

Types of contingency frameworks

Below we summarize four main types of contingency model which link
HR strategy to different ways of thinking about context (environment).
The four types are: linking SHRM to business strategy; linking SHRM
to business life-cycle; linking SHRM to strategy and structure; linking
SHRM to social purpose and performance outcomes.

Linking SHRM to business strategy

It is sometimes argued that an HR approach is only ‘strategic’ if it ‘fits’
with the organization’s product–market strategy and if it is proactive in
this regard. Most of the theorists in this category draw on Porter’s (1980)
distinction between innovation, quality-enhancement, or cost-reduction
strategies (e.g., Schuler and Jackson 1987; Miles and Snow 1985).
For example, Schuler and Jackson (1987) suggest that where a firm
has opted for innovation as a means to gain competitive advantage, this
 Mapping the field of strategic human resource management 15

sets up certain predictable required patterns of behaviour. Prime among

these requisite ‘role behaviours’ are creativity, a capacity, and willingness
to focus on longer-term goals, a relatively high level of collaborative
action, a high tolerance of ambiguity, and a high degree of readiness to
take risks.

Linking SHRM to business life-cycle

The business life-cycle approach essentially seeks to tailor human
resource policy choices to the varying requirements of a firm at different
stages of its life-cycle, i.e., from business start-up, through early growth
and maturity, and eventually on to business decline. At each stage, a
business might be hypothesized to have different priorities. These dif-
ferent priorities, in turn, require their own appropriate human resource
strategies. There are a number of examples of the life cycle or ‘stages’
approach (Lengnick-Hall and Lengnick-Hall 1988; Kochan and Barocci
1985; Baird and Meshoulam 1988).
Kochan and Barocci (1985) and others suggest that, at the start-up
stage, new enterprises require recruitment and selection strategies that
quickly attract the best talent; reward strategies that support this by
paying highly competitive rates; training and development strategies that
build the foundations for the future; and employee relations strategies
that draw the basic architecture and put in place the underlying phi-
losophy for the new business.
Under mature conditions, the emphasis in HRM is upon control and
maintenance of costs and resources. Hence, the recruitment and selection
stance might be geared to a gradual introduction of new blood into
vacant positions created by retirements. There might also be a policy of
encouraging enough labour turnover so as to minimize the need for
compulsory lay-offs. Meanwhile, the pay and benefits policy is likely to
be geared to a keen control over costs. Training and development might
be expected to have the maintenance of flexibility and the adequate
provision of skill levels in an ageing workforce as their priority.

Linking SHRM to organizational strategy and structure

The most noted example of the strategy/structure linkage of contingency
theory is the work of Fombrun et al. (1984). Their model shows a range
of ‘appropriate’ HR choices suited to five different strategy/structure
types, ranging from single-product businesses with functional structures,
through diversified product strategies allied to multi-divisional organi-
zational forms, and on to multi-product companies operating globally.
For each of the five types of situations, the key HR policy choices in the
spheres of selection, appraisal, reward, and development are delineated.
16 Mapping the field of strategic human resource management

For instance, the HRM strategy of a company following a single-

product strategy with an associated functional structure is likely to be
traditional in appearance. Selection and appraisal may well be conducted
in a subjective fashion, and reward and development practices may veer
to the unsystematic and paternalistic.
By way of contrast, a company pursuing a diversification strategy and
operating with a multi-divisional structure is likely to be characterized by
a HR strategy driven by impersonal, systematic devices which are
adaptable to the different parts of the organization. Reward systems are
likely to be formula based with a tendency towards a focus on return on
investment and profitability. Selection, and even appraisal, may be found
to vary between the different constituent business divisions.

Linking SHRM to social purpose and performance outcomes

There has been a growing research interest in the issues of Equality,
Diversity and Inclusion (EDI). Notably, EDI is often regarded as both a
desirable end itself and as a means to other ends such as enhanced
organizational performance. A notable phenomenon in recent times has
been ‘the significant global groundswells of social activism. The Black
Lives Matter, #MeToo and LGBTQ+ rights movements have drawn
much-needed attention to issues of diversity and the necessity to speak
openly about racism and sexism’ (Turner and Merrimen 2021). Turner
and Merrimen’s research tested the link between senior managers’
awareness and sensitivity to such issues and the nature of diversity
practices. Focusing on higher educational institutions in the USA they
found a significant association between the cultural sensitivity of senior
HR managers and organizational practices which suggested to the re-
searchers the importance of the discretionary effort of these actors.
A UK-based study of EDI examined how executives in an organization
that had developed a strategic business case for diversity and inclusion
were able to address the equality implementation gap (between what is
espoused and what is achieved) through control over managers in order to
direct their actions towards pro‐diversity objectives. Interventions such as
mandatory diversity training, diversity targets, and diversity monitoring
they contend can prompt managers towards making progressive steps but
are ultimately limited by management discretion. ‘The agency of managers
means the equality implementation gap can be reduced but never com-
pletely closed’ (Noon and Ogbonna 2021: 619).
In tune with both the previous studies, a research project in the USA
found ‘a virtuous cycle such that increases in board diversity are related
to the subsequent adoption of diversity management practices, which are
related to subsequently higher levels of board diversity’. They connect
board diversity to the adoption of diversity management practices and
 Mapping the field of strategic human resource management 17

demonstrate the mutually positive influence they have on each other

(Srikant et al. 2021).

Summary
This chapter has summarized the key aspects of SHRM:

• What is it and what does it look like?

• What were its antecedents?
• Why is it important?
• What kind of performance outcomes have been found?
• What are the main theories, trends, and frameworks?

Key issues include:

• That strategy can be emergent as well as planned. Either way, it can

be assessed and evaluated in terms of its efficacy and appropriateness
to labour and product market conditions.
• Ad hoc decisions and responses which lack consistency may risk
inefficiencies and waste.
• HR strategy normally has to validate itself in terms of its contribu-
tion to the wider organizational mission. This does not necessarily
mean simply following in an unquestioning way the lead taken by
other directors in operations and marketing – it may be that a
resource-based approach requires a HR strategy which is distinctive.

In the next chapter, we assess the body of research which has tried to
clarify the performance outcomes arising from the deployment of stra-
tegic human resource practices. These outcomes may be behavioural in
the sense, for example, of higher employee commitment or firm out-
comes in the shape of higher productivity or even higher profitability.
2 Strategic human resource
management and performance
outcomes

One of the earliest frameworks for exploring the impact of HR practices

on performance was the ‘Behavioral Perspective’ outlined by Schuler and
Jackson (1987) as noted briefly in Chapter 1. Having its roots in contin-
gency theory, this model was based on the assumption that the purpose of
employment practices was to shape or control employee attitudes and
behaviours. They suggested that (a) different competitive strategies require
different employee ‘role behaviours’, and (b) different HR practices can
elicit these different role behaviours. Thus, they suggested that employee
role behaviour mediated the relationship between strategy and perform-
ance and that HR practices were critical for producing the relevant be-
haviours. Also central to this model was the need for congruence across
HRM practices such that all worked towards producing the required set of
behaviours.
The behavioural perspective also formed the basis for Miles and Snow’s
(1986) exploration of HR practices associated with different organiza-
tional types. Having proposed three types, ‘defenders’, ‘prospectors’, and
‘analysers’ in an earlier paper (Miles and Snow 1978), they provided an
analysis of the types of practices that would be appropriate for each of
these types.
Another behavioural approach to explaining the relationship between
HR practices and performance can be found in social exchange theory
(Blau 1986; Homans 1961). This theory originated as a way to explain
how relationships develop between individuals but was later expanded
to explore the relationship between an organization and its employees
(Eisenberger et al. 1986). This more macro-level application suggests that
when employees perceive that the organization is taking positive beneficial
actions towards them, they will reciprocate in positive and beneficial ways
towards the organization. Consequently, a number of authors have sug-
gested that commitment-based HR practices demonstrate beneficial
treatment of employees, which causes them to reciprocate by being more

DOI: 10.4324/9781003364276-3
 Strategic human resource management and performance outcomes 19

committed and productive, resulting in higher organizational performance

(e.g., Chuang and Liao 2010; Messersmith et al. 2011; Sun et al. 2007).
While these frameworks provide process-focused explanations for the
relationship between HR practice and performance, the resource-based
theory (RBT) of the firm (Barney 1991; Wernerfelt 1984) provided a
higher-level explanation for why HR practices can impact firm perform-
ance. Barney (1991) noted that resources that are valuable, rare, inimi-
table, and non-substitutable can be a source of sustainable competitive
advantage to a firm. Sustainable advantages accrue when a firm imple-
ments a value-creating strategy that competitors have ceased trying to
imitate. While such an advantage is defined in terms of economic rents that
can be distributed to, or among, a variety of stakeholders (e.g., share-
holders, customers, employees, etc.; see Coff 1999), the assumption within
empirical research is that such advantages are observed in shareholder
returns, and thus financial- and market-based performance of firms.
Early on, debates arose about the extent to which HR practices could
be viewed as sources of sustainable competitive advantage, with the
debates focused on the inimitability of the practices. Wright et al. (1994)
suggested that any HR practice could easily be imitated by competitors.
However, Lado and Wilson (1994) argued that the system (as opposed to
individual practices) could be unique, causally ambiguous, and syner-
gistic in how it impacted firm competencies. Later, Barney and Wright
(1998) similarly suggested that while competitors could imitate any one
practice, they would find it difficult to imitate the system of practices.
Consequently, the field has come to a consensus on the importance of
HR practices and their potential to at least aid in creating competitive
advantage. This consensus has become so great, that one would be hard
pressed to find any study of the relationship between HR practices and
performance that does not at least pay lip service to the RBT as the
overarching rationale for hypothesizing a positive relationship.
The earliest conceptual and empirical research on HR practices began
with explorations of the ‘determinants’ of the various practices. Miles
and Snow (1978) were among the first to offer a framework for aligning
HR practices with strategy. They argued that the different strategic types
(defenders, etc.) required different approaches to how they managed
people. They then provided an analysis showing the different HR
practices associated with these strategic types and provided company
examples to illustrate these differences. Baird and Meshoulam (1988)
explored the determinants of HR practices rather differently. Instead of
focusing on business strategies, these authors looked at the different
stages in organizational life cycles and provided a conceptual examina-
tion of how HR practices might become more sophisticated as firms
moved into different stages. Lengnick-Hall and Lengnick-Hall (1988)
developed a model juxtaposing organizational readiness and corporate
20 Strategic human resource management and performance outcomes

growth potential to create a two-by-two matrix. They then hypothesized

the different types of HR systems that would be associated with each.
A more recent two-by-two matrix to describe different systems of HR
practices was proposed by Lepak and Snell (1999). Grounded in the
Resource Based View (RBV) they proposed two dimensions along which to
categorize different talent pools: value and uniqueness. They then suggested
that human capital pools within each of the four resulting quadrants would
require different approaches and different systems of HR practices.
In line with these conceptual models, the early forms of empirical
research explored the determinants, rather than the outcomes, of HR
practices. For instance, Snell (1992) was among the first to explore the
drivers of HR practices at the organizational level of analysis. He viewed
HR practices as control mechanisms (input including selection; and
throughput, using for example, behavioural appraisal; and output, using
for example, results-based appraisal) and found that the use of these
aspects of HR practices was associated with administrative information
and strategic context. Snell and Dean (1992) explored the link between
integrated manufacturing and HR practices. They measured integrated
manufacturing in terms of the use of advanced manufacturing tech-
nology, just-in-time inventory control, and total quality management.
They suggested that such manufacturing technologies required upskilling
of the workforce to be able to effectively utilize the technologies. Thus,
they expected that their use would be associated with more selective
staffing practices, comprehensive training, developmental performance
appraisal, and equitable rewards. They generally found support for these
hypotheses among operations staff and quality-control staff, but not
among production control employees.
Arthur (1992) examined how strategy impacted HR practices in a
sample of steel mini-mills. Using cluster analysis he identified six different
clusters of mini-mills similar in their profile of HR practices. He then
collapsed them into two types: ‘cost-reducers’ and ‘commitment max-
imisers’. This was consistent with Walton’s (1985) view of firms using
control or commitment approaches, and Arthur’s (1994) later use of this
nomenclature. He found that mini-mills emphasizing manufacturing few
products in large quantities tended toward the use of a cost-reducer/
control HR system, while those stressing more flexible manufacturing were
more likely to use a commitment-maximiser HR system.

Research redirection: HR practices and performance

Following the initial inquiries into the determinants of HR practices, the
field then began to shift to exploring the consequences, particularly their
impact on firm performance. This research progressed in three stages as
described below.
 Strategic human resource management and performance outcomes 21

Stage 1: demonstrating the relationship between HR practices and

performance
Exploring the determinants of HR practices, while useful, did not
accomplish the goal of showing that HR mattered. However, that soon
changed. Huselid’s (1995) seminal study provided the empirical founda-
tion for HR advocates to argue that HR can have a profound impact on
organizational performance. Using a sample from the Russell 3000,
Huselid surveyed Chief HR Officers regarding their use of 13, what he
termed, ‘High-Performance Work Practices’ (HPWS). (These can be seen
as the component elements of the much vaunted ‘HPWS’). He then re-
gressed the firm’s financial performance (both Tobin’s Q and gross rate of
return on assets) on these practices and found significant results. However,
the basis for the study’s immediate popularity stemmed from the fact that
he provided point estimates of the value of HR practices. In fact, he
concluded that a one standard deviation increase in the use of HPWS was
associated with a per employee increase in market value of $18,641, an
increase of $27,044 in sales, and an increased profit of $3,814. Needless to
say, HR practitioners jumped on these results to tout their importance,
and HR academics quickly set out to conduct similar studies.
Appearing somewhat simultaneously with the Huselid (1995) study were
three other studies that captured the imagination of the field by demon-
strating empirical linkages between HR practices and performance. First,
Arthur (1994) used the data from his previously discussed study to examine
how HR systems might differentially impact outcomes. His results showed
that, compared to mini-mills using commitment-based HR systems, those
using control systems displayed lower productivity, higher scrap rates, and
higher employee turnover. MacDuffie (1995) examined how bundles of
organizational systems impact performance in a manufacturing environ-
ment. Using data from automobile assembly plants, he demonstrated that
those using a combination of ‘high commitment’ HR systems and low
inventory and repair buffers consistently outperformed those using mass
production systems in terms of both quality and productivity. Delery and
Doty (1996) tested the relationship between HR practices and performance
in a sample of banks. Distinguishing among universalistic, contingency, and
configurational approaches, they found the most support for a universalistic
(a consistent set of practices across all firms) model in terms of explaining
performance variance.
Unsurprisingly, these four studies appearing within a two-year time
frame sparked a plethora of further studies examining the relationship
between HR practices and performance. For instance, Youndt et al.
(1996) followed up the original Snell and Dean (1992) study by surveying
the companies regarding a number of performance measures. They
found that an HR system focused on enhancing human capital was
22 Strategic human resource management and performance outcomes

related to employee productivity, machine efficiency, and customer

alignment, but that this relationship was predominantly observed with a
quality manufacturing strategy.
But demonstrating a clear link is by no means easy. Based on an em-
pirical study of HR and firm performance in Finland, it was found that the
link between HR practices and firm performance was highly equivocal; the
stage in the economic cycle was found to play a much more direct part in
explaining firm performance (Lahteenmaki et al. 1986).

Stage 2: exploring the black box

As the research base showing a positive relationship between HR
practices and performance grew, one thing was missing: an empirical
exploration of how these practices impacted performance. Wright et al.
(2005) described this problem as the failure to explain the ‘black box’
between practices and performance. Their call, along with others, began
to spark an increase in studies that explored the mediating mechanisms
between these two variables.
So, for example, Cappelli and Neumark (2001) conducted an inter-
esting study examining the costs and benefits of HPWS. They found that
these practices transfer power to employees and result in higher wages,
but only weakly impacted productivity. Given the higher wages, they
found that there was no effect on labour efficiency in terms of the output
per dollar spent on labour. Way (2002) found similar results in a sample
of small businesses. His results showed that HR practices were associ-
ated with lower workforce turnover, but not with labour productivity.
In a study of call centres, Batt (2002) found that HPWS were negatively
related to quit rates and positively related to sales growth and that the
impact of HPWS on sales growth was mediated by quit rates. Takeuchi
et al. (2007), relying on the resource-based view of the firm and social ex-
change theory, hypothesized that HPWS raise human capital and social
exchange within a firm and that the human capital and social exchange
should be related to establishment performance. Using a sample of
Japanese business establishments, they found that human capital and social
exchange mediated the relationship between HR practices and establish-
ment performance.
In an extensive meta-analysis, Jiang et al. (2012) explored human
capital and employee motivation as mediators of the relationships
between HR practices and voluntary turnover, operational performance,
and financial performance. They found that the skill-enhancing HR
practices relationship with financial performance was partially mediated
by human capital, employee motivation, turnover, and operational
outcomes, but that the motivation- and opportunity-enhancing practices
relationship with performance was fully mediated by these variables.
 Strategic human resource management and performance outcomes 23

In what Schuler et al. (2014) refer to as ‘targeting practices’, a number

of studies began to emerge which examined HR practices developed
specifically to encourage certain behaviours. For example, Collins and
Clark (2003) examined HR practices for top managers. They investi-
gated how HR practices that encouraged networking were related to
how much top managers networked internally within the firm and ex-
ternally with others outside the firm. They found that HR practices
encouraging networking were related to sales growth and stock growth
and that these relationships were mediated by networking behaviour.
Similar efforts have explored HR practices targeted at HR flexibility
(Chang et al. 2013), customer service (Chuang and Liao 2010), and
knowledge-intensive teamwork (Chuang et al. 2016).

Stage 3: process models of the relationship between HR practices and

performance
While the mediation research has demonstrated the significance of a
number of mediating variables, a further development was the emer-
gence of process models of the relationship. One of the earliest models
was proposed by Truss and Gratton (1994). Building on the previous
work of Dyer (1985), they distinguished between ‘Planned HR Practices’
and ‘Implemented HR Practices’. They noted that some practices could
emerge, not as a result of a planning process, and conversely, some
practices that are planned may never be implemented.
Bowen and Ostroff (2004) provided another foundational contribu-
tion to process models of strategic HRM through their development of a
construct they termed HR ‘system strength’. Those authors used com-
munication theory to examine how HR systems could strongly or weakly
communicate the intended messages aimed at managing employee be-
haviour. They argued that climate serves as the critical multilevel med-
iating construct between HRM practices and performance. They stated,

We propose that HRM content and process must be integrated

effectively in order for prescriptive models of strategic HRM actually
to link to firm performance. By process, we refer to how the HRM
system can be designed and administered effectively by defining
metafeatures of an overall HRM system that can create strong
situations in the form of shared meaning about the content that
might ultimately lead to organizational performance.
(Bowen and Ostroff 2004, p. 206)

They argued that the strength of the HR system can be described as the
extent to which the system induces conformity. Consequently, they
24 Strategic human resource management and performance outcomes

described the features of an HR system that could create strong situa-

tions as having distinctiveness, consistency, and consensus.
Building and expanding on these basic ideas, Wright and Nishii (2013)
and Nishii and Wright (2008) proposed a more thorough process model.
This recognizes that the basic relationship between HR practices and
performance requires a number of individual-level processes. In addition
to the distinction between intended HR practices and actual HR practices,
they further recognized that the actual practices are implemented by
managers, and thus, there could be significant variance in the practices
across managers, and even across employees with the same manager. The
next stage in the process entailed clarifying the Perceived HR Practices.
Even if a supervisor treats two employees the exact same way, it can be
perceived differently by each. The concept of employee reactions describes
the affective, cognitive, and behavioural responses of employees to the
practices they perceived. Finally, how all employees coordinate, integrate,
and align their behaviours determines the performance at the unit level.
Thus, their process model starts at the unit level, goes down to the indi-
vidual level, and then comes back up to the unit level.
Similarly, Guest and Bos-Nehles (2014) developed a model of HR
practice implementation. They described four stages of implementation. In
the first stage, HR managers and senior executives make the decision to
implement HR practices. In the second stage, HR managers consider the
cultural and regulatory constraints to decide on the quality of the HR
practices that can be implemented. The third stage concerns how line
managers and/or senior managers actually implement the HR practices.
The fourth stage refers to the quality of implementation by line managers.
A recent approach within this process model of the HRM-performance
relationship turns to the role of employee attributions (Sanders et al. 2021).
These authors note that while early research on the HRM-performance
relationship failed to explain how the association was achieved, recent
work from a process perspective has started to remedy this. This
approach examines how employees perceive HR practices, how line
managers communicate and implement practices, and why employees
believe that management implements specific HR practices (Sanders
et al. 2021: 695). For further analysis of HR process research and HR
strength see also Sanders et al. (2021).
In an example of this approach, Alfes et al. (2021) explored how the
extent to which employees attributed the presence of HPWS to a firm’s
desire to improve employee well-being, and to a firm’s desire to increase
performance, impacted employee engagement. In their study of 484
employees across 5 different organizations, they found that HPWS was
positively related to both types of attributions, and both types of attri-
butions were positively related to employee engagement. They also
 Strategic human resource management and performance outcomes 25

found that the two types of attributions interacted significantly to

increase employee engagement.
In another project using attributions theory, Katou et al. (2021)
conducted a multilevel study with 158 Greek organizations to investigate
how line manager implementation of HRM, HR strength, and HR at-
tributions impact organization performance. They found that HR
strength (in terms of distinctiveness, consistency, and consensus) fully
mediated the relationship between the HRM practices and line manager
implementation at the organizational level. They also found that the line
manager HRM implementation fully mediated the relationship between
HR strength and employee attributions of both the commitment and
control orientations of those practices. Finally, they found that employee
attributions fully mediated the relationship between line manager
implementation and organization performance.
Guest et al. (2021) used signalling theory to analyze HR processes
and HR attributions. In a study of 83 bank branches, they found that
implementing a coherent set of high-commitment HR practices and
having agreement between managers and staff about those practices
were related to employee attributions regarding the commitment- or
control- based motivation underlying those practices. However, they
did not find that the attributions were related to branch performance.
Thus, these process models primarily recognize the fact that the
ways through which HRM practices can influence performance
require examining processes at multiple levels of analysis. They also
correctly note that what an organization intends to do according to its
HR strategy may diverge greatly from what actually happens and how
employees experience HR practices (Nishii et al. 2008). The recent
research focuses on how employees make attributions regarding why
organizations implement practices has helped to enlighten the ways in
which these practices may or may not be related to performance.
Having described some of the theories, the more impactful em-
pirical research, and the process models linking HR practices to
performance, we now turn our attention to answering the two critical
questions: What do we now know about this relationship, and what
do we still not know?

What do we know about the relationship between HR practices

and performance?
Given the extensive literature on HR practices, one would expect that
there would be a number of consistent findings. A more accurate
description of this literature, however, is that there are indeed quite a
number of findings, but few very consistent ones.
26 Strategic human resource management and performance outcomes

There is a positive relationship between the use of HR practices and unit

performance
One almost unarguable finding across the hundreds of research studies
conducted examining the link between HR practices and performance is
that a positive relationship exists between these two variables. Combs
et al. (2006) identified 92 studies with an overall N of over 19,000 that fit
their criterion to meta-analyse the relationship between HR practices
and performance. Using a conservative estimate, they suggested a mean
correlation of 0.20 between HPWS and performance. They noted that
while this number may not seem large, ‘it is much larger than what is
found among other organisation-level phenomena where long-held or-
ganisational performance hypotheses either do not stand up to the evi-
dence … or are much smaller than predicted by theory … ’ (p. 517).
However, in a later meta-analysis, Tzabbar et al. (2017) performed a
moderating meta-analysis, comparing their results to those found in past
meta-analyses. The moderated aspect of the meta-analysis entailed ex-
amining if different characteristics of the study, such as the type of per-
formance measure or the country/region in which the studies were
conducted, explain variance in the effect sizes observed. Some of the
moderating results will be discussed below, but for now the most impor-
tant comparison is with regard to the overall effect size. They found a
mean z effect size of 0.09 and noted ‘the reported association is smaller
than the effect size reported in prior meta-analyses’ (2017, p. 139).
In addition, recent research has explored the simultaneous effects of
HRM practices with other aspects of the employee experience. For ex-
ample, Ehrnrooth et al. (2021) examined the simultaneous effects of
transformational leadership and HPWS on employee attitudes. In a
study of 308 subordinates of 76 managers, they found that both trans-
formational leadership and HPWS were positively related to employee
self-efficacy, engagement, organizational identification, and turnover
intentions. While the effects of transformational leadership were reduced
when accounting for HPWS, the effects of HPWS were only marginally
reduced when accounting for transformational leadership.

The positive relationship between HR practices and performance

transcends country boundaries
Hofstede (1993) has strongly influenced management thinking based on
his research on country cultures. He originally described four dimensions
of culture: individualism-collectivism, masculine-feminine, uncertainty
avoidance, and power distance, and he later added the dimension of
long-term-short-term orientation. For decades, authors suggested that
US-originated HR systems, such as HPWS, would not work or at least
not work as well in certain country cultures. However, Gerhart and Fang
 Strategic human resource management and performance outcomes 27

(2005) were among the first to question what they termed the ‘cultural
constraint’ hypothesis which suggests that the effectiveness of HR
practices is constrained by country cultures. They noted the conditions
that had to be true in order for the cultural constraint hypothesis to
hold, and presented preliminary data suggesting that these conditions
likely did not hold. Then, in a meta-analysis using 156 effect sizes and
over 35,000 firms, Rabl et al. (2014) found (a) an overall mean corre-
lation of 0.28, (b) that the relationship between HPWS and performance
was positive in every country, and (c) that the relationship was actually
stronger in countries that the cultural constraint hypothesis would sug-
gest would result in weaker relationships.
Using meta-analysis, Tzabbar et al. (2017) found that the effect size
was positive and significant in all regions and that the effect sizes were
largest in Asia, Eastern Europe, and the Middle East.

Bundling of HR practices matters in the relationship with performance

MacDuffie (1995) was one of the first researchers to introduce the con-
cept of ‘bundling’. He actually described the importance of bundling a
set of HR practices with corresponding production system character-
istics, but many readers interpreted his bundling concept to refer mainly
to bundles of HR practices. In the Combs et al. (2006) meta-analysis
described below, the researchers demonstrate that the effect of a system
of HR practices is greater than the effect of individual HR practices. In
fact, the average correlation between individual HR practices and per-
formance was only 0.14 compared to the 0.28 estimate for the systems of
HR practices as noted above.
Combs et al.’s results were not perfectly mirrored by Tzabbar et al.
(2017) who found that while HPWS had a stronger relationship with
performance than profit sharing and voice, they did not correlate higher
than development, training, and job security practices. One of the unique
aspects of their study stemmed from their moderation analyses where
they explored how different aspects of the studies might explain variance
in the effect sizes observed across studies. They found that societal
context explained 33% of the variance such that the highest effect sizes
were observed among studies conducted in Asia, Eastern Europe, and
the Middle East with significantly lower effect sizes found among studies
conducted in Australia, Europe, and North America. The industry sector
explained 12% of the variance in effect sizes, with the highest effects
observed in low-tech firms followed by service firms with high-tech firms
having the lowest observed effect sizes. Finally, firm size explained 8% of
the variance in effect sizes with the largest effect sizes being observed
among large firms relative to medium or small firms.
28 Strategic human resource management and performance outcomes

What do we still not know about the relationship between HR

practices and performance?
While the above conclusions seem almost unarguable given the signifi-
cant body of research that exists, a number of unanswered questions
remain.

Which practices?
While research has clearly demonstrated the positive relationship
between HR practices and performance, the critical question remains
unanswered: which practices? As early as Becker and Gerhart’s (1996)
introduction to the Academy of Management Journal’s special issue, we
see complaints about the lack of consistency in the HR practices mea-
sured across the studies. They noted that no single practice was part of
each paper, and only one, training, appeared in all but one paper. This
problem has not gone away. Posthuma et al. (2013) analyzed 193 peer-
reviewed articles and identified 61 specific HR practices that had been
measured. However, they bemoaned the fact that there was very little
consistency in the practices that have been measured across these studies.
Similarly, Langevin-Heavey et al. (2013) found little agreement on the
specific practices that have been used in studying the relationship
between HR practices and performance.
Recently, Su et al. (2018) have suggested expanding the list of prac-
tices used in this research. They noted that since the early distinction
between commitment- and control-oriented practices (Arthur 1994),
HPWS research has focused almost entirely on commitment-oriented
practices, In two studies, Su and Wright (2012) and Su et al. (2018) have
found that adding control-oriented practices increases the amount of
performance variance explained beyond that of just the commitment-
oriented practices.
Moreover, in addition to the question of which practices, there is also
little consensus on the approach to aggregating the practices. Since the
Huselid (1995) study, virtually all research has simply added the items
together to compute an overall scale (or used factor analysis and added
up the sub-scales). However, research based on the ability, motivation,
and opportunity (AMO) perspective has suggested that HPWS really
contain three sub-components: ability-enhancing, motivation-enhancing,
and opportunity-enhancing sub-scales. For instance, Gardner et al.
(2011) noted that ability-enhancing practices were actually positively
related to turnover, while motivation- and opportunity-enhancing
practices were negatively related.
More comprehensively, the Jiang et al. (2012) meta-analysis segmented
HR practices into three sub-components: AMO-enhancing practices. They
found that skill-enhancing practices were more strongly related to human
 Strategic human resource management and performance outcomes 29

capital and less strongly related to employee motivation than motivation

and opportunity-enhancing practices. They noted:

The findings of the differential relationships between the dimensions

of HR systems and organizational outcomes also offer methodo-
logical implications for strategic HRM research. First, if all three
dimensions of HR systems have unique effects on organizational
outcomes, failure to include any dimension may compromise the
overall impact of HR systems on organizational outcomes or at
least lead to inaccurate results … . Relatedly, the results indicate
that the three-dimensional model fit the data slightly better than the
model combining the three HR dimensions into a unidimensional
HPWS element.
(Jiang et al. 2012: 1278)

In addition, while most of the research has focused on HPWS, some

research has explored HRM practices aimed at more specific outcomes.
For example, Salas-Vallina et al. (2021) introduced what they called
‘well-being-oriented’ human resource management practices (WBHRM),
in essence a set of HR practices aimed specifically at ‘ … maintaining and
improving employees’ psychological, physical, and social well-being, on
the basis of a positive employment relationship’ (2021: 334). They argued
that such a system of practices both increases employee well-being while
enhancing performance, because people support one another, set ambi-
tious goals, and are willing to go the extra mile. In a study of 2,914
employees across 192 teams, they found that the WBHRM practices
related to employee well-being and individual performance and that the
effect was accentuated when they experienced engaging leadership. So,
research in this area increasingly allows for exploring different orienta-
tions of practices as well as the basic practices themselves.

Which direction does the causal arrow point?

While the positive relationship between HR practices and performance
seems virtually unarguable at this point in the field’s evolution, what
remains somewhat unclear is whether increasing HR practices causes
higher performance or high performance encourages firms to develop
and implement more HR practices. Guest et al. (2003) examined the
relationship between HR practices and performance among a sample
of UK-based firms. They found that while the positive relationship
existed between the practice and performance, once they controlled for
past performance, the relationship disappeared. Similarly, Wright
et al. (2005) found that measures of HR practices were equally cor-
related with measures of past, present, and future performance and
30 Strategic human resource management and performance outcomes

that the correlations between HR practices and future performance

were greatly reduced when controlling for past performance. These
findings do not suggest that HR practices do not cause future per-
formance; rather they only suggest that current research cannot prove
which way the causal arrow points.

How much value can we expect from increasing HR practices?

Given the fact that the data does not prove a causal relationship of HR
practices on performance, this calls into question some of the point es-
timates of the value accrued from increasing them. For instance, Huselid
and Becker (2000) stated, ‘Based on four national surveys and obser-
vations on more than 2,000 firms, our judgment is that the effect of a one
standard deviation change in the HR system is 10–20% of a firm’s
market value’ (p. 851).
Likewise, based on their meta-analytic results discussed above,
Combs et al. (2006), when trying to argue for why the observed mean
correlation of 0.20 is meaningful, state:

It means that 20% of the utility available from predicting perform-

ance differences among organizations is given by HPWPs. Increasing
use of HPWPs by one standard deviation increases performance by
.20 of a standard deviation. For example, Huselid (1995) reports
means of 5.1 and 18.4% and standard deviations of 23 and 21.9% for
gross ROA (i.e., returns plus non-cash items) and turnover, respec-
tively. In this sample, a one standard deviation increase in the use of
HPWPs translates, on average, to a 4.6 percentage-point increase in
gross ROA from 5.1 to 9.7 and a 4.4 percentage-point decrease in
turnover from 18.4 to 14.0%. Thus, HPWPs’ impact on organiza-
tional performance is not only statistically significant, but manageri-
ally relevant.
(pp. 517–518)

Here again, we do not mean to dispute the relationship between HR

practices and performance, nor do we suggest that implementing HR
practices should not lead to greater performance, all else being equal.
However, we do suspect that there may be a dually causal relationship,
where HR practices may help increase performance and that increased
performance may then provide more money to invest in HR practices.
But, in such a situation, using the correlation or effect size reflects both
of the causal forces, and thus overestimates the true impact of HR on
performance. Thus, given that the causal arrow could point either way
(or both), we caution that the point estimates of the value of increasing
HR practices may possibly be overly inflated.
 Strategic human resource management and performance outcomes 31

Conclusion
Research on the impact of HR practices on performance has grown to be
one of the more frequently studied phenomena in the field of HR. This
research has been conducted in cross-industry (e.g., Huselid 1995),
within industry (e.g., Delery and Doty 1996; MacDuffie 1995), and
within corporation (e.g., Wright et al. 2005) settings. In addition, it has
been conducted across a large number of geographies. In the main, these
studies have revealed a consistent finding of a positive relationship
between HR practices and performance. In the next chapter, we make a
closer examination of the precise nature of the practices involved.
3 Key practice areas and the key
levers

Ultimately, strategic human resource management is defined by what it

does: that is, the actual practice of SHRM. To put this point another way:
‘it is the how of HRM in the chain of processes that make the various
models of HRM work well or poorly’ (Boxall et al. 2008, p. 7).
The critical incidents between entry and exit of workers which
attract the attention of HR practitioners include job design and team
design, on-boarding and induction, assessment, training and develop-
ment, engagement, reward and retention, talent management, em-
ployment relations, safety, health and well-being, and organizational
design and redesign, organizational vision, mission, and culture man-
agement. The value of these kinds of activities can best be appreciated
when their absence or their mishandling is observed; this can lead to
expensive and sometimes even existential threats to an organization.
Examples include the passivity of the HR department at Miramax in
the face of complaints about Harvey Weinstein; similar passivity in the
British House of Commons when faced with complaints from staff
about bullying and sexual harassment from some elected members; a
failure to have active systems in place at Oxfam resulting in cata-
strophic reputational damage in 2018; and well-publicized reputational
damage to P&O Ferries when in March 2022 they dismissed 800 es-
tablished staff without notice while replacing some of them with for-
eign workers on less favourable terms (Calder 2022).
Beyond the universal good practice idea is the potential gained from
tailoring the specific practices to organizational strategy – e.g., whether
geared to enable a low cost, quality, or innovation business strategy
(Schuler and Jackson 1987). So, for example, an innovation-led
approach may need to emphasize team-oriented practices (Jørgensen
and Becker 2017). Further, such a goal requires practices that allow and
encourage engagement and divergent thinking rather than mere con-
formity to standard HR practices and procedures (Shipton et al. 2016).
This, in turn, implies changes to leadership development practices. Thus,

DOI: 10.4324/9781003364276-4
 Key practice areas and the key levers 33

practices must not only be performed well, they need to align. This
means vertical alignment with organizational goals and horizontal
alignment of practices with each other.
Analyses of its enactment are normally structured in line with a
notional chronology from staff recruitment through to exit. See Figure 3.1
which displays the range of HR practices and interventions as a cycle.
If the constituent elements are approached in a strategic way, then
careful regard will be given to how such activity contributed to organi-
zational objectives. If they are approached in a non-strategic manner,
then action will be governed by ad hoc responses or by following some
traditional mode of practice.
There is a danger in treating each component as a separate process.
This happens sometimes in both theory and in practice. Thus, the HR
function is often separated out into sub-functions each staffed by spe-
cialists in their own right. Yet, the practices may only add significant
value if they are coherent and mutually reinforcing. They contribute best
when adding to ‘system strength’ (Hauff et al. 2017). This is the idea
expressed in the notion of ‘High Performance Work Systems’ (Hong
et al. 2017; Meuer 2017) and the concept of ‘HR bundles’ (MacDuffie
1995) as described in the previous chapter.
Thus, pursuing a particular strategic goal – such as innovation – will carry
implications for the kind of HR practices that should be pursued. An example,
based on the target of encouraging innovation, can be found in research
conducted at European Centre for Nuclear Research (CERN) (Mabey and
Zhao 2016). This emphasized the value of trust, of rewarding knowledge
sharing, encouraging diversity, and fostering communities of practice.

Figure 3.1 The cycle of HR practices.

34 Key practice areas and the key levers

In the realm of practice, HR departments are likely to require

cooperation from line managers and will benefit from enhancing their
implementation skills (Trullen et al. 2016; López-Cotarelo 2018).
We start the analysis with planning and resourcing.

Human resource planning and resourcing

If the mantra ‘people are our most important asset’ is to mean anything,
then the methods used in the selection of the workforce would need to be
taken seriously rather than in the ad hoc and peremptory fashion so often
used in the past, and to a lesser extent, today. The process ideally begins
with a careful assessment of the organization’s needs with regard to size
and composition of the workforce. From there, it would proceed through
recruitment and selection. The throughput continues with deployment and
succession planning, and on to various modes of exit including redun-
dancy, retirement, voluntary exit, and enforced exit: all part of the process
of labour flow, in, through, and out.
There appear to be fashions in human resource planning (HRP). A
decade or so ago ‘talent management’ and ‘high potentials’ were key
themes. But a recent assessment has argued that the focus on ‘special
talent’ has ‘passed its prime’ and attention now shifted to more ‘inclusive
models’ (Tavis 2018). This is a contentious claim as a significant body of
research suggests that a minority of high performers account for a dis-
proportionate amount of value gain across many organizations (Ready
et al. 2010; Aguinis and O’Boyle 2014). As a result, star performers are
subject to invitations to defect to competitor organizations and thus
employers tend to take steps to protect these resources. A study of
financial analysts showed that star performers are indeed attractive to
competing firms and risked being poached, but the effect is moderated
by the status and reputation of the employing firm (Kang et al. 2018).
An example of the scepticism about the special few is reflected in
Khurana’s work on superstar CEOs (Khurana 2002) and in a meta-
analysis that examined the relationship between CEO succession and
firm outcomes. This found that CEO succession negatively influences
performance in the short term and has no significant direct influence on
long-term performance (Schepker et al. 2017).
A distinction can be drawn between an idealized rational-linear
description of the HRP process and the everyday realities of staffing.
The idealized approach recommends a series of logical steps from
the calculation of demand for labour arising from the business plan, the
calculation of the supply of labour, and a matching process. The ex-
ample offered by Storey and Sisson (1993) is shown in Figure 3.2.
Work study techniques and standard ‘staffing ratios’ relating labour
requirements to indicators such as the number of assembly lines and
 Key practice areas and the key levers 35

Figure 3.2 Idealized model of HR planning.

Source: Storey and Sisson 1993, p. 113.

shifts to be worked, the number of beds on a hospital ward or the

number of children in a school may all be used as part of the calculation.
Career planning and succession planning can also be used as part of this
stock and flow approach.
The planning stage may be more complex than is at first apparent.
Not all workforce requirements are necessarily met through direct em-
ployment. Services may be outsourced to agencies or to self-employed
workers. There may be staff working in-house in a manner dedicated to
one organization even though these staffs are actually employed by an
36 Key practice areas and the key levers

agency (Rubery et al. 2002). An interesting variant occurs when a ded-

icated unit in, for example, in-house recruitment is floated off so that it
can offer its services on the open market, thus exploiting the capabilities
and intellectual capital of this aspect of HR. Lepak and Snell (1999)
discuss the complex composition of the ‘HR architecture’. The converse
to the careful managed approach to planning and resourcing is the
casual hire and fire approach where filling the workforce quota is an
afterthought. Such an approach reflects the labour as ‘cost’ rather than
as ‘asset’ perspective.
In an earlier manifestation, HRP was termed ‘manpower planning’
and it became increasingly sophisticated and mathematical in form.
Aspects of flow through the system and related aspects of succession
planning helped raise the status of the departments responsible for such
plans. The oil company Royal Dutch Shell did a great deal to elevate this
set of techniques. HRP is especially important in a number of critical
public services such as education and health where teachers and clinical
staff require lengthy training periods. But the track record of authorities
responsible for delivering such plans has been poor, resulting in periods
of surplus and shortages of staff.
The formal approach suggests a process based on assessments of
forecasts of need and supplies both external and internal sources of
labour. These calculations in turn build on measures of existing ‘stock’
and the ‘flows’ shaped by attrition and maturation. Thus, succession
planning forms an integral aspect. Predicted numbers are also affected
by changes in demand for labour as a result of new strategic plans for the
business (for example, entry into new markets and/or new functions) and
as a result of new techniques and new equipment which can influence
both numbers and skill types required as labour substitution occurs or as
new skill requirements emerge.
For a while, manpower planning enjoyed growing respect and pop-
ularity. But this was followed by a decline as the mechanistic nature of
the models and their associated plans became seen as detached from
reality (Cowling and Walters 1990). While the full potential of man-
power planning was rarely realized in actual practice, the basic com-
ponents such as measuring employee turnover and retention became
well-established as core personnel management tools. In subsequent
years, these tools and techniques, in adapted form, became more fully
developed in desktop computer personnel information packages and
the idea of Human Resource Information Systems (HRIS) – software
combining multiple forms of information – became popular and there
remains considerable interest in their potential (Bersin 2016). Such
modern versions can differentiate more between jobs and occupations
and be geared to both organizational and employee outcomes (Schmidt
et al. 2017). In any case, other research shows that only supportive career
 Key practice areas and the key levers 37

management approaches have an impact on performance outcomes (De

Vos and Bart Cambré 2017).
An area that has attracted considerable research within the realm of
HRP has been that of ‘career management’. During the classic years of
formal HRP, this often meant planned progression through a corporate
hierarchy and the associated aspects of ‘succession planning’ (Mayo 1991).
Many consultancies still offer this service. For example, they may offer to
assess ‘bench-strength’ – that is an organization’s preparedness to replace
key staff. But, in general, as corporations downsized and fragmented, the
ownership of career management seemed to shift from the organization to
the individual. Concepts such as the ‘boundaryless career’ came under
scrutiny (Arthur and Rousseau 1996) along with ‘portfolio careers’
(Arnold 1997). There are two broad views on the state of play. One sug-
gests that the abandonment of organizational careers has not been as
dramatic as often suggested (Guest and MacKenzie-Davey 1996). An
alternative view is that the growth of precarious work has severely dented
career management along with training and development.

Recruitment and selection

Following the process of HR planning and the identification of the
staffing requirements implied by the business strategy, it may be neces-
sary to recruit new staff to posts – either externally sourced or recruited
internally. Recruitment is the process of generating a pool of candidates.
It is followed by a process of selection between these candidates.
It has been claimed that the staffing function, including recruitment
and selection, is ‘the most critical human resource function for organi-
zational survival and success’ (Collins and Kehoe 2009, p. 209). For
knowledge-based firms such as digital enterprises, financial services, and
pharmaceuticals this is especially critical. But it can also be crucial in
other settings including retail, hospitality, and other industries which
rely heavily on the behaviour of customer-facing staff. It has been argued
that as organizations are made up of different groups of employees,
employment systems, including recruitment, need to match their ap-
proaches to these characteristics. In other words, recruitment and
selection systems need to be tailored to these groups; hence, there is no
single best recruitment system. Requirements for knowledge, skills, and
abilities (KSAs) will vary across occupations to reflect differences in task
complexity and task interdependencies (March and Simon 1958;
Thompson 1967). This perspective offers a view of organizations as
comprising different groups or subunits each with their own organiza-
tional design needs and staffing requirements. Some units can be shielded
from uncertainty and this allows routine and standardization of tasks.
Staff resourcing can reflect this. Conversely, other roles are exposed to
38 Key practice areas and the key levers

high levels of uncertainty and these require special resourcing approaches.

This leads to the identification of appropriate recruitment strategies
(Collins and Kehoe 2009).
External recruitment may be by open advertising followed by selec-
tion processes including online tests, assessment centres, and interviews.
But part of HR strategy in some organizations has been to tailor re-
sourcing to particular groups and sources. Thus, in the UK, the much
expanded fast food and coffee shop industry tends to recruit using em-
ployment agencies and to gear recruitment to young enthusiastic labour
from European countries such as Spain, Portugal, and Poland. Similarly,
UK cruise ships tend to recruit their cabin and catering staff almost
exclusively from India and the Philippines. These staff are recruited by
agencies in Mumbai and elsewhere and are allocated a fixed-term
renewal contract for tours of duty.
This kind of arms-length contracted approach does not suit all situ-
ations. The move towards in-house direct labour was undertaken for a
reason. Control of a total labour force and the desire to instil commit-
ment may impel managers to categorize at least certain segments of the
labour force as permanent staff with a sense of identity and commitment
to the employer brand. Internships have become a significant method of
recruitment especially for graduates (Hao and Liden 2011).
Following recruitment and selection, a further HR intervention is
likely to include some form of performance management.

Performance and reward management

The term ‘performance management’ suggests an interconnecting set of
policies and practices which have as their focus the enhanced achievement
of organizational objectives through attention directed towards individual
and group behaviour. Its elements normally include setting clear goals and
objectives, formal monitoring of performance, and the use of outcome
reviews to attempt to shape future behaviour (London and Mone 2009).
The management of individual and group performance is elevated to a
matter of strategic importance. As such, a formal ‘performance manage-
ment system’ may be constructed. An example is shown in Figure 3.3
This suggests a continuous cycle formed by establishing a clear
linkage between the corporate and business strategies to the identifica-
tion of departmental objectives and from there on to individual objective
setting. Ideally, organizational objectives and individual employee be-
haviours should be aligned. This sets up the possibility of performance
evaluation in terms of prime organizational objectives and, from there,
implications can be drawn for what kinds of feedback, rewards, and
development processes should be put in place. Thus, finding a way to
allow differential rewards may be part of a performance management
 Key practice areas and the key levers 39

Figure 3.3 Key elements of a performance management system.

Source: Storey and Sisson 1993, p. 133.

system but that is only one element of a larger objective. In some in-
stances, development may be a bigger aim than assessment. Clarity and
specificity in goal setting are important (Locke and Latham 1990).
Feedback can be a problematic process; it needs to avoid comments on
personal characteristics and to focus on specific behaviours and goal
progress (Kluger and DeNisi 1998). Critical elements are perceived
fairness and equity (Giles and Findley 1997).
Other key issues for practitioners in operating a performance man-
agement system include the need to elicit the active buy-in of executives
and managers to the design and use of the programme, linking the
components of the programme to overall organizational strategy and to
each department’s priorities, keeping the programme current, capturing
40 Key practice areas and the key levers

the learning, and evaluating the programme (London and Mone 2009).
Perceived relevance is key because off-the-shelf instruments for appraisal
tend not to engage. Annual performance reviews have been found to put
both appraisers and appraisees on edge and to make them defensive.
Instead, ongoing performance-enhancement communication throughout
the year as part of the ongoing work process is found to be more effective
(London and Mone 2009). Either way, skill is required in conducting
appraisals; a coaching style has been found to be more effective (Russo
et al. 2017).
Assessment is normally framed as for both performance review and
for development. There is an ongoing debate about the control versus
the development dimensions. The process is complicated further when
there is a link to salary or bonus payments. Research suggests that the
involvement of employees in agreeing the fairness of the performance
measures is vital (Groen et al. 2017).

Compensation
Compensation is the monetary side of the total reward system. The key
issues addressed by researchers concern the types of monetary reward
and their impact. Two main types are structured pay based, for example,
on skill or location in the hierarchy, and second, various forms of
performance-related pay (PRP).
‘Reward’ includes various monetary-related elements such as pay and
benefits plus various non-monetary aspects including intrinsic rewards.
The whole package is often referred to as ‘total reward’. Reward choices
are: base pay, performance pay, or indirect pay/benefits. Individual, team
and/or organization-wide rewards are, for example, profit sharing. Taken
together, ‘total reward’ includes monetary compensation (including cash
and benefits) and non-monetary rewards (Gerhart 2009). Settling on a
monetary reward often depends on the ‘going rate’ for similar jobs in
similar labour markets. Firms may have more discretion over how they pay
(that is, what form compensation takes, especially with regard to pay for
performance) rather than how much to pay (Gerhart 2009).
Payment by results (PBR) is one form of PRP. It was common in
industries such as engineering and textiles where paying by the piece was
normal. From the 1980s onwards, there was an expansion of PRP into
non-traditional areas such as banking and the civil service. Overall, there
has been a shift from job evaluation-based pay structures to more PRP
methods.
There are two sub-types of PRP: linking pay to performance as mea-
sured by the achievement of specific outcomes such as units produced; and
assessing performance in terms of behaviours as in merit rating derived
from assessment of traits such as problem-solving, cooperation, and the
 Key practice areas and the key levers 41

use of initiative. A meta-analysis of incentive effects of individual PRP

revealed a productivity effect of around 30% (Locke and Feren 1980). But
other research shows how PRP systems deteriorate over time and how the
effect only works in the context of straightforward physical tasks. Also
interesting is the ‘sorting effect’ – that is, the way in which the existence of
a PRP attracts some workers and repels others (Lazear 2000).
Part of the drive in the direction of PRP in the 1980s onwards was
the intent to individualize the employment relationship and break
away from standard collective contracts. But PRP schemes seem
counter-productive as the link between performance and pay becomes
subject to anomalies. Individual PRP can conflict with attempts to
forge teamwork and there is a danger that the focus on individual
reward compromises other incentives and sources of work motivation
(Gerhart 2009).
Individual PRP systems can also undermine team-based management
approaches. Thus, PRP as with any reward system has to align with
other features of the organizations. The idea of ‘fit’ is also relevant in
relation to other aspects of HR policies such as high organizational
commitment and organizational citizenship and with intervening vari-
ables of ability, motivation, and opportunity (Appelbaum et al. 2000).
For example, with regard to opportunity, group-based incentives are
more likely to be relevant in small group settings rather than in larger
group settings (Kruse 1993).
Alternatives to individual PRP include group performance schemes
and organization-wide profit-sharing schemes. An alternative is ‘gain-
sharing’ which is based on the sharing of cost savings and may also be
used in cases of productivity gain sharing (Kruse et al. 2010).
Finally, with any form of PRP, there are likely to be measurement
issues. Results-based measures may seem more directly linked to effort
and ability but there are also grounds for using behaviour-based
methods. These can take into account judgements about surrounding
factors and wider forms of contribution such as customer service and
colleague support. But, on the downside, there may be deficiencies in
rater reliability (Viswesvaran and Ones 1996).

Human resource development and talent management

Strategic training and development are concerned with the design and
implementation of training and development systems to successfully
impact organizational performance (Noe and Tews 2009). It is argued
that there need to be clear links between business strategy and the design
and delivery of strategic training and development initiatives. Likewise,
the evaluation of these efforts should lead to feedback into the business
strategy (Tannenbaum and Woods 1992).
42 Key practice areas and the key levers

Managerial commitment to training is often indicative of a wider

commitment to a workforce; it sends a message about the value invested
in employees. Conversely, the absence of training may indicate a wider
message about the undervaluing of staff. Thus, investment in human
resource development (HRD) may be associated with a desire for a high-
skill, high-value, and high-pay strategy as opposed to a low-skill, low-
value, and low-pay equilibrium. As part of this, dynamic training not
only adds skills but can also help to attract and retain staff.
Some analyses suggest that HRD needs to be tailored to the different
occupational groups that normally make up an organization (Lepak and
Snell 2003). Thus, routine training in standards and conformity may be
geared to contract employees fulfilling routine tasks whereas commit-
ment and values-based development may be offered to core knowledge
workers. There are complications because professional staff may be
oriented to commitment beyond the organization and this has implica-
tions for HR practices (Olsen et al. 2016).
It is argued that talent management, and HRD more generally, is
especially important in an age of globalization and an increased reliance on
knowledge workers (Guthridge et al. 2008; Beechler and Woodward 2009).
Organizational success becomes more dependent on finding, keeping, and
deploying the right people (Boudreau and Ramstad 2005; Boudreau and
Ramstad 2009). Hence, developing and utilizing the appropriate talent
management system becomes ever more important (Sparrow and Makram
2015). Further, while the issues of managing talent are universal, they are
especially acute in emerging market economies (Glaister et al. 2018) where
talent shortages highlight a pressing need for organizations to adopt stra-
tegic approaches. Moreover, survival in a rapidly changing and global
context requires the nurturing of ‘dynamic capabilities’ (Easterby-Smith
et al. 2009). Such a perspective aligns with human capital and the resource-
based view of the firm (Barney 1991).
There is a question concerning who owns the responsibility for skill
development. Is it the state, the organization, or the individual? Or a
combination of these? In so far as the organization plays a part there are
further questions about the role of the HR/training department and the
role of line managers. A survey in the United States found 57% of
training and development professionals outsourced all or part of their
training (Johnson 2004). Yet, the growth of the corporate universities
phenomenon suggests a desire to own and control this important func-
tion and a belief that training and development merit a strategic inter-
vention (Taylor and Storey 2016).
For many managers, training and development simply do not rep-
resent strategic issues, rather they are regarded as secondary and even a
luxury. In contrast, a learning organization puts learning and knowledge
at its centre and uses them as a fundamental regenerating resource
 Key practice areas and the key levers 43

(March 1991; Nonaka and Takeuchi 1995; Davenport and Prusak 1998).
Using a similar logic, social networks and social capital are recognized
and used as important resources for knowledge creation and sharing
(Nahapiet and Ghoshal 1998). A recent meta-analysis revealed a sig-
nificant performance improvement effect both for individuals and
groups tied into networks. They further show the benefit of making use
of bridging roles which span different social networks (Brennecke and
Stoemmer 2018). Likewise, it has been argued that talent management
focused on social networks has a positive outcome (Glaister et al. 2018).
At a level beyond individual training and development, HR may
contribute to the goal of embedding ‘organizational learning’. This is an
abstract concept based on the idea of organizational culture and prac-
tices which encourage the creation, sharing, and retention of relevant
knowledge. To a degree, the simple experience of working jointly on a
common purpose can be expected to enhance organizational learning.
Thus, the generation of routines can be a form of organizational learning
(Argyris and Schon 1981; Easterby-Smith et al. 2009; Argote and Miron-
Spektor 2011).

Employment relations, employee engagement, health, and

wellness management
When considered from a strategic HRM perspective, employment rela-
tions (also sometimes termed industrial relations or employee relations)
can be regarded as representing a series of choices about how to engage
with workers either directly or by working with their representatives.
These latter may be trade unions or representatives of employee asso-
ciations. So, one set of choices might be whether to recognize trade
unions at all and, if so, to what extent and for what purposes. For ex-
ample, whether to recognize one or more unions for collective bargaining
purposes with a view to reaching collective agreements. From this, many
other options ensure – for example, what will be the bargaining units,
will negotiations extend across different locations, who will be involved?
If unions are not involved then will some form of staff association be
used for consultative purposes?
These choices are usually heavily context dependent. Changing contexts
are often associated with shifts in power dynamics – a central concept in the
IR perspective. Employment relations differ from other aspects of SHRM in
that it tends to be more explicit in its recognition of the plurality of interests in
work organizations. Industry sector, time, and place all make a difference in
this dynamic of interests and power relations. A few decades ago, the pre-
dominant mode of representation would have been through trade unions. Pay
and other conditions of employment were mainly settled through collective
bargaining. Over the intervening years, the picture has changed dramatically.
44 Key practice areas and the key levers

In the UK, the Trade Union Congress (TUC) Directory 2018 reports that
union density in the private sector was 13.4%, while in the public sector it stood
at 52.7%, and the overall figure was 23.5%. Government statistics show the rate
declined further to 23.1% in 2021 - the lowest rate ever recorded in comparable
data (DBEIS 2022). The salience of industrial relations issues facing most
managers today is far less than it was some decades ago. Context differs also in
relation to the laws governing employment matters in different economies.
Nonetheless, the strategic question of what kind or relationship with
the workforce is to be sought remains to be addressed. Where unions or
staff associations exist, most managers will simply have inherited this
situation and will need to decide how to handle it. Will the strategy be to
marginalize the representatives and to try to communicate with the
workforce as individuals, or will some form of partnership arrangement be
attempted? Formal relations may be pursued as a means to institutionalize
conflict and manage discontent or more ambitiously they may be used to
seek mutual gains through productivity agreements (Flanders 1964).
As Kochan and colleagues showed, US firms such as Ford and
General Motors found it easier to engage the workforce in programmes
of HRM change when they involved the unions and removed a source of
mistrust. From here it was a short step to various modes of partnership
agreements with the unions (Kochan et al. 1986).
A feature of part of the current industrial relations scene is the con-
cern about precarious employment in the form of skewed employment
contracts (such as zero-hour contracts) and even the absence of em-
ployment contracts when self-employment and agency work systems are
deployed. In the UK, the government responded to pressure by com-
missioning an inquiry into ‘modern employment practices’ including the
so-called ‘gig economy’. The Taylor commission reported in 2017 in a
report entitled ‘Good Work’. The review’s stated goal was that ‘all work
in the UK economy should be fair and decent’. However, it also stated a
belief that the ‘British way’ of flexible labour markets works and that the
aim should be to build on the distinctive strengths of the existing
framework of regulation. It recommended, however, that reforms be
made to tax status, the minimum wage, zero-hour contracts, and agency
work, along with changes to rights and benefits; information and con-
sultation; and enforcement and tribunals (Taylor 2018).
Beyond formal industrial relations, a key agenda item in recent years
has been to foster ‘employee engagement’. This term has become central
to the lexicon of many managers and consultants and a quasi-industry
has been built around it. Much of the popular literature on the subject is
superficial but the idea has remained active for a number of years now.
A distinction is often made between its use as a psychological state
and employee engagement as a set of practices designed to encourage
employee commitment (Truss et al. 2014). It has been argued that
 Key practice areas and the key levers 45

engagement is dependent on trust and supervisory support (Holland

et al. 2017). Attempts to measure engagement have often been prob-
lematic (Shuck et al. 2017). From a more traditional IR/HRM per-
spective, Purcell offers an assessment of the employee engagement fad.
He is critical of the lack of rigour underpinning many of the claims
within this approach but holds up the prospect of finding some potential
value within the approach by ‘build[ing] on the key advantage of the
focus on employees, their beliefs, values, behaviours and experiences at
work in a way not seen before in mainstream HRM or employee rela-
tions’ (Purcell 2014, p. 253).
An extension from the usual engagement agenda geared towards pro-
ductivity has been a focus on health and well-being in many workplaces.
This includes work on stress management, safety, and even happiness.
Ironically, there may be tension here. Engaged workers exhibiting high
organizational citizenship behaviour may be prone to burn-out and stress
(Conway et al. 2016; Deery et al. 2017; Kilroy et al. 2017). And yet,
research in the NHS reveals that engagement may offer a win–win for
employers and employees: a ‘virtuous circle’. ‘There is clear evidence that
trusts with higher engagement levels have lower levels of sickness absence
among staff, and also have lower spend on agency and bank staff’. The size
effect was substantial – a one standard deviation increase in overall staff
engagement is associated with a £1.7 million saving on agency staff costs
for the average trust (Dawson and West 2018).

Organization design: structuring and ‘organizational culture

management’
The ways in which tasks and functions are divided and arranged,
activities grouped and coordinated, and lines of accountability drawn
form the basis of job design and organizational design. This design
activity is by no means solely the responsibility of HR specialists but
they may have an input into these choices. Likewise, HR strategists may
be involved in the vision, mission, values, and culture dimensions.
Examples of changes to organizational forms which also normally
carry a culture aspect include downsizing, decentralizing, devolving,
and divisionalising and the general drift towards semi-autonomous
business units. Structures are often neglected in analyses of HR, yet the
way work is organized into units of accountability is very important.
The consequences of the broad move away from the large corporate
firm with its multiple layers, job evaluation techniques, and career
progress have been extensive. There would seem to have been a shift
from bureaucratic forms to ‘new’ forms such as networks (Miles and
Snow 1986), cluster organizations (Quinn 1992) virtual organizations,
and hypertext organizations (Nonaka and Takeuchi 1995). The overall
46 Key practice areas and the key levers

theme is one of fragmentation, enterprise, agility, and a greater em-

phasis on a shift to market-facing units.
An early move from the large corporation was the process of divi-
sionalising. This was prominent in the 1990s (Marginson et al. 1995).
Early examples of divisionalisation were found in Du Pont and General
Motors early in the 20th century (Chandler 1962). The later phase
allowed greater focus, clarity, and accountability. It also allowed
financial and cost accounting tailored to specific business areas. This laid
the basis for an ‘enterprise’ cultural perspective.
A related shift was towards marketisation. One aspect of this was to
externalize (outsource) activities that were formerly performed in-house.
This occurred within both public and private sector organizations. This
carried implications for HR in that the numbers of workers directly
employed decreased and much of the responsibility for labour man-
agement was itself outsourced. The idea was to retain core competency
functions. Even where functions remain nominally within a unified
organization, a quasi-market was created by means of a purchaser-
provider split in public service organizations. Services were ‘commis-
sioned’ and purchased in an ‘internal market’. This could lead to a shift
from an employment relationship to a contract for services type of
relationship.
The broad shift from proceduralism and collectivism to a more indi-
vidualist approach with an aim to engender commitment is itself a sign of a
significant culture change. The wider political, social, and economic con-
texts impelled this shift. The move from mass employment in heavy
industries to a service-based economy, where customer responsiveness
became crucial, moved vision, mission, and culture change to centre stage.
The baseline is the idea of an organization’s ultimate and enduring pur-
pose (beyond surviving and making a surplus). ‘Strong cultures’ were
extolled in the In Search of Excellence movement (Peters and Waterman
1982) – though dysfunctional companies have also been noted to have
been misled by strong cultures albeit of a negative kind.
Beckhard points out that managing culture change is not just a matter
of managerial will and communication. It is inextricably linked with
structural conditions including external conditions that might make the
status quo unsustainable. His change management guidelines highlight
the importance of building a critical mass of support and a willingness to
commit resources into the change programme. He outlines a series of
steps: the design of a future state, a diagnosis of the current state,
identifying what needs to be done to move including the sorts of rela-
tionship required, formulating how an organization will function under
the desired state, and the switch of behaviours including those of senior
managers (Beckhard and Harris 1987). These ambitious forms of inter-
vention are likely to include, but go beyond, the inputs from HR
 Key practice areas and the key levers 47

specialists. They need to be aligned with the array of supportive mech-

anisms – the key ‘levers’ – reviewed throughout this chapter.

Conclusion
This chapter has offered a synopsis of some of the large body of research
on the wide array of SHRM practices. Inevitably, the coverage of those
literatures is only indicative. Lots of research evidence is omitted, but in
broad measure many of the ongoing debates about the choices facing
SHRM practitioners are reflected in the chapter. There are aspects such
as social capital and the encouragement of building and benefiting from
networks that are crucial yet not conventionally covered in most con-
siderations of HRM practice areas. It is also noteworthy that HR
practices and philosophies are subject to significant shifts over time.
Economic cycles appear to have a significant impact on these as do more
structural shifts such as globalization. Hence, for example, soft HRM
processes may not be resilient in recessions (Cook et al. 2016).
In the next chapter, we take a different perspective by examining in
more detail the nature of the competencies which underpin effective
strategic human resource management and we look more closely at the
HR function itself.
4 HR competences and the HR
function

In this chapter, we turn to an examination of research on the strategic

contribution of the HR function itself. By ‘function’ here, we refer to the
institutionalized forms which HR practice takes – usually in the form of
some kind of departmental structure. Thus, we discuss the capabilities and
competences of those who provide HR services (including both policy and
practice) and we look at how the HR function is organized (e.g., cen-
tralized or decentralized; fragmented into separate sub-units or integrated;
outsourced or in-house). There is a two-way relationship between HR
ideas and the HR function. Emergent and dominant ideas shape the
function’s form and function; conversely, HR practitioners help shape
ideas even if they do not always fully determine them. Research from
Finland indicates the link between HR capabilities and the adoption of
HR practices (Beletskiy and Fey 2021)
A complicating factor is that while larger employing organizations
tend to have specialized and dedicated HR departments, many small- and
medium-sized enterprises operate without them. In these latter circum-
stances, general managers and other management specialists undertake the
tasks involved in managing human resources. Indeed, even in large cor-
porations which have their own HR departments, some of the major
strategic choices about the management of the human resource may be
taken by influential senior managers from other disciplines such as chief
executives, works managers, production directors, or finance directors
(Storey 1992). Furthermore, even when HR specialists do exercise influ-
ence by shaping policy, the actual realization of these policies in everyday
practice usually depends heavily on the role of line managers (Trullen et al.
2016; López-Cotarelo 2018).
There have been attempts to professionalize this domain of man-
agement, but there has been limited success in achieving occupational
‘closure’ of the kind associated with the traditional professions (Abbot
1988). Accordingly, HR work is undertaken by general managers, as well
as professional specialists, and by hybrid managers who have multiple

DOI: 10.4324/9781003364276-5
 HR competences and the HR function 49

responsibilities. Most of the research on HR competences is restricted to

those who self-define as specialists.
The chapter is organized as follows. In the next section, the backstory
of how today’s HR function emerged is summarized along with an outline
of the main areas of research and debate. Then, in section two, the focus
shifts to a closer consideration of HR competences. Section three examines
recent developments in the organization of the HR function.

The backstory
From the earliest days of HRM in the 1980s, there has been discussion
about the capability of personnel departments to translate conceptual
models into actual practice. As we have seen in earlier chapters, the
conceptual models emphasize strategic and integrated approaches. With
respect to the personnel (or HR) function, the questions arising therefore
included the extent to which such prescriptions were being followed and
how the function was responding.
In some formulations, this was turned into a question about the
‘impact’ of HRM ideas on personnel as a function (Sisson 2001). However
expressed, the underlying questions concerned the extent to which the
prescriptive models were being adopted by personnel specialists and their
ability to deliver these. To an extent, this acknowledges that HRM ideas
emerged from outside the HR function.
Many of the early reports and analyses were sceptical about the degree
of adoption. Tyson and Fell (1986) identified different categories and types
of personnel managers. ‘Clerks of works’ were largely involved in routine
matters such as record keeping and handling documentation. ‘Contracts
managers’ tended to handle industrial relations matters in workplaces with
trade unions. ‘Architects’ were involved in policy making and were senior
managers who tended to identify as business managers first and personnel
managers second. They concluded that, in practice, the ‘clerks’ and
‘contract manager’ types well outnumbered the ‘architects’. Likewise,
Sisson (1995) recorded ‘little impact’ of HRM on personnel in the
1980s and early 1990s. Using data from the well-regarded Workplace
Employment Relations Survey (WERS), he updated the analysis and
amended the judgement to one of ‘partial impact’ (Sisson 2001). The
WERS data revealed a mixed picture: there was little increase in
board-level representation for the personnel/HR function, and rather
than an integrated, holistic approach being widely adopted, the evi-
dence pointed to the function remaining fragmented and ‘balkanized’.
On the other hand, the much anticipated externalization of the func-
tion (to outsourced suppliers) had not occurred to any significant ex-
tent during this period. Based on additional survey work, Caldwell (2003)
50 HR competences and the HR function

reached similar conclusions while also noting the ongoing ‘ambiguities and
uncertainties’ in the role of personnel management/HR.
As observed, one of the claimed distinctive features of the new
approach was a greater focus on strategy rather than merely efficient
administration of the workforce. This strategic element relates to both a
tighter horizontal integration so that the various sub-elements of the
function align (e.g., recruitment with training and with compensation
and promotion), and a tighter vertical integration so that as a whole
these elements align with the business strategy. This ambitious mission
for HRM requires appropriate competences and appropriate organiza-
tional arrangements – i.e., the two themes that form the main focus of
this chapter.
Findings from the WERS in the UK based on data from 2,680 work-
places using very detailed face-to-face administered questionnaires with
multiple respondents, again suggested ‘little evidence of an increasingly
strategic role for HR’ between the 2004 survey and the one conducted in
2011 (Van Wanrooy et al. 2013). The percentage of workplaces belonging
to organizations with a formal strategic plan for employee development
was 56% – not significantly different from the survey in 2004. Details of the
study can be found via this link: [Link]/government/publications/
the-2011-workplace-employment-relations-study-wers.
In the USA too, there have been some sober assessments of the nature
and contribution of the HR function. Most infamous was the extended
essay Why We Hate HR (Hammonds 2005). Among a number of critiques
this argued that HR had essentially focused on administrative work which
was being outsourced; unfortunately, the HR function, he argued, was ill-
suited to the remaining crucial element, the strategic role. Lawler (2005), as
well as Becker and Huselid (2006), reached a similar conclusion. Later in
this chapter, we present some alternative data and interpretations.
Analysis in the USA of small- and medium-sized enterprises drawing
on the National Organizations Survey revealed a positive unit-level
performance effect from having a formal HR function (Chadwick and Li
2018). One explanation is that their presence may prompt and promote
the creation and maintenance of a high-performance work system.
Useful though such evidence might be, such studies shed little light on
the actual processes involved. The relative lack of data about the pro-
cesses involved in doing HR – that is, the ‘black box’ between policies
and outcomes – as has been noted by a number of observers including,
for example, Haggerty and Wright (2010). Their work emphasized the
importance of implementation rather than formulation and linked this to
crucial attributes such as legitimacy and visibility of the HR function.
These attributes may be problematic even with regard to receptivity by
fellow managers, never mind the wider body of employees (Haggerty and
Wright 2010, p. 112).
 HR competences and the HR function 51

There have been limited studies of the ways in which outsourcing HR

activities affect the HR role internally, its remaining competences or its
influence with senior management. One study, that compared HR depart-
ments which had engaged in HR outsourcing with those departments which
had maintained full in-house HR provision, found that the latter enjoyed
more positive outcomes such as enhanced trust, more competency devel-
opment, and a clearer strategic focus (Glaister 2014). The enhanced benefits
of an in-house HR function are also underlined by the findings from a study
of a German subsidiary of a US company. This revealed that the effects
of outsourcing on the in-house HR function included a decrease in its
flexibility, a slowdown in its processing time of transactional work, and a
decrease in job satisfaction among HR managers (Patel et al. 2019).
Research using data from a study of firms in Spain attends directly to
this question of acceptance and credibility. The research found that the
credibility of the HR function is only one of the factors that influence
employees’ acceptance of HR’s role. Other essential elements were top
management and supervisor support, and that supervisor support carries
more weight than that of top managers (Stirpe et al. 2013). Similar
results are reported from a study of subsidiaries of Nordic multinationals
though in this instance the attitudes of the unit managers were found to
be especially important (John and Bjorkman 2015).
We now turn to recent work which attends directly to the question of
contemporary HR competences. Unlike the mainly UK-based studies
above, the ones which follow are mainly American-based though with
some global survey evidence included. The perspectives described below
also tend to be more prescriptive in nature than the descriptive accounts
discussed so far.

HR competences which make a difference

There have been a number of attempts to delineate HR competences: the
knowledge, skills, and abilities required of HR professionals. Many HR
associations, independent organizations, researchers, and consultants
have worked to define the competences required for HR professionals.
For example, HR has been encouraged to increase its analytical com-
petence (Angrave et al. 2016) and to make HR ‘relevant to business’
(Kryscynski and Ulrich 2015).
The discussion of competences for HR professionals is an extension of
the general competency-based approach to building leaders. One of the first
large-scale applications of competences to the work environment occurred
during World War II as the United States Army Air Corps applied com-
petency logic in selecting and training fighter pilots. Following the war, a
central figure in the Air Force’s task force applied this approach to a
division of General Motors. This approach was advanced by David
52 HR competences and the HR function

McClelland in 1973 in Testing for Competences, and further developed by

Richard Boyatzis, then of the McBer and Company consulting firm, in his
influential book, The Competent Manager (Boyatzis 1982).
The task of defining personal competences for HR professionals began
across organizations in the 1970s with work by the American Society for
Training and Development. This examined the competences of those
involved in human resource development (McLagan and Bedrick 1983).
Since then, a number of attempts have been made to define the compe-
tences required by HR professionals more widely. This included a series of
surveys of HR practitioners and line managers starting in 1987 with a
sample of 10,291 through to 2017 with a sample of 31,868 managers
(Ulrich et al. 2017). Similar work was conducted by the Center for
Effective Organizations over a 20-year period from 1996 to 2015 (Lawler
and Boudreau 2009; 2012). Likewise, consultancy firms such as Boston
Consulting Group and Deloitte have undertaken surveys of trends in HR
which highlight emerging competences in HR. Professional societies such
as the Chartered Institute of Personnel and Development (CIPD) and the
Society for Human Resource Management (SHRM) have also conducted
their own periodic surveys which have tracked trends and changing em-
phases such as the growing focus on talent management and leadership
(CIPD 2022).
Ulrich et al. (2017) identified four key principles that shape choices
for defining HR competences.
First, competences that create positive outcomes were identified as
being central. These authors suggest that most competency models ask
the question, ‘What are the competences of HR professionals?’, whereas
the question should be ‘What are the competences of HR professionals
that create the greatest value?’ Different HR competences have differ-
ential impacts on three outcomes: personal effectiveness of the HR
professional, impact on key stakeholders, and business results.
Second, HR competences they suggest should be determined less by
self-report and more by how those competences are perceived by
others. HR competences should be assessed not only by the HR pro-
fessional but by those who observe the HR professional. People gen-
erally judge themselves by their intent; others judge them by their
behaviour, so it is important to evaluate both intent and behaviour
(see Bracken et al. 2018).
Third, global or generic HR competences exist, but they also may vary
by geography, industry, size of organization, level in the organization, role
in the organization, gender, time in role, and so forth (Ulrich et al. 2012).
In general, according to Ulrich, about 50–60% of HR competences are
essential to all circumstances, 40–50% vary by setting.
Fourth, key HR competences change over time. As the environment
changes, so do businesses, and so do personal competences required to
 HR competences and the HR function 53

be effective. Over time, every four to five years, about 30–40% of HR

competences evolve to stay current.
These principles shape the definition, assessment, and application of
HR competence models as illustrated below.

Illustration of the Ulrich HR competency model

To illustrate the process and approach to HR competences, we report on
the seventh round of the HR competency study (Ulrich et al. 2017). In
that 2017 round, data were collected from worldwide surveys rating the
competences and performance of about 4,000 HR professionals from
more than 1,200 organizational units.
In collaboration with regional HR partners, this study examined 123
specific items detailing what HR professionals should be, know, or do.
These items were derived from focus groups by each of the 21 regional
partners and from previous iterations of the research. Through factor
analyses, nine competence domains were identified (see Figure 4.1). Three
of these competences were identified as core drivers because they delivered
on key outcomes:

• Strategic positioner: Able to position a business to win in its market.

In the past, this competence domain was called business knowledge
or acumen or strategic positioner. It has four elements: knowing
the language of business (business literacy), knowing the business’
strategy and how the business makes money, defining the expectations
of key stakeholders (customers, suppliers, investors, and competitors)
in the business niche, and anticipating shifts in the business environ-
ment and context.
• Credible activist: Able to build relationships of trust by having a
proactive point of view. In the past, this competence was often called
the trusted advisor or cultural guardian. When HR professionals are
trusted, they are more likely to be ‘invited to the table’ of business
dialogue. The activist dimension of this role implies that HR be
proactive and initiate conversations to deliver trust.
• Paradox navigator: Able to manage tensions inherent in businesses (e.g.,
be both long- and short-term focused, be both top-down and bottom-up
capable). By navigating paradox, HR professionals are able to help both
organizations and people create the agility to respond to change.

This study also found three domains of HR competence that are orga-
nization enablers, helping position HR to deliver strategic value:

• Culture and change champion: Able to make change happen and

manage organizational culture.
54 HR competences and the HR function

Figure 4.1 HR competency model for HR professionals.

• Human capital curator: Able to manage the flow of talent by

developing people and leaders, driving individual performance, and
building technical talent.
• Total reward steward: Able to manage employee well-being through
financial and non-financial rewards.
• Three other delivery enablers that focused on managing the tactical
or foundational elements of HR were also found in the study.
• Technology and media integrator: Able to use technology and social
media to drive high-performing organizations.
• Analytics designer and interpreter: Able to use analytics to improve
decision-making (Huselid 2018; Kryscynski et al. 2018).
• Compliance manager: Able to manage the processes related to
compliance by following regulatory guidelines.
 HR competences and the HR function 55

Each of these HR competences is important for the performance of HR

professionals though of course there are many practitioners who do not
achieve or display these competences. There are many details around this
research (e.g., variation in competences by level, by geography, by length
of service, by functional expertise, etc.), but the focus here is on three key
findings related to the outcomes of HR competences. First, to be invited
to the table to exercise influence, HR professionals need to demonstrate
personal credibility. Second, HR professionals need to demonstrate the
ability to serve multiple stakeholders. For internal stakeholders (em-
ployees, line managers), HR professionals require personal credibility,
but to serve external stakeholders (customers and investors), HR pro-
fessionals should be strategic positioners. Third, to create business value,
HR professionals need to become paradox navigators. These three
outcomes demonstrate the impact of the ‘core driver’ competences in
Figure 4.1. Collectively, they help HR professionals deliver value by
knowing what they should be, know, and do to affect their personal
effectiveness, stakeholder outcomes, and business results.
It is interesting to see the evolution of HR competences over 30 years.
Each of the seven rounds is independent, in that they represent a cross-
section of HR professionals who rate themselves on competences and
Associate Raters who rate them. Over the rounds, factor analyses
showed an increase in the complexity of HR competences. In 1987, three
domains were delineated: business knowledge, HR delivery, and man-
agement of change. In 1992, this was expanded to four domains, then
five in 1997, and then ultimately nine domains in 2017. Being a com-
petent HR professional has become increasingly complex, with some of
the recent competences (analytics designer and interpreter; technology
and social media integrator) reflecting how HR competences reflect
general business trends. Competences for HR professionals have evolved
with changing business conditions.
Across all competence domains, the seven rounds of survey from 1987
through to 2017 show that HR professionals have improved over these
30 years. The business knowledge score increased from 3.17 to 4.13, HR
delivery from 3.33 to 4.02, and personal proficiency from 3.78 to 4.33.
These are significant improvements in the overall competences for HR
professionals. They offer a serious challenge to many of the doubts
about the HR profession that have been expressed as exemplified in
earlier parts of this chapter.

Competent HR departments
In workshops with business leaders, when asked the question: ‘How
would you divide ten points between individual talent (individual
competences, workforce, people, employees, human capital) and
56 HR competences and the HR function

“organization” (workplace, organization capabilities, systems, team-

work, culture) and their relative impact on business results?’ Answers
range across the board, with some highlighting talent, others organi-
zation, and some neutral.
Ulrich and colleagues undertook research on this question with over
1,200 businesses and 32,000 people. They have determined for these
businesses both the quality of both their organization and the compe-
tences of their people. They then correlated these two domains on the
financial and stakeholder results of the business. While other factors
(e.g., strategy, industry, operational excellence, and culture) impact
results, they were able to divide the relative impact of talent and orga-
nization on business and stakeholder results. They report that organi-
zation has four times the impact of talent on business results. These are
significant findings and imply an 8 to 2 distribution in the ten-point
allocation exercise with executives. So, talent matters, but organization
matters even more.
Organizations are social systems that enable people to learn to
cooperate, develop talents, find a shared sense of purpose, and survive.
By so doing, organizational performance is greater than individual
productivity. Additionally, organizations take on identities of their own
that outlast individual personalities. Enduring organizations sustain
change that any single individual may initiate. When customers buy
products or services from an organization (rather than an individual),
they have long-term confidence in the sustainability of the organization.
Investors who have more favourable impressions of an organization
(versus individuals) give the organization a premium for its sustained
financial performance as well as intangibles (strategy, brand, and oper-
ational systems).
This ‘power of organization effect’ extends also to the way the HR
function itself is organized. Far less research has been done on what
factors underpin effective HR departments than on the research reported
above on defining HR’s contribution and competences. Some of the
original work on how to organize HR was captured in the work on being
a business partner in the book Human Resource Champions (Ulrich
1997). That book outlined four roles within HR departments: adminis-
trative experts, employee champions, strategic partners, and change
agents. These roles provided the basis for the model used by the CIPD
and its work on the role of the ‘business partner’ (CIPD 2022). In
popular form, three main organizational roles were widely discussed:
shared services (doing administrative work), centres of expertise (doing
technical specialist work), and business partners (doing generalist
business-focused work). This three-legged model of how to organize a
HR department became highly influential among practitioners (Holley
2016). After a couple of decades, there have also been attempts to offer
 HR competences and the HR function 57

alternative assessments and alternative modes of organizational ar-

rangements for HR (Roebuck 2015; Scott-Jackson and Mayo 2017). The
model has also attracted critique (Adams 2016).
Many of the critiques apply the 1997 business partner model to
business issues 20 years later. In the ensuing 20 years, much has changed
in the world of technology and much has changed in the world of HR.
The business partner concept has dramatically evolved from roles and
outcomes to a logic of how HR delivers value to employees, organiza-
tions, customers, investors, and communities. The transformation of HR
is not just about changing roles in an HR department, but a fundamental
shift in how HR conceives, organizes, and delivers work. More recent
work by Ulrich and colleagues (2017) identifies nine dimensions of an
effective HR department. These dimensions draw on the latest work in
organization design and also come from experience working with many
HR departments. The updated model is shown in Figure 4.2.
Starting from the top of the figure is the dimension of HR
Reputation. Every organization creates a reputation in its marketplace,
which may be called its identity or brand. This reputation shapes how
stakeholders perceive and act towards the organization. An HR
Department creates a reputation or identity based on what value it has

Figure 4.2 Nine dimensions of an effective HR department.

58 HR competences and the HR function

created, why HR practices are created and how they are used, and what
roles HR professionals play. These reputations often outlive individual
leaders and shape how others respond to the HR department.
The second dimension is HR Context/Deliverables. An organization
succeeds by mastering its context and defining a unique definition of
success. This definition of success sets the criteria for how the organi-
zation allocates resources and makes choices. Four sub-criteria that
shape HR work have been identified: service (reduce transaction costs),
create (increase technical excellence in HR practices), integrate (link HR
practices to business strategy), and influence (use HR to win with cus-
tomers and investors). HR departments can be focused on any or all of
these four deliverables as criteria for effective work.
Third, HR Strategy. Effective organizations have a sense of direction
with purpose that represents an aspiration for what can be and can
include a vision of an idealized state of what the organization wants to
become, a mission statement for why it exists, and strategies and goals of
where and when it will invest to get there. The purpose envisions a
future, sets an agenda, and offers direction. An HR department has a
purpose with a mission that answers who they are (roles), what they
aspire to deliver (capabilities), and why (value created). This mission
focuses on results or outcomes, not activities.
Fourth, HR Design (process, roles, and structure). Every organization
has a structure that translates strategy to action and deals with how work
is done. These organization structures may range from a matrix of cen-
tralized (single business focused on efficiency) to decentralized (multiple
businesses focused on effectiveness). Likewise, the organization of HR
departments needs to match or align with the organization design logic of
the business. If the business is centralized and single business, HR should
be centralized and functionally organized; if the business is a holding
company; HR should embed HR practices in each business; if the business
is a diversified allied firm, HR would be run like a professional services
firm (Ulrich and Grochowski 2012). HR work might be done through
centres of expertise, embedded HR business partners, corporate staff, or
service centres that may be outsourced (Lawler et al. 2004; Ulrich et al.
2008). The HR structure should match the business structure.
Fifth, HR and Organization Capability. Organization thinking has
evolved from morphology (efficiency and hierarchy) to system (align-
ment) to capabilities (identity). Organization capability is what the
organization is known for and good at doing – its identity (Ulrich and
Lake 1990). Organization capabilities represent what the organization is
good at doing and how it patterns its activities to deliver value.
Capability is the collective set of skills, expertise, and alignment of the
people in the company that create the identity of the organization both
internally and externally – ultimately, what it is known for.
 HR competences and the HR function 59

Sixth, HR Analytics. Information has become a central issue for

analyzing organizations. Every Nobel Prize winner in economics who
focuses on organization (institutions) as the unit of analysis frames
organization as information (e.g., George Akerlof, Kenneth Arrow,
Ronald Coase, Friedrich Hayek, Herbert Simon, Michael Spence, James
Tobin, and Oliver Williamson). Likewise, over the last decade, ‘analy-
tics’ has become a buzzword in HR and an increasingly important
concept for HR’s future. There are two major challenges to HR
departments using analytics to drive stakeholder and business results.
When talking about analytics, a number of concepts are used: scor-
ecards, dashboards, predictive analytics, data science, evidence-based
decisions, metrics, human resource accounting, cloud (or big) data,
forecasting, or workforce modelling. The underlying agenda of all these
efforts is to access and use information to make better decisions. The
role of analytics has evolved in four stages: scorecards to insights to
interventions to impact (Rasmussen and Ulrich 2015).
Seventh, HR Practices. An HR department is often known by the HR
practices it creates and establishes throughout the organization. Four
criteria for designing and delivering HR practices have been identified:
innovative (based on the latest research), integrated (offering systems
solutions not isolated HR practices), aligned (connected not just to
strategy, but to customers and investors outside the firm), and simple
(increasingly a focus on simplicity has shaped HR practices). An effec-
tive HR department has functional experts who can create HR practices
around these criteria.
Eighth, HR Professionals. This is concerned with what HR profes-
sionals need to be, know, and do to deliver key outcomes. This topic was
reviewed earlier in this chapter.
Ninth, HR Work Style: How does HR go about doing its work? HR
practitioners, when working effectively, will make it easy for stake-
holders (line managers, employees, and customers) to access HR solu-
tions and HR techniques. The characteristics of a high-relating HR
department have been defined as: share a common purpose, respect
differences, govern and connect, care for one another, share experiences,
and grow together.
These nine criteria for an effective HR department build upon and
extend previous work on HR transformation and broaden the focus of
the HR department to an overall logic. These nine criteria for an HR
department may be seen as delivering value at four stages (see Figure 4.3)
Each of these waves has a focus on different HR outcomes:
Foundational/Administrative: HR focuses on efficiency; Functional: HR
focuses on best practices; Strategic: HR focuses on delivering strategy;
Outside in: HR focuses on increasing value to stakeholders outside the
organization. The nine dimensions can be arrayed against these four
60 HR competences and the HR function

Figure 4.3 Waves of HR value creation.

outcomes which result in a matrix that can be used to describe, audit, or

improve the overall effectiveness of an HR department. For example, to
take the dimension ‘HR Reputation’, under the foundational/adminis-
trative stage would be characterized as about efficiency and the depart-
ment would be known for delivering tasks efficiently and effectively.
Under the functional stage, it would be known for its performance in the
different functional areas. Under the strategic stage, it would be known
and evaluated with respect to how its work aligned with, and supported,
the business strategy. Under the outside in stage, it will be evaluated with
regard to how well the function understands and responds to external
stakeholders such as customers, investors, and the community. To take
another example, using the dimension of ‘HR Analytics’, the foundational
stage would use this to refer to a HR scorecard to measure the past per-
formance of the department, at the functional stage analytics would offer
insight into people and organization; at the strategic stage analytics would
focus on measuring HR interventions that can be shown to contribute to
the business strategy; and at the outside in stage analytics would be used to
measure business impact, the HR scorecard becomes the same as the
business scorecard (Ulrich et al. 2012).

Conclusion
As the chapter has shown, research on the subject of the HR function
over the past few decades has produced portraits of contrasting forms.
One set of accounts suggests an optimistic view with increasing evidence
of enhanced capabilities and positive contributions. But other, more
sceptical accounts suggest that the function has yet to attain in practice
the kind of elevated status or the influence which has been outlined in
conceptual models. The origins of the function are found in personnel
 HR competences and the HR function 61

administration and much of the early work portrayed an occupational

group that lacked influence despite attempts to establish a ‘professional’
status. The emergence of HRM appeared to offer the opportunity, the
logic, and the tools to enable a more strategic role for the function. The
evidence from the studies described in the early part of the chapter
tended to point towards the uncertain and even fragile standing of the
function, but the latter part of the chapter offered material pointing
towards a far more optimistic picture. Both depictions reflect different
realities of time and place. Context matters hugely in HRM. This is the
subject of the next chapter.

Acknowledgement
The authors would like to acknowledge the valuable contribution of
Dave Ulrich to the writing of this chapter.
5 The changing contexts of
strategic human resource
management

As emphasized in the first chapter, the SHRM phenomenon (in its dis-
tinctive sense denoting a high-commitment approach) can be seen as a
product of its time. It emerged and spread when international pressures
were making many firms in western economies uncompetitive and new
ways of working were being sought. The post-Second World War con-
sensus was in the process of breaking down and a shift was underway
that offered an alternative to conventional wisdom and practices based
on managing labour through temporary truces secured through collec-
tive bargaining. At first, only a few corporations (examples included
General Electric, Hewlett Packard, and Eli Lilley) led the way in
installing an approach to employment that sought ‘commitment’ in place
of mere acquiesce (Walton 1985). As noted, the new approach started
from the perspective of the workforce as an ‘asset’ and not simply a cost;
these assets merited investment in this form of capital – the human capital.
For example, Jeffrey Pfeffer made the case for Competitive Advantage
through People (Pfeffer 1994). From the late 1980s onwards, the pioneering
firms were imitated by a host of more mainstream organizations in both
the private and public sectors as revealed by empirical case research
(Storey 1992). Initial doubts about whether HRM would be able to es-
tablish itself gave way to wider adoption.
Of course, this interpretation relates only to the distinctive version of
HRM, as noted in the first chapter. In the wider, looser usage, em-
ployment decisions might be ad hoc, short-term, and reactive. Hence,
just as in the field of strategic management itself, there are multiple
meanings of ‘strategy’. It can be variously a plan, a pattern, a position, a
perspective, or a ploy (Mintzberg et al. 1998; Mintzberg and Lampel
1999). Low-road approaches as well as high-road approaches can be
‘strategic’ if decisions about employment matters (recruitment, reward,
and appraisal) are not merely isolated processes but reflect and are in-
formed by, some explicit intent that aligns employment choices to
business organization choices (Storey 1992).

DOI: 10.4324/9781003364276-6
 The changing contexts of strategic human resource management 63

But changing contexts in recent decades have triggered and enabled

changing employment practices – often of a very radical kind. Some
of these changes seem to signal a reverse of the emphasis on high-
commitment working and a shift to outsourcing, sub-contracting,
short-term, even zero-hour contracts, precarious work, and a growing
disparity in rewards. Growing income inequality in the USA has been
systematically traced by two Harvard and California University econo-
mists (Lindert and Williamson 2017), while MIT economist Peter Temin
(2017) likewise tracks the negative impacts of the ‘dual economy’. The
metaphor of the ‘hourglass economy’ refers to the hollowed-out middle
of the labour market with a growing disparity between high and low
earners (London Assembly 2016). It is reflected in a ‘squeezed middle’ and
growing income inequality, not just wealth inequality. For most of the
20th century, the central employment relationship was between a large
employer and a set of directly employed workers with relative job security
and a host of employment benefits. In the past couple of decades, a wider
range of employee/employer relationships have been formed. While most
employees still work full-time and on ‘permanent’ contracts, an increasing
number of others are working part-time and in a multitude of contractual
relationships. Employment has often been devolved to a complex web of
smaller contracting agencies that participate in equally complex supply
chains. Terms and conditions which had improved in the 20th century
among the large employing bureaucracies (Edwards 1979) went into
reverse in this latter period. Many workers are reported as valuing flexi-
bility and yet at the same time the picture is complex and contested
because work in many organizations became less well-rewarded and more
precarious (Standing 2011; Kalleberg 2013; 2018). As Kalleberg (2018)
notes, there appears to be a growth, rather than a diminution, of ‘bad jobs’
even if these latter are not always necessarily precarious.
Some of these trends can be traced to larger, mega-trends. One such
is the rise of the ‘intangible economy’. This term denotes a shift from
investment in tangible assets such as factories and machinery to intangible
assets such as design, software, and branding (Haskel and Westlake 2018).
Firms illustrating this trend include Apple, Google, and TikTok. Haskel
and Westlake spell out a whole range of major and sustained consequences
stemming from this shift. These include a substantial rise in inequality and
shifts in power consequent to the differential ability to benefit from the
exploitation of intangibles. The thesis is that investment in intangible
assets carries certain characteristic features which make them distinc-
tive from traditional tangible assets. Intangible assets tend to be more
scalable (with relatively little extra investment they can be scaled up
and thus come to dominate a marketplace), their costs are more likely
to be sunk (they are more risky because failed assets cannot so easily
be sold), they are more subject to spillovers (ideas and inventions can
64 The changing contexts of strategic human resource management

be used multiple times and potentially by multiple players), and they

benefit disproportionately from synergies. Haskell and Westlake explore
the many economic and social consequences associated with the rise of
intangibles, but the human resource management implications have yet to
be fully investigated. Many of the institutions and assumptions about
labour relations and the management of employees which were built
during the industrial era may not be so relevant under the radically dif-
ferent economic conditions prevailing in an intangible economy.
The implications of the intangible economy context for human
resource management may play out in a variety of ways. Haskel and
Westlake (2018) note how the intangibles of the operating system in
Amazon warehouses constrain employees with tight monitoring and an
inherent command and control regime. Conversely, organizations that
produce intangible assets, such as software writing, design, and research
and development, will probably want to foster autonomy, retain talent,
and promote commitment.
The COVID-19 pandemic brought many repercussions for work
and human resource management. One effect included the wholesale
emergence of working from home, furlough (Huffman et al. 2022), and
employment disruptions alongside apparent new assessments of the
wage-effort bargain, hybrid working, and the changing nature of implicit
contracts (as explored in a special issue of Human Resource Management
Vol 61(3) 2022).
Felstead and Reuschke (2021) researched the surge in homeworking
in the UK during the pandemic and assessed its impact on productivity.
Putting the phenomenon in context they noted that it had taken almost
40 years for homeworking to grow by three percentage points, but it
grew eightfold in 2020 because of the pandemic. Employees reported
that their productivity was not adversely affected – seven out of ten
employees said that they were able to get as much done while working at
home in June 2020 as they were able to do six months earlier.
Furlough is an interesting HR intervention because it has so many
variants and potential responses. Essentially furlough refers to a tem-
porary lay-off. The job is kept open for a limited time, and the employee
is expected to return to that job after the specified lay-off period. One
version and one response may view this as an enlightened policy that
keeps employment open and which retains at least some measure of
compensation (potentially reaching 100% but more frequently a pro-
portion of this). But another perspective views furlough as a type of
‘cutback strategy’ and finds varied reactions to potential breaches of the
psychological contract (Huffman et al. 2022). Some uses of furlough or
temporary lay-off in the USA appear to suggest leave without pay. Such
interventions can be seen to potentially threaten trust, commitment, and
perceived fairness.
 The changing contexts of strategic human resource management 65

A valuable resource that assesses these issues across all 27 EU countries

is to be found in the report by the European Foundation for the
Improvement of Living and Working Conditions (Eurofound 2022).
Using a series of surveys, it tracks how lockdowns transformed labour
markets, the types of state intervention to protect employment and
businesses, remote working and furloughs, patterns of inequality, the
fragmentation of work and employment relationships and the ways in
which (against expectations) labour supply became restricted as
economies recovered. The report shows that at its peak in quarter 2 of
2020, the number of workers on furlough across the 27 EU member
states reached 13.8 million which was 17% of the total workforce. The
report shows how job losses disproportionately hit workers on tem-
porary contracts. A related resource on the implications of COVID-19
for work can be found in: [Link]/ef20050 (accessed 1st Feb
2023). Likewise, the International Labor Organisation, a United
Nations agency, reported that in 2021 around one-third of workers in
the leading economies were supported by their governments on one
kind or other of a furlough scheme (ILO 2021).
Contrary to expectations about the large-scale loss of jobs and hence
high unemployed at the end of state-subsidized ‘furloughs’, the period
following the lifting of restrictions saw labour shortages. In part, this
was attributed to migrant workers returning to their home countries but
in addition another social and economic phenomenon was said to be in
play. The ‘Great Resignation’ is a label and an idea popularized by
Anthony Klotz of Texas A&M University. Klotz noted the rise in quit
rates and the degree to which employees were not returning to their
workplaces in the expected manner. This includes mid-career people
taking early retirement (see the ‘Great Resignation’ report from the
World Economic Forum (2021). This phenomenon raises some inter-
esting research questions. These include its extent and nature, its dis-
tribution across socio-economic and occupational groups, the source of
alternative forms of income and, not least, the changing nature of the
meaning of work, and its role in social identity and status.
A less visible form of reappraisal and withdrawal is known as ‘quiet
quitting’. This refers to the obverse of high commitment and can be
manifested in minimal effort and engagement while nominally con-
tinuing to work at a job. Running alongside this in the post-pandemic
world has been a notable increase in strikes and other forms of
industrial action as workers and unions seek to at least match the
increases in price inflation. In the UK, notable examples have occurred
in the railways, the postal services, and in other mainly public sector
organizations. Strikes and protests about the rising costs of living have
also been recorded in France, Belgium, and other European countries
during 2022/2023.
66 The changing contexts of strategic human resource management

Developments such as those outlined above carry numerous impli-

cations for the management of human resources as traditional assump-
tions come under challenge and they offer enticing future research
opportunities.

The ebb and flow of HRM

The post-war settlement in many of the advanced economies was based on
a tri-partite employment governance system brokered by employers, trade
unions, and the state. Employment relations were governed by a ‘system of
rules’ (Dunlop 1958). The conflict was managed through the negotiation
of the rules governing pay rates, holiday entitlements, and rights of rep-
resentation. The rules were thus procedural and substantive. In the
background, as a kind of safety net, were employment laws covering, for
example, health and safety at work, child labour, and redundancy. But, in
the main, the parties preferred the ‘voluntarist system’ based on collective
bargaining rather than an ‘interfering’ state (Flanders 1970). In conse-
quence, employment was governed by elaborate and detailed collective
agreements negotiated at the industry sector level as well as at company
level. The resulting written agreements were often lengthy and very de-
tailed. Variations had to be subject to renegotiation.
That was the order of things for a number of decades. It was a
product of the economic and social conditions prevailing at the time.
Under these conditions, the prized skills of the labour manager were
based on negotiation. Industrial relations specialists and trade union
leaders were in high demand as were arbitrators. But that ‘system’
(Dunlop 1958) began to unravel as alternatives were developed which
seemed to meet better the challenges of more competitive global trade.
One of the main alternatives can be characterized as forming the shift
to HRM.
The ‘productivity agreements’ of the 1970s in a sense presaged the
way as flexibility was traded for pay (Flanders 1964). The HRM
movement seemed to take this a significant step further. HRM specialists
(in staffing, training, compensation, and organization design) began to
displace industrial relations specialists as the link between employment
approaches and business strategy was made more explicit. The method of
managing labour was posited as a source of competitive advantage
rather than a mere afterthought or as a given.

Entrepreneurship, finance, and ownership

But further changes in context have prompted further changes in em-
ployment practices. A key set of drivers stemmed from new forms of
finance, ownership, and organizational (re)structuring. Organizations
 The changing contexts of strategic human resource management 67

faced heighted competition in an increasingly global marketplace for

services, goods, capital, and labour. There was an erosion of life-time
employment, and measures were introduced to increase accountability.
Agency theory (Jensen and Meckling 1976) proposed that employees
were more productive when they acted as ‘owners’ rather than as ‘agents’
of others. Employees became increasingly responsible for their personal
career choices. The threat of this accountability was that employees who
did not meet changing work conditions were often left out; while em-
ployees with high value-added skills were given opportunities to learn
and to grow. However, high-commitment working built around high
skill and high wages has, in many instances, gone into reverse. In the
decade 1996 to 2006, there was a 50% reduction in publicly traded firms
in North America (Ulrich et al. 2017). In large part, these firms were
merged with other firms, or they turned to private equity for leveraged
buy-outs where employees were made more accountable for their own
work. In early private equity deals, firms would focus on a ‘buy and sell’
strategy to strip out costs and to resell the firm as quickly as possible.
The workforce was often seen as a cost to be reduced.
The epitome of this trend is captured by the concept of ‘financiali-
zation’ (Batt and Appelbaum 2013; Appelbaum and Batt 2014). This
denotes a tendency towards an economic system where firms are treated
in a new way, with less emphasis on investment and growth and more
emphasis on opportunistic speculation and financial manipulation.
Hedge funds and private equity firms acquire enterprises, restructure
them, and load them with debt before selling them. This results in firms
becoming more unstable and, in consequence, labour once again is re-
garded as an afterthought.
But in some recent analyses of private equity, it has been suggested that
employees and leadership are seen as a valued asset to be nurtured and
developed. In leading private equity firms, leadership capital partners are
figuring out how to define and invest in leadership, talent, and culture to
increase the value of the firm (Ulrich and Allen 2017). These ‘buy and
build’ approaches link HR issues to sustainable shareholder value. The
implication of more transparent financial accountability is that employees
who lack skills may be downsized, delayered, or outsourced, but the
opportunities for employees who are agents for their development are
higher. HR plays a paradoxical role in these settings. On the one hand, HR
policies demand that all employees are treated equally and with respect,
but on the other, HR responds to market pressures by requiring differ-
entiation of employees based on performance.
The diverse ways of raising finance for business carry implications for
the management of human resources. Seed funding, angel investors,
private equity and public, management buy-outs, venture capital, peer-
to-peer lending, crowd funding, or employee ownership each brings
68 The changing contexts of strategic human resource management

shades of influence on the conduct of business. One aspect is that many

of these involve active investors who seek to directly influence man-
agement. Di Pietro et al. (2022) explore different kinds of entrepreneurial
financing and their implications for HR practices. They provide a
framework of different ‘investor logics’ along with different investment
time horizons to unpick operational, strategic, and transformational
HRM practices identified in their sample companies. For example, they
found that firms in the early stages of growth that receive funding from
angel investors or bank equity tended to adopt an operational approach
to their human resource management practices. Kuvandikov et al. (2022)
find that activist hedge funds tend to be associated with workforce
reduction and with no clear gains in labour productivity.
The key point is that the source and nature of finance can crucially
affect the nature of the human resource policies and practices adopted.
Despite some interesting contributions, such as the Special Issue of the
British Journal of Management devoted to the theme of entrepreneurial
finance (Budhwar et al. 2022), this remains rich, promising and as yet
still relatively under-researched terrain for HR scholars.

The gig economy

In recent years, the ‘gig economy’ (Graham et al. 2017), as epitomized by
Uber, has come to characterize trends in the nature of modern work even
though it is as yet a statistically small part of the employed population.
Graphic descriptions of the experience of work in the low-wage zero-
hours economy can be found in James Bloodworth’s book, Hired: Six
Months Undercover in Low Wage Britain (Bloodworth 2018).
A measured and research-based analysis of the nature and size of the
more precarious forms of work can be found in The Rise of Alternative
Work Arrangements in the United States 1995–2015 (Katz and Krueger
2016). They report that alternative forms of work (contracting, sub-
contracting, on-call workers, freelancers, agency staff, etc.) are growing
faster than conventional employment opportunities. These peripheral
forms of work increased overall from 10.1% of the US workforce in 2005
to 15.8% in 2015. More starkly, the growth in this form of work ac-
counted for over 90% of net new employment amounting in total to
23.6 million American workers by November 2015. According to Forbes
Magazine by 2021, the ‘gig economy’ in the USA accounted for 35% of
the workforce (Zgola 2021).
One consequence of the growth of these kinds of work has been the
decline in the share of GDP going to labour across a number of different
countries (Karabarbounis and Neiman 2013; Piketty 2014). In The Fall
of the Labor Share and the Rise of Superstar Firms, Autor et al. (2017)
note the decline in the labour share of rewards compared with capital
 The changing contexts of strategic human resource management 69

over the decade up to 2014 in the large countries that account for two-
thirds of world GDP.
While some of these work contracting arrangements give employees
the flexibility and autonomy they desire, the downside is that many of
these alternative work arrangements offer lower financial and health care
benefits. So, the optimism of the early HRM movement has given way,
to a large extent, to a more pessimistic assessment of deteriorating
conditions of work and employment for many people. This is epitomized
in David Weil’s book about the ‘fissured workplace’ (Weil 2014). Weil, a
former adviser to President Obama, argues that fissuring represents a
fragmentation of the traditional corporation. It comes in the forms of
franchising and outsourcing. One example he offers is Hyatt Regency
Hotels in Boston which fired longstanding full-time staff and replaced
them with outsourced agency staff at a much lower rate and without
benefits (echoed, as noted earlier, by P&O Ferries in 2022). Weil sees a
profound shift that has not been fully recognized. He sees it as spreading
way beyond its traditional confines such as construction and cleaning
services spreading both vertically in terms of occupations, and hori-
zontally across sectors. The fissured workplace may contain multiple re-
combinations of contracting organizations. Far from identifying with
and being committed to their employing organizations, some workers
are not even sure who actually employs them or if they are employed or
not. Thus, ‘under the hood’ of the main brand there can be multiple
subcontracted service organizations.
Such trends raise the question as to the part played by human
resource managers. Is their advice side-lined or are they central architects
and operational agents of the new forms? The dynamics of this offers a
promising subject for future research.

Regulation and public policy initiatives

Public policy and labour law have been behind the curve in relation to
the developments in new forms of work. In Canada, the Ministry of
Labour for Ontario commissioned a Changing Workplaces Review to
respond to the secular shift to precarious work. This stemmed from a
concern that existing labour laws were not adequate for dealing with the
new fragmented and precarious employment landscape (Mitchell and
Murray 2017). The UK government set up a similar review led by
Matthew Taylor, a former adviser to Prime Minister Tony Blair. This
commission produced a report entitled Good Work: The Taylor Review
of Modern Working Practices (Taylor 2018). Both reports offered ten-
tative suggestions pointing to the need to approach new forms of regu-
lation with some caution. The response so far from the UK government
has been to suggest consultation on a possible series of regulatory
70 The changing contexts of strategic human resource management

measures including all new staff to be given, on their first day at work, a
list of their rights including holiday and sick pay entitlement, a right to a
payslip for all workers including casual and zero-hour workers, and a
requirement for agency workers to be informed who pays them and for
clarity on all deductions from wages.
Referring to trends in the USA, Weil noted:

Many of the industries where researchers in recent years have found

high rates of violations of basic labour standards and worsening
employment conditions coincide with industries where fissuring is
most advanced. These include restaurant and hospitality sectors,
janitorial services, many segments of manufacturing, residential con-
struction, and home health care.
(Weil 2014)

He also notes however that fissuring has now become prevalent across
many sectors of the economy.
Labour laws designed to protect workers often have company-size
threshold and these are easily by-passed when sub-contracting occurs. In
the introduction to a symposium on work in the ‘gig economy’ published
in The Economic and Labour Relations Review (2017), it is noted that
theoretical and empirical research into this phenomenon is ‘in its
infancy’. Uber and Deliveroo exemplify the platform-based businesses of
the gig economy. Once again, the uncertainties about how to respond to
the phenomenon are emphasized. It is noted that ‘While digital platform
work shares powerful continuities with much older work formations, it
also presents modern policymakers and trade unions with a variety of
new political, regulatory, and legal challenges’ (Flanagan 2017, p. 378).
One interpretation suggests that these forms of casualised work are not
new and that they represent reincarnations of age-old attempts to allow
access to work on an unrestricted basis (Stanford 2017). There is the
possibility that digitization will permit and impel the wider diffusion of
this business model and hollow out more extensively the standard em-
ployment model. There is often an implied inevitability about this
technology-driven trend, but others are intent on countering this deter-
minism by pointing to the wider range of economic and regulatory forces
to set alongside the technological (Stanford 2017).
Arguably, the trends described are more characteristic of Anglo-
American contexts but less so of many other economies. A distinction
has been drawn between stock-exchange-focused financing, which is
especially characteristic of many firms in Anglo-Saxon countries, and
other means of raising capital, which is typical of firms in countries such
as Japan, Germany, and Italy. The former approach has been linked to
short-termism in behaviour as companies need to report quarterly to
 The changing contexts of strategic human resource management 71

shareholder representatives who normally seek evidence of profitable

returns. Failure to produce results may mean sale of the stocks and a fall
in the stock price and thus the value of the enterprise. In contrast, firms
which raise capital in other ways – perhaps through close relations with
regional banks – are more able to focus on the longer term and can thus
invest in resources such as machinery and training which cost money in
the short-term but can deliver profits over the longer term. A similar
point can be made in relation to employee-owned companies (Salaman
and Storey 2016).
In their examination of these variations, Hall and Soskice use the term
‘varieties of capitalism’ (Hall and Soskice 2001). According to these ana-
lysts, institutions (such as joint stock companies, investment banks, edu-
cational bodies, and stock markets) are shaped not only by laws but by
informal rules or common knowledge acquired by actors through history
and culture. ‘Institutional complementarities’ theory suggests that nations
with particular types of institutions in, say, the economics sphere, develop
complementary institutions in other spheres. This could include a sup-
porting system of laws and conventions and ways of behaving.
Hall and Soskice argue that there are two main types of market
economies. The first type is made up of the ‘liberal market economies’
(LMEs) such as the USA, the UK, Canada, and Australia; the second
type includes the ‘coordinated market economies’ (CMEs) such as
Germany, Japan, and Sweden. Hall and Soskice argue that the institu-
tional arrangements of a nation’s political economy tend to push its
firms toward particular kinds of business strategy. These strategies are
associated with different approaches to the hiring and firing of workers,
to degrees of investment in training, and to employment security. This
means, in turn, that HRM can be significantly different within and
across these contrasting types of institutional contexts.

Drivers of change: globalization and technology

Globalization has not only made the world ‘shrink’ but has changed how
and where people work. This has meant that many firms are now global
organizations. Importantly, firms often expand beyond their original
national borders to increase profit. This can be based on wanting to
exploit an emerging market or to take advantage of new resources. Such
expansion often allows them to better compete in an increasingly
international market wherein few firms are ‘safe’.
The ways in which globalization is playing out in the sphere of human
resource management have been and are being intensively studied. The
interplay between competition, cost, technologies, and local contexts is
central to such analyses. The following quotation sums up a central
thesis,
72 The changing contexts of strategic human resource management

Because countries have different institutional legacies or ‘starting

points’, and different industrial relations systems, they vary in their
ability to absorb new work practices from abroad; and even where
they do absorb these practices, they transform them in the process.
Lean production, for example, has quite different characteristics in
Denmark, the United Kingdom, and Japan.
(Batt et al. 2009, p. 457)

Multinational corporations present some of the greatest challenges to

those working within HRM. Working across different international
contexts with diverse and potentially conflicting cultural understandings
and practices can be difficult. It requires considerable skill. One way to
manage the challenge is through the effective transfer of knowledge
within and between organizations. This requires the creation of appro-
priate HRM strategies.
One question is the extent to which different national settings produce
and sustain distinctive practices and the challenge which these may
present to HR managers who have to decide whether to seek to stan-
dardize or to work with continued variety and to adapt to local cir-
cumstances. This is important for any organisation which is seeking to
do business outside its ‘home’ country environment – especially if it
wishes to directly employ people in these different countries.
Another (wider) question is the extent to which the differences are
found across borders are tending towards a reduced importance because
of a ‘convergence’ of practices or whether varied practices will remain
divergent.
With regard to technology, the automation of routine tasks has de-
valued traditional unskilled labour. As technology develops in the form
of artificial intelligence (AI), middle-class occupations and professions
face a similar deskilling. Examples include radiography and some aspects
of legal work. At the same time, digitalization has enabled and reduced
the costs of coordination of tasks and this has allowed the growth of
outsourcing and the management of complex supply chains and net-
works (Tsay et al. 2018). Examples here include the falling costs of
tracking goods as they are delivered from online order to home or
workplace delivery. This surveillance capability intertwines with the
fragmentation of the delivery workforce using such arrangements as sub-
contracting and self-employment.
A number of studies have reported from the front line of digitaliza-
tion. A critical assessment of the changing nature and intensification of
work in Amazon warehouses can be found in the book The Warehouse:
Workers and Robots at Amazon (Delfanti 2021). This work was based on
interviews conducted between 2017 and 2021 mainly in Italy and to a
lesser extent in other countries. It details the nature of digital surveillance
 The changing contexts of strategic human resource management 73

and the regimes of control of workers. A rather different perspective on

the same company is presented by Bryar and Carr (2022) in their book,
Working Backwards: Insights, Stories, and Secrets from Inside Amazon.
This latter work is written by two former Amazon executives and it
presents a distillation of what they see as the key lessons about the lead-
ership and management methods deployed by Amazon. Likewise, another
former executive of Amazon sets out the 14 leadership principles which he
claims as at the core of that company’s growth (Rossman 2021).
With regard to the question of the contribution of Artificial
Intelligence (and humanoid robot versions in particular) to productivity,
research by Giudice et al. (2022) suggests that such technology has so far
not directly impacted labour productivity but they find some indirect
impact through revised routines.
Digitalization and the rise of the internet are transforming the nature
of work. New skills are required, new methods of recruiting and selecting
employees are happening, and new policies are required to govern how
and for what purposes digital communication may be used in work time
(and the very notion of what ‘work time’ means today is opened up for
debate as exemplified by work undertaken during commuting time and
time allocation when working from home). Advances in workforce
analytics are transforming approaches to people management (Huselid
2018). Innovations such as 3D printing enable the distributed production
of items with consequences for the architecture of work organizations.
With fast-changing technologies and with the spread of knowledge
work there has been much interest in the appropriate form of HRM for
such work settings (McIver et al. 2013). Knowledge-intensive firms, it
has been argued, emphasize the need for a more sophisticated use of
selection methods, a greater care to offer challenging work, and conge-
nial work environments along with opportunities for development.

Green HRM
With so much emphasis on climate change and a growing concern about
the environment more generally, it is perhaps not surprising that there
has been increased attention to the role of HRM in these regards – for
example, Paulet et al. (2021); Luu (2021); Ren et al. (2022); Ali (2022).
One meta-review suggests that Green HRM research papers increased
fivefold between 2016 and 2020 (Paulet et al. 2021).
The idea that ‘Green HRM’ policies and practices could potentially be
key drivers of green behaviour is a crucial underpinning to much of this
research as is the assessment of compliance with environmental sustain-
ability priorities. The wider external context contains many prompts for
action on the environmental challenge – for example, pressure groups and
consumer concerns, investors with environmental social and governance
74 The changing contexts of strategic human resource management

(ESG) concerns, government regulations, and global mobilizations as

expressed in the United Nations Global Compact – see [Link]
[Link] (accessed 2nd Feb 2023).
Various aspects have been studied in recent HRM literature,
including examination of the relationship between green management
policies and green values of employees (Dumont et al. 2019; Alzgool
2019). Aspects of recruitment, employer/employee fit, training, retention,
and job satisfaction have all been explored (Pham and Paille 2019).
Economic challenges post-pandemic may pause the focus on Green
HRM but the scope for future research on this topic seems evident.

Conclusions
In the light of the trends and mega-trends described above, the question
arises as to how much scope for manoeuvre do HRM strategists really
have? The concept of strategy implies that there are choices to be made.
These choices may be made after conscientious and careful study, or they
may occur after only cursory and superficial review of options. As we
saw in the first chapter of this book, choices about HR management
might be carefully constructed in a proactive manner and with longer-
term goals in mind, or in an ad hoc manner as a reaction to events, but
either way, some scope for choice is implied.
One way of approaching this question of room for manoeuvre is to look
at data on the role of HR professionals over time. As reported in the
previous chapter, longitudinal research by Ulrich and colleagues traced
the changing competences of HR professionals. The data sets came not
only from self-reports but also from external raters. From 1997 to 2017,
they found that being a competent HR professional has become increas-
ingly complex, with some of the recent competencies (analytics designer
and interpreter; technology and social media integrator) reflecting how
HR competencies reflect general business trends. Competencies for HR
professionals have evolved with changing business conditions (Ulrich et al.
2017). This research data suggests that HR has not merely been a spectator
to changing economic conditions but an active player. On the other hand,
arguably, in many cases, strategic choices are made within constraining
and limiting ‘boundary conditions’ (Paauwe and Farndale 2017). Thus,
context matters greatly. A key part of the contemporary context is vola-
tility, complexity, and uncertainty. These conditions seem to require agility
from strategic HRM practitioners. This is the focal subject of the next
chapter.
6 Fit, flexibility, and agility

As the terrain of competition for organizations becomes more global,

companies must build their workforces to be able to compete in a con-
stantly changing environment. Wright et al. (2018) identified four trends
that present challenges to firms in their attempts to manage human
resources. First, the increasing pace of change in the external environ-
ment. Second, the increasing globalization of firms and markets due to
both increased telecommunications capability and the globalization of
supply chains has resulted in firms having to manage employees across
borders, each of which may have unique cultural, competitive, and
regulatory constraints. Third, the increasing importance of talent as a
competitive necessity (Chambers et al. 1998). Fourth, these trends have
created a challenge in the increasing skills gaps in labour markets.
Technology has increased skill requirements in some jobs while elim-
inating many lower-skilled jobs.
These trends existed prior to the COVID-19 pandemic, and that
pandemic caused even greater disruptions to organizations and work
(McKinsey Global Survey, 2020). Within a few days, companies had to
send significant portions of their workforce out of the workplace to work
from home while adjusting work processes and the work environment to
provide safety to those who needed to stay in the workplace. Then, as the
pandemic subsided, companies faced the need to adjust work to provide
flexibility to accommodate those employees who wanted to remain
working from home for at least some of the time – and to align diverse
work patterns with organizational needs.
Taken together, these trends have created a situation where firms
must be as efficient or even more efficient than the competitors in their
current operations, while also being able to transform their products,
operations, and workforce to meet new competitive challenges. That is,
they require both fit and flexibility/agility. As seen in earlier chapters,
these concepts are fundamental to the very idea of strategic human
resource management. Hence, in this chapter, we examine in more detail

DOI: 10.4324/9781003364276-7
76 Fit, flexibility, and agility

the conceptual/theoretical models and research regarding how firms seek

to achieve both fit and flexibility in their HR systems.
Research papers that explore the nature of ambidexterity in relation to
HRM often straddle the fit and flexibility boundary. A Special Edition of
the US journal Human Resource Management (2015 vol 54 S1) featured a
collection of papers that illustrate work in this area. One key example of
the use of the concept is the ability of an organization to simultaneously
exploit existing capabilities and resources while also exploring new ones
(often referred to as exploitation and exploration). Different factors have
been identified as contributing to this capability including, for example,
organizational structural arrangements, training, employee character-
istics, culture, and leadership (e.g. Junni et al. 2015).
To start the analysis of ambidexterity, fit, and flexibility, we go back to
one of the definitions of SHRM discussed in the first chapter of this book.
There it was defined as ‘the pattern of planned human resource deploy-
ments and activities intended to enable an organization to achieve its
goals’ (Wright and McMahan 1992, p. 298, emphasis added). It was fur-
ther noted that the major subjects within the field included ‘the determi-
nants of decisions about human resource practices, the composition of the
human capital resource pools (skills and abilities), the specification of
required human resource behaviours, and the effectiveness of these deci-
sions given various business strategies and/or competitive situations’
(p. 298–299). This definition sets forth the major variables to be managed.
Fit derives from the statement that one focus of SHRM is to understand
the effectiveness of the HR decisions given various business strategies, i.e.,
how to achieve a fit between aspects of the HR system and business
strategy. As we will later see, flexibility is encompassed in the idea that the
effectiveness of different decisions will depend on the competitive en-
vironment, in particular, the extent to which that environment is volatile,
uncertain, complex, and ambiguous (VUCA). The chapter is divided into
two parts: the first part examines fit and the second turns to an ex-
amination of flexibility and agility.

The concept of fit in SHRM

Many authors discuss ‘fit’, ‘alignment’, and ‘congruence’ as desirable
characteristics, but very seldom are clear definitions of these terms of-
fered. SHRM theory normally suggests that the aim should be to ensure
a ‘vertical’ fit (with business strategy) and a ‘horizontal’ fit (among the
various HR practices themselves). In their exploration of fit, Wright and
McMahan (1992) drew upon Venkatraman’s (1989) delineation of the six
models of fit.
Venkatraman was concerned that the much-used notion of fit was not
matched by precision in its various uses and their associated empirical tests.
 Fit, flexibility, and agility 77

To help correct this, he delineated six types. These were fit as moderation,
mediation, matching, gestalts, profile deviation, and covariation. He then
set out the appropriate empirical analyses for the testing of each. The first
three models anchor the concept of fit to a particular criterion such as
performance or effectiveness. Fit as moderation is characterized when it is
argued that the relationship between one variable (e.g., a high-performance
work system) and another variable (e.g., financial performance) depends
on a third variable (e.g., type of strategy). Fit as mediation exists when
the impact of one variable (e.g., HR practices) on another variable (e.g.,
performance) is through the first variable’s impact on an intermediate
variable (e.g., employee behaviour). Fit as profile deviation (degree of
adherence to an externally specified profile, such as a specific configuration
of HR practices that will best position a firm within its competitive en-
vironment, thus resulting in optimal performance).
The next three conceptualizations of fit are not tied to a specific cri-
terion. Fit as matching suggests a match between two related variables
(e.g., differentiation strategy and HPWS), but does so without regard to
a criterion. Fit as gestalts describes the specification of specific clusters of
entities that are similar in their use of multiple variables, such as iden-
tifying sets of companies, where each set of companies uses a similar
profile of HR practices. One observes this view of fit in SHRM when
researchers use cluster analysis to identify sets of firms that have similar
sets of HR practices. Finally, fit as covariation entails observing a set of
variables that tend to work in a pattern. This is observed in SHRM
research when researchers conduct factor analyses to determine which
practices tend to be used together.
In order to explore further the research on fit within the domain of
SHRM, we will examine how each of Venkatraman’s (1989) concep-
tualizations of fit has been utilized.
Fit as moderation is the most utilized. Early SHRM researchers fo-
cused on aligning HR practices with strategy and so they often examined
how the relationship between HR practices and performance might
differ across strategies. For instance, Huselid (1995) examined the
interaction between strategies and his two HPWS scales but found no
significant relationships. He also utilized this conceptualization to ex-
plore the fit between these scales and the strategic HRM index and again
found no significant relationship. Finally, he examined the interaction
between the two scales and found that while the regression weight was
significant, the interaction term did not add significant incremental
variance explained.
Delery and Doty (1996) also conducted a multi-fit approach in their
study. They sought to test universalistic, contingency, and configura-
tional models to determine which represented their data best. Because
contingency models represent the fit as moderation conceptualization
78 Fit, flexibility, and agility

(Venkatraman 1989), they examined the interaction between strategy

and HR practices for each of their seven HR practices and found no
significant incremental variance explained in either of their performance
measures. This suggested the failure to find any support for the fit as
moderation model.
The dual alignment of horizontal and vertical fit was examined by Han
et al. (2019). They used market entry timing as the operationalization of
strategy and also examined horizontal fit as the extent to which each of the
components (ability, motivation, and opportunity) of the HPWS were
implemented with similar intensities. They found that HPWS was most
strongly related to performance among firms following a fast-follower
strategy, followed by those who were first-movers and last those following
a fence-sitter strategy, and that those effects were accentuated to the extent
their HPWS displayed horizontal fit.
The internal/horizontal fit among the HPWS practice components of
ability-, motivation-, and opportunity-enhancing practices at the indi-
vidual level of analysis has been explored by Chung and Pak (2021).
They found that each of the three components was positively related to
individual performance. Regarding internal fit, they found that ability-
enhancing practices had a positive effect when motivation-enhancing
practices were low but not high, that similarly, opportunity-enhancing
practices were positively related only when motivation-enhancing prac-
tices were low but not high, and that ability-enhancing practices were
positively related when opportunity-enhancing practices were high but
not low.
MacDuffie (1995) expanded on the view of fit as moderation, to
consider the fit to be more than just two variables. He explored the in-
teractions among the use of buffers in the production system, the work
system, and the HR practices in predicting the productivity of auto-
mobile assembly plants. He found that this three-way interaction ex-
plained significant incremental variance supporting this broader view of
fit as moderation.
Similar to Huselid’s (1995) testing for fit between his two HPWS sub-
scales, Su et al. (2018) examined the use of commitment- and control-
based HR practices. Hypothesizing that both types of practices were
necessary for optimal performance, they computed the interaction
between these two sub-scales and found that the interaction did, in fact,
explain significant incremental variance in performance.
Chadwick et al. (2013) also tested fit as moderation looking at
organization size as a moderator of the relationship between HPWS and
performance. They theorized that implementing and maintaining HPWS
requires managerial attention and that larger organizations would have a
larger amount of managerial attention than smaller organizations. They
 Fit, flexibility, and agility 79

found support such that the relationship between HPWS and perform-
ance was greater for large relative to small organizations.
Fit in relation to external context is also a matter of interest. Gahan
et al. (2019) explored the fit between HPWS and change in the en-
vironment in the determination of innovation outcomes. Using a sample
from Australia they found that HPWS had a stronger relationship with
innovation outcomes in stable rather than dynamic environments.
Fit as mediation is probably the most frequently and thoroughly re-
searched model of fit. An early conceptual depiction of this model was
the ‘Behavioural Perspective’ (Schuler and Jackson 1987), which posited
that HRM systems impact performance by promoting appropriate be-
haviours. Schuler et al. (2001) expanded this to the four-task model
stating that HRM systems function primarily to (a) identify needed
employee behaviours, (b) ensure employees have necessary competen-
cies, (c) motivate employees to exhibit the needed behaviours, and (d)
provide opportunities for employees to perform successfully.
As discussed in Chapter 2 in relation to HR and performance,
numerous studies have examined potential mediators between HR prac-
tices and performance. Rather than repeat our account of that literature
here, we simply want to note that this conceptualization of fit has also been
broadened in order to include human capital. For instance, Delery and
Shaw (2001), Becker and Huselid (2006), and Lepak et al. (2006) argued
that the role of HR systems is to focus on building the skills and abilities
and motivating strategically relevant employees. In addition, Beltran-
Martin et al. (2021) found that HR flexibility (as will be discussed below)
mediated the relationship between HPWS and firm performance.
Fit as profile deviation in this area of research was best exemplified by
Delery and Doty’s (1996) use of a ‘configurational’ approach to SHRM.
They identified market-oriented, internal, and middle-of-the-road con-
figurations of employment systems, and then examined how the extent to
which firms deviated from their designated profile related to perform-
ance. However, they failed to find any support for this model of fit.
One must recognize that what most commentators refer to as a ‘best
practice’ approach to HR practices (i.e., the HPWS) is, in fact, essen-
tially a configurational approach. It encompasses multiple variables (i.e.,
practices), hence it fits Venkatraman’s (1989) conceptualization of profile
deviation. When researchers use an index of the HPWS, they are, in fact,
implicitly assuming that use of all the HPWS elements is an ideal profile,
and the extent to which firms deviate from that profile negatively impacts
their performance.
Fit as gestalts is best exemplified by studies that seek to group similar
organizations together based on the HR practices they use. Arthur’s
(1992) study provided a perfect example. He surveyed the use of a
number of HR practices in steel mini-mills. He then submitted the data
80 Fit, flexibility, and agility

to cluster analysis to identify clusters of mini-mills similar in their em-

ployment systems. His analysis originally identified six clusters, but he
then collapsed the six into two: commitment and control approaches.
Another example is Hauff et al.’s (2014) study of HRM systems in
Germany. Building on Arthur’s (1994) commitment and control ap-
proaches, they discovered two additional hybrid clusters: long-term
oriented control and regulated commitment systems.
Fit as gestalts has also been a popular approach to examining HRM
differences across nations. For instance, Ignjatovic and Svetlik (2003)
used the Cran-Net data to identify countries similar in their approach to
HRM. They identified four clusters which they termed ‘Central Southern’
(Germany, Austria, Spain, Czech Republic, Slovenia, Italy, and Portugal),
‘Peripheral’ (Bulgaria, Estonia, Greece, Cyprus, Ireland, Northern Ireland,
and Turkey), ‘Nordic’ (Denmark, Finland, Norway, and Sweden), and
‘Western’ (UK, Switzerland, Belgium, the Netherlands, and France).
Fit as ‘matching’ in SHRM was first popularized with some early
conceptual models of the determinants of HR practices. For instance,
Lengnick-Hall and Lengnick-Hall (1988) identified the types of HR
systems that would be associated with productivity, expansion, devel-
opment, and redirection strategies. Similarly, Baird and Meshoulam
(1988) linked the types of HR systems that would be associated with
firms at different stages of their life cycles. These were all conceptual
approaches to fit as matching.
However, the previously discussed work by Arthur (1992) also used
a ‘fit as matching’ approach. After creating the commitment and
control groups of companies, he then showed that mills using more of
a differentiation strategy were more likely to use commitment systems
and firms using more of a cost strategy were more likely to use control
systems.
In a unique approach to fit as matching, Lepak and Snell (1999)
developed the ‘HR architecture’ approach. Rather than match HR
systems to strategy, they proposed a typology of different talent pools
based on two dimensions: uniqueness of the skills and strategic value of
the skills. They suggested that different HR systems best match talent
pools within the different quadrants of their framework. In a follow-up
empirical study, Lepak and Snell (2002) found support for the idea that
different HRM systems match different types of talent pools.
Fit as covariation is an often used approach in the social sciences as a
means of data reduction. When multiple-item scales are developed, re-
searchers often submit the data for factor analysis. Factor analysis ex-
plores the covariation among items within the larger scale, finding
‘factors’ comprised of items that tend to covary more with one another
than they do with the rest of the items. For instance, Huselid (1995)
submitted his data to a factor analysis, revealing two factors, ‘employee
 Fit, flexibility, and agility 81

skills and organizational structures’ and ‘employee motivation’, using a

covariation view of fit. Similarly, Beltrán-Martin et al. (2008) specifically
state ‘we operationalize HPWS internal fit as covariation … [a]ccording
to this perspective the common variation of HPWS dimensions is ex-
plained by a latent factor (HPWS) that captures their covariance’
(p. 1020).
The results of research on fit in SHRM have been equivocal. In
particular, regarding the ‘fit as moderation’ model, there has been very
little support and when support has been shown, it has not been repli-
cated. There is substantial research support for the ‘fit as mediation’
approach, albeit that there are multiple mediators that have been dem-
onstrated, and no consensus as to which are the most critical. The ‘fit as
profile deviation’ has seen substantial research attention, but has seldom
been shown to be related to performance. ‘Fit as gestalts’ has been
consistently demonstrated in the SHRM and international HRM liter-
atures, but these gestalts have not necessarily been consistent (in SHRM)
or tied to outcomes. ‘Fit as matching’ was used early in this literature,
but has been relatively ignored over the past 15 years. Finally, ‘fit as
covariation’ has consistently been used as factor analyses are conducted
and/or coefficient alphas computed on the HR practice measures in
almost every study.
However, we turn our attention to the ‘fit as moderation’ model,
because this is what most people think of when they think of fit. The
failure to find this type of fit is probably attributable to the failure to
adequately measure HR practices with sufficient specificity. Becker and
Gerhart (1996) proposed that the architecture of HR practices consisted
of multiple levels: Philosophy (overall approach to managing people),
Principles (basic guidelines for how they should be managed), Policies,
and Practices. Wright and Sherman (1999) noted that there might be one
more level better suited to assessing fit: Products. Products refer to the
outcomes that the HR practice is aimed at eliciting. Most of the research
in this area has used a rather generic best practice HR measure such as
the number of hours training, the use of pay for performance, etc.
However, these authors suggested that if these are best practices, they
would likely be used equally across different strategies, but the products
that they seek to elicit would differ. For example, a firm focused on
customer service might devote 20 hours of training to customer service
behaviour, while one focused on cost/efficiency might devote 20 hours to
process redesign skills. Similarly, the customer service organization
might tie pay to customer service performance, while the cost/efficiency
firm might tie pay to cost control or reduction. Thus, where firms
actually try to support their strategies through HR comes not from the
use of different practices, but rather from the use of the same practices to
elicit different behaviours or outcomes.
82 Fit, flexibility, and agility

Flexibility and agility

Virtually all of the research exploring fit has been conducted in a cross-
sectional format, exploring the fit between HR practices and strategy at
fixed points in time. However, the increasingly volatile nature of the
competitive environment requires that organizations not only achieve fit
with the conditions at the current point in time but also develop capa-
bilities that can adapt to be able to achieve fit under a new set of com-
petitive challenges: i.e., adaptive capacity. This leads to a discussion on
flexibility and agility in SHRM and their role in supporting ‘dynamic
capabilities’ (Teece et al. 1997).
Flexibility can be defined as ‘a firm’s abilities to respond to various
demands from dynamic competitive environments’, (Sanchez 1995,
p. 138). Weick (1979) noted that to be flexible, firms must be able to
detect changes in the environment while retaining a pool of novel actions
to accommodate those changes. Teece et al. (1997) argued that firms in
dynamic environments must be able to ‘reconfigure the firm’s asset
structure, and to accomplish the necessary internal and external trans-
formation’ (p. 520). Thus, in their framework, high-flexibility firms
possess the capability to ‘scan the environment, evaluate markets and
competitors, and to quickly accomplish reconfiguration and transfor-
mation ahead of competition’ (p. 520).
Related to the concept of flexibility is the more recent construct of
‘organizational ambidexterity’ (OA). OA has been described as the
ability of a firm to simultaneously pursue efficient capitalization on
current opportunities while innovating to meet the needs of future
markets (Andriopoulos and Lewis 2009; Benner and Tushman 2003;
Gibson and Birkinshaw 2004). Within this literature, people have re-
ferred to the ability to exploit existing competencies while exploring,
through innovation, the next generation of products and services nec-
essary to enhance future competitiveness (Abernathy 1978; Brown and
Eisenhardt 1998; Levinthal and March 1993). Birkinshaw and Gibson
(2004) defined ‘alignment’ as ‘a clear sense of how value is being created
in the short term and how activities should be coordinated and
streamlined to deliver value’ (p. 47), and defined ‘adaptation’ as a firm’s
‘ability to move quickly toward new opportunities, to adjust to volatile
markets, and to avoid complacency’ (p. 1). Each of these discussions of
ambidexterity coincides clearly with our approach to flexibility.
Milliman et al. (1991) noted two views of the relationship between fit
and flexibility in the strategic HRM literature. The ‘orthogonal’ perspec-
tive suggests that fit and flexibility serve as opposite ends of the same
spectrum. The ‘complementary’ perspective argues that fit and flexibility
are independent of one another, and both are essential to effective func-
tioning of organizations. Wright and Snell (1998) took the complementary
 Fit, flexibility, and agility 83

perspective and proposed that fit ‘as a state that exists at some point in
time … it can only be assessed as a snapshot: fit at time 1 in no way
guarantees fit at time 2’ (p. 757). Flexibility, on the other hand, represents
a characteristic or a trait signifying an ability to meet changing competitive
needs. Thus, they argued that while it might be assessed as a trait at one
point in time, ‘confirmatory evidence that flexibility existed at time 1 is best
examined by observing a successful adaptation to an environmental
change at time 2’ (pp. 757–758).
In order to explore flexibility in SHRM, it is important to note that
the major model is built upon Sanchez’s (1995) analysis. He proposed
two types of flexibility. ‘Resource flexibility’ describes the range of
alternative uses to which a resource can be applied, the cost and diffi-
culty of switching to an alternative use, and the time required to do so.
‘Coordination flexibility’ refers to how well a firm can resynthesize
strategy, reconfigure resources, and redeploy those resources. Using this
as a foundation, Wright and Snell (1998) noted how both resource and
coordination flexibility might be exemplified with regard to HRM
practices, human capital skills, and employee behaviours. This model
has driven much of the HR flexibility research.
For example, Bhattacharya et al. (2005) relied on the ideas of Wright
and Snell to develop a measure of HR flexibility. They generated a list of
items based on an extensive literature review and discussions with
managers, and then modified the items based on input from HR man-
agers and scholars. Their 50-item measure was then administered to 117
HR executives, and factor analysis revealed a 22-item measure consisting
of three factors: HR practice flexibility, skill flexibility, and behaviour
flexibility. Each of these factors was shown to be related to objective
measures of firm financial performance in a cross-sectional study.
Ketkar and Sett (2009) added the construct of ‘flexibility inducing’
HR practices to the literature on HR flexibility. They began with
Bhattacharya’s measures of skill, behaviour, and HR practice flexibility,
but also developed a 22-item measure of practices that induce flexibility
(e.g., ‘We use selection methods that help us to detect employee flexi-
bility and adaptability’). In a cross-sectional study of Indian organiza-
tions, they found that flexibility-inducing HR practices were related to
skill, behaviour, and HR practice flexibility. They also found that their
flexibility measures were related to employee, operational, and financial
performance. However, because all measures came from the same
respondent, it is difficult to conclude any causal relationships. Using the
same data set, Ketkar and Sett (2010) also showed that managers’ per-
ceptions of the environmental dynamism was related to HR flexibility.
Ngo and Loi (2008) examined the relationship between HR flexibility
and adaptability culture. Collecting data from HR directors/managers in
multinational companies in Hong Kong, they used shortened versions of
84 Fit, flexibility, and agility

Bhattacharya et al.’s (2005) HR practice, skill, and behaviour flexibility.

They found that employee behaviour flexibility and HR practice flexi-
bility were both related to adaptability culture, but that skill flexibility
was not, and that adaptability culture was related to both HR-related
and market-related performance measures.
Given the pace of change in competitive environments, Beltrán-
Martin et al. (2008) suggested that HR flexibility might mediate the
relationship between HPWS and performance. Unlike previous studies
that included HR practices flexibility, they operationalized HR flexibility
with a scale containing items regarding functional flexibility, skill mal-
leability, and behavioural flexibility. Their data suggested that HPWS
was related to performance, but that when the mediating effect of HR
flexibility was accounted for, the HPWS effect became non-significant,
suggesting that HR flexibility was the mechanism through which HPWS
impacted performance.
Taking this idea of flexibility further, Chang et al. (2013) explored
what they termed ‘flexibility-oriented HRM systems’ (FHRM) and their
relationship with absorptive capacity and firm innovativeness. They
distinguished FHRM from HR flexibility, defining it as ‘a set of inter-
nally consistent HRM practices that enable a firm to acquire and
develop human resources for a wide range of alternative uses and to
redeploy those resources quickly and effectively’ (p. 1926). In a sample of
Chinese high-tech firms, they found that both components of FHRM
(coordination FHRM and resource FHRM) were related to the potential
for absorptive capacity, but that only coordination FHRM was related
to realized absorptive capacity. They also found that absorptive capacity
was related to firm innovativeness and market responsiveness.
Patel et al. (2013) argued that as opposed to purely structural ap-
proaches to building flexibility/ambidexterity, the skills, and decisions of
the human capital pool play a key role. They suggested that ‘one set of
HR activities helps to build a resource base capable of exploiting existing
market realities, while another set of activities works to simultaneously
build the resource adaptability necessary to exploit new opportunities’
(p. 1423). They then hypothesized and found support for the fact that
HPWS were related to OA and that OA partially mediated the rela-
tionship between HPWS and firm growth.
Note that these studies, while based somewhat on the Wright and
Snell (1998) conceptualization of HR flexibility, used scales that diverged
from that conceptualization. Bhattacharya et al. (2005) assessed the HR
practice, skill, and behaviour flexibility, but did not distinguish between
resource and coordination flexibility, and a number of later studies used
that scale or a variation of it. In what is the most thorough scale vali-
dation to date, Way et al. (2015) developed an HR flexibility scale tied
directly to, and expanding on, the resource and coordination flexibility
 Fit, flexibility, and agility 85

of HR practices, skills, and behaviours. Using seven separate samples,

these authors demonstrated the content validity, internal consistency
reliability, convergent validity, discriminant validity, and criterion-related
validity of their measure. In the end, their measure consisted of 21 items
and five factors: Resource Flexibility in HR Practices (five items),
Resource Flexibility in Employee Skills and Behaviours (four items),
Coordination Flexibility in HR Practices (four items), Coordination
Flexibility in Contingent Worker Skills and Behaviours (four items), and
Coordination Flexibility in Employee Skills and Behaviours (four items).
It is important to note that, contrary to the original Wright and Snell
(1998) model, the employee skills and behaviours were not separate, but
converged with one another, and also that this measure went beyond their
model to include contingent workers.
More recently, Way et al. (2018) pointed out an inconsistency in
much of the work on HR flexibility. They noted that the basic theory
underlying the importance of flexibility suggests that it is most critical in
highly volatile environments. This (returning to our previous discussion
of fit as moderation) suggests that the dynamicity of the environment
moderates the relationship between HR flexibility and performance,
such that the relationship is positive in dynamic environments, but
perhaps even negative in stable ones. In essence, they argue that flexi-
bility may be a firm asset in some cases, but a liability in others. However,
all of the previous research examining the direct relationship between
HR flexibility and performance always treated it as an asset. The results
from Way et al. (2018) show first that a flexible business strategy and
HPWS serve as precursors to HR flexibility, and second that industry
dynamism and growth moderate the relationship between HR flexibility
and financial performance.
Another variable to consider is ‘interaction orientation’. Ma et al.
(2019) examined this as a potential driver of organization performance
through HR flexibility. They defined interaction orientation as ‘ … a
firm’s capability to interact with its individual customers and to utilize
the knowledge obtained through those successive interactions towards
the achievement of profitable customer relationships’ (p. 333). In a study
of 156 companies in China, they found that interaction orientation was
positively related to performance through HR flexibility.
The potential mediating role of ‘HR flexibility’ in the relationship
between HPWS and organizational performance was examined by
Katou et al. (2021). Using Beltran-Martin et al.’s (2008) conceptualiza-
tion of HR flexibility as consisting of functional flexibility, skill malle-
ability, and behavioural flexibility, they used a longitudinal Greek
database to explore this relationship. They found that HPWS positively
impacts all three components of HR flexibility. However, the strongest
effect on organization performance was through skills malleability, with
86 Fit, flexibility, and agility

a smaller effect through behavioural flexibility, and almost no effect

through functional flexibility.
Finally, Way et al. (2023) examined both the mediating role of HR
flexibility in the HPWS-performance relationship and the moderating
role of organization size in the relationship between HR flexibility and
performance. Using a global sample of 8,139 individuals across 306
companies, they first found support for the mediating role of HR flexi-
bility in the relationship between HPWS and performance, somewhat
replicating the results of Beltran-Martin et al. (2008) and Katou et al.
(2021). More interestingly, they found that the positive relationship
between HR flexibility and performance was strongest for large com-
panies and weakest for small companies. When separating out the dif-
ferent components of the overall performance measure (employee,
organization, customer, and financial outcomes), they actually found
that HR flexibility was negatively related to financial performance for
small companies.
The literature on HR flexibility continues to grow and develop. From
the earliest theoretical conceptualizations of HR flexibility, through a
number of empirical examinations of its direct relationship with firm
performance, to the newer, more theoretically accurate research sug-
gesting dynamism as a moderator of the relationship between HR flex-
ibility and performance, research has become much more rigorous and
theoretically accurate.
Most studies have found a positive relationship between HR flexi-
bility (however conceptualized) and performance. But some recent
research has cautioned that flexibility is not always a clear asset. Recent
findings provide additional avenues for future research. Given the fact
that most believe that the VUCA characteristics in markets will continue
to grow, rather than shrink, HR flexibility will become even more
important to organizations, and research in this area will continue to be
important.

Conclusions
In Chapter 2 of this book, we discussed the extensive literature on the
relationship between HR practices and performance outcomes. This
relationship has been well documented and it has been extended by ex-
ploring mediating mechanisms such as organizational commitment. In
this present chapter, focusing on fit and flexibility, we have explored the
relationship in even greater depth. First, we note that SHRM en-
compasses a firm’s strategy, its HR practices, and the skills and beha-
viours of employees. However, for SHRM to live up to its name, it must
tie strategy to HR practices and workforce characteristics, which led us
to the concept of ‘fit’. We showed that according to the most popular
 Fit, flexibility, and agility 87

view of fit, i.e., fit as moderation, there is little support for the fact that fit
matters to performance. However, we also noted that this is likely due
more to the generic level at which most HR practices are measured.
Thus, future research that more specifically captures the products or
outcomes necessary for a strategy is much needed in order for our em-
pirical work to support what most firms do in practice.
Then we turned our attention to HR flexibility, which is viewed as a
firm-level construct encompassing the resource and coordination flexi-
bility of a firm’s HR practices, employee skills, and employee beha-
viours. Flexibility is conceptualized as the ability of a firm to achieve fit
with a diverse and changing set of circumstances. The research on fit has
generally used the HR practices, employee skills, and employee beha-
viours model, but the operationalization has not been consistent.
However, regardless of operationalization, measures of flexibility have
consistently demonstrated positive relationships with performance, even
though the theory would suggest that the positive relationship should
only be observed in environments characterized as VUCA. The study by
Way et al. (2023) noted how flexibility can be an asset in some contexts
but a liability in other contexts. This, and other recent studies of fit and
flexibility in SHRM, suggests that there is scope for further productive
research in this area.
7 A stock-take and promising
avenues for future research

The previous six chapters have tracked research in the field of Strategic
Human Resource Management over a period of half a century. As a
result, two main questions arise: first, what overall conclusions can be
drawn from this body of research, and second, what are the emergent
issues meriting future research?
One of the notable developments has been the unravelling, in many
corporations, but not all, of the sophisticated packages of SHRM which
had been celebrated and portrayed in the 1980s. In the face of more severe
global competition and the squeeze on costs, some firms, including such
notable and celebrated cases as Hewlett Packard, proceeded to erode
many of the attributes of the high-commitment model of HRM (Hodgson
et al. 2012). As the prevalence of ‘low road’ practices developed, the
headlines were increasingly characterized by reports of precarious work
and poor working conditions. We noted the increased polarized distri-
bution of workers in high-paid and low-paid jobs as indicative of this
trend. While low wages characterize many parts of modern economies,
there are pockets of very high compensation such as at Facebook and
Google where the median compensation in 2022 was nearly $300,000
(Wall Street Journal 2022). Fragmentation and turbulence – reflected in
the volatility, uncertainty, complexity, and ambiguity phenomenon – seem
to characterize the state of play in modern employment conditions. But
there is a possibility this generalization rests on an unrepresentative set of
highly publicized cases.
From another point of view, it could be said that the basic underlying
issues in SHRM remain broadly familiar, even though not presenting in
quite the same way. As noted in the introductory chapter, some core
themes of HRM are perennial and have been revisited and reworked
several times under different guises. Examples include the Resource-Based
View, High-Performance Working, Talent Management, and the new
focus on ‘Management Practices’ (Bloom and Van Reenen 2007; Bender
et al. 2018). At the core is the employment relationship. Employers seek

DOI: 10.4324/9781003364276-8
 A stock-take and promising avenues for future research 89

reliable service; employees seek fair rewards. From an employer’s per-

spective, a workforce must be found, recruited, selected, trained, objectives
set, performance monitored, compensation provided, and in due course,
contracts terminated. From these basics, many variants emerge. The em-
ployer may sub-contract and so the identity of the ‘actual’ employer may
be uncertain and a matter for legal determination. Likewise, whether an
employment contract even exists or whether there is some form of pay-
ment for service from a supposedly ‘self-employed’ contractor, also
becomes a matter of contention. Relatedly, the fluctuation from a com-
mitment to a control-based relationship and back again is a further
instance of continuity. However, when taking a long view, the recent
increased prevalence of precarious forms of low-paid work sitting along-
side a privileged few attracting high rewards can be seen as far from new.
Moreover, while the precise list of items in the HR bundles may vary, the
fundamental conceptualization of what constitutes the domain of SHRM
has remained broadly the same. The early models and their building
blocks of vertical and horizontal integration, the positioning of workers as
‘assets’ rather than mere ‘costs’, and the strategic value of the intelligent
use of human resources as the basis of value-added are all concepts which
have endured. There remains scope for debate about whether the field has
narrowed unhealthily (Kaufman 2015) or whether it has matured and
deepened (Wright et al. 2015), but the enduring significance of the core
concepts seems evident.
But, as noted earlier, an alternative conceptualization of the focal issue
of concern seeks to shift attention from a single firm perspective with its
own approach to managing its employment relations to a perspective
which expands the unit of analysis to encompass a wider ‘eco-systems’ of
interdependent agents. New technologies and project work forms tend to
favour cross-boundary working (Snell et al. 2023; Roundy and Burke-
Smalley 2022). This kind of network analysis is however not entirely new
as many of its insights were presaged in earlier publications – for example,
research on network organizations (Miles and Snow 1986; Snow 1992;
Storey 1998). Nonetheless, it does seem likely that contemporary condi-
tions of turbulence and new digital technologies such as online labour
platforms (OLPs) will impel and enable new forms of work organization
which extend beyond conventional organizational boundaries (Keegan
and Meijerink 2023) which favour complex adaptive systems (Burke and
Morley 2023).
As noted in the first chapter, the very idea of ‘strategy’ in HRM implies
considerable scope for, and the exercise of, choice. HR specialists, or
indeed other managers making decisions which impact on employment,
have the potential to make choices about the kinds of employment – and
employment relations – they want to encourage and realize (though this
does not mean their choices are unfettered). As noted in previous chapters,
90 A stock-take and promising avenues for future research

there are the classic strategic choices about a high value-added/high-pay

model or a low-cost/low-pay business model. ‘Alignment’ in strategic HR
is used to imply matching high-quality customer service with high-end
employment practices built on skilled staff, good training, and high
commitment. To some extent that equation may still hold. But, as noted in
Chapter 5, in recent times there is evidence that even high-end employers
have fragmented their labour forces so that some staff are retained on low-
end conditions such as zero-hour contracts, low pay, and poor terms and
conditions, while others are highly rewarded (Weil 2014). The extent to
which HR strategists (or those managers acting in that capacity) have the
scope and freedom of manoeuvre to resist the pressures created by low-
cost options (such as outsourcing to low-cost economies, or contracting
out certain service functions) is often unclear. This topic would make for
an excellent future research project. The boundary conditions to open
choice are increasingly fuzzy. This means that the work HR specialists are
expected to do fluctuates over time even while, at a more fundamental
level, it broadly remains the same. The data on changing HR competencies
as reported in Chapter 4 suggests that persons occupying these roles are
expected to play an increasingly strategic role in place of an administrative
one. But the extent to which the choices they make are context-dependent
remains uncertain and more empirical research is required.
While the fundamentals of SHRM remain in place as a reference
point for practice and theory, it is evident, as noted throughout the
book, that there are many counterforces which are in contention with the
rather more optimistic outlook of the early days of the field. Instead of
an overall drift towards the adoption of many of the attributes of SHRM
which was recorded empirically through extensive fieldwork in main-
stream companies and documented in detail (Storey 1992), in many in-
stances, the tidal flow since then has often been in the reverse direction.
Financialization, fragmented labour markets, deteriorations in terms
and conditions of work, outsourcing, and short-termism have been
compelling forces which fly in the face of the high-commitment model of
SHRM. Signs of employers taking the ‘low road’ option have been all
too evident (Osterman 2018). And yet examples of employers taking the
‘high road’ still do exist and there is evidence that they can ‘do well by
doing good’ (Osterman 2018).

Are there signs of progression in HR theorizing?

A review of HR theorizing such as has been attempted in this short book
raises the question as to whether there has been any significant pro-
gression in theory (as opposed to further empirical affirmations of ex-
isting theory)? This is a contested terrain. There are certainly indications
of changing concerns and shifting foci. HRM and TQM, The War for
 A stock-take and promising avenues for future research 91

Talent, Employee Engagement, and many other themes have entered

centre stage for short periods before giving way to ‘new’ focal concerns.
But whether a case can be made for cumulative progression is a more
open question. A gloomy assessment is made by Kaufman (2020). His
bleak judgement is one of limited progress beyond the initial contribu-
tions and a series of either trivial or replicating studies in the subsequent
years. He refutes the claims of HR journal editors and suggests that:

‘Strategic HRM’s 30-year knowledge outputs, at least with a high-

oomph factor (and not a rediscovery/repackaging of earlier-known
ideas, such as strategic HRM, high-commitment model, and partic-
ipative management; Kaufman 2008, 2012), effectively drops to
zero’ (p. 65).

As a result, Kaufman (2020) contends that there is, overall, a ‘contri-

bution deficit’:

We still have, particularly in the U.S. case, almost no idea of how many
firms have implemented a partial or full HPWS (5%, 40%, or 70%?),
whether the trend is increasing, decreasing or flat, the HPWS success/
failure rate, what other types/configurations of HRM systems populate
the economy, and whether the HPWS (now 40 years old) is still a
relevant model or has evolved into something distinctly different.
[There is] … a dearth of case studies and field research—approaching
near-zero in U.S. management and HR journals—of the system’s
structure, practices, and operation in real-world companies … or
meaningful consideration of business/organisational trends, such as
widespread erosion of internal labour markets, financialisation’s bias
against longer term HPWS-type investments, effect of business cycles/
crises and growth rates … . (2020, p. 65).

This is a harsh evaluation. The reference to the relative lack of mean-

ingful research projects in the USA is neglectful of the number of studies
in that country and of the wider body of international research especially
as conducted in Europe and Asia.
But there are other critical views, some of which attack from a dif-
ferent angle. For example, Butterick et al. (2021) contend that ‘some
aspects of HRM theory (Atkinson 1984; Lepak and Snell 1999) have
acted as transmission mechanisms for wider political and economic
forces driving persistent economic inequalities and legitimising the
increasing commodification of labour’ (p. 848). This suggests that HRM
theorizing itself may inadvertently reinforce negative trends. Indeed,
these critics go further, they argue that ‘Pervasive ideological individu-
alism (Dundon and Rafferty 2018) has contributed to widespread
92 A stock-take and promising avenues for future research

amorality (Quade et al. 2020) in people management’ (Butterick and

Charlwood 2021, p. 848).
As even these few examples of recent overall assessments of HR
research suggest, there are some serious and deep-seated issues to be
considered as research in HRM progresses to the next stage.

What next?
So, to address our second question: what next? What issues and themes
will future researchers in SHRM be studying? We cannot of course predict
the future, but we can report on current and emergent themes in the very
latest literature and other influential sources such as conference agendas,
consultancy reports, workshops, and grey literature such as think-tank
reports and government-sponsored reports. These sources offer different
windows through which to view the nature of contemporary trends and
concerns. The view from these windows varies: some disclose a bright
optimistic landscape others a darker more pessimistic view.
In what follows, we first draw out the key issues found in emergent
academic literature; second, we summarize findings from the grey liter-
ature of think-tank and government reports; third, we review themes
found in practitioner-oriented publications such as Harvard Business
Review and HR Magazine; and finally, we seek to encapsulate the key
contemporary and future-oriented issues as found represented in con-
temporary practitioner settings and forums.
These diverse sources of insight do not always produce agreement on
what is happening in SHRM and what are the central research issues.
But from this plurality, a number of interesting and important research
agendas can be constructed.
For the first of these, the review of the very latest academic literature,
we consulted the following journals: Asia Pacific Journal of Human
Resource Management, Human Resource Management Journal, Human
Resource Management, Human Relations, International Journal of
Human Relations, Academy of Management Journal, and the Journal of
Chinese Human Resource Management. We included ‘online-first’ articles
i.e., those issued prior to full publication.
Of interest to note are the topics that had dropped off the radar or
which had received lesser attention than previously. Compared with past
times, there has been much less discussion about the nature and role of
human resource management as a function and its relationship with
personnel management; likewise, the erstwhile foci on the relation
between HRM and Total Quality Management, Learning Organizations
and Corporate Culture have given way to other concerns.
Notable themes of continuity included high-performance work sys-
tems (HPWS), leadership, citizenship behaviour, women and careers,
 A stock-take and promising avenues for future research 93

diversity and inclusion, organizational change, organizational climate,

commitment, work and identity, labour-management partnerships, em-
ployee engagement and the psychological contract, HR practices in
knowledge-intensive firms, freelance, and temporary and agency work.
With hindsight, it can be observed that there have been some false
dawns. For example, around 2014–2016 there was considerable specu-
lation about the significance of neuroscience for human resource man-
agement. A CIPD report suggested it was an ‘emerging but rapidly
growing field’ (2014b, p. 3). The evidence base for this was anecdotal,
and the practitioners extolling the approach were attracted to the ‘sci-
entific’ credentials that it seemed to convey. From the perspective of
2023, it is notable that research into the neuroscience applications to
human resource management over the intervening years has been scarce.
The potential remains of course for future research advances in this
domain.
Emerging with new, or renewed, emphasis is workforce analytics
(Angrave et al. 2016; Huselid 2018); the use of artificial intelligence in
HR (Palos-Sánchez et al. (2022); attention to human resource manage-
ment in times of disruption and crises; disability (Bacon and Hoque
2022) and other aspects of equality, diversity and inclusion (EDI) (Noon
and Ogbonna 2021); signalling theory (Garavan et al. 2022; Guest et al.
2021); and deeper dives into the processes of HR practice. Corruption,
risk, terrorism, and management in contexts of high uncertainty, vola-
tility, violence, economic crises, and natural disasters all now find a
presence. Signalling theory, a key theme in economics, has only recently
made an appearance in HRM – for example, Garavan et al. (2022),
Guest et al. (2021), Connelly et al. (2011), Chang and Hyun Chin (2018),
Pudil et al. (2018) and Pernkopf et al. (2021). In the context of HRM,
signalling theory has clear relevance to recruitment. Recruitment mes-
sages from employers and signals from employees such as qualifications
and selected experiences are cases in point. More broadly, signalling
theory places focus on ‘line managers as signallers of HR messages and
employees as receivers’ (Guest et al. 2021: 796). The gap between policy
and practice (the black box) can be approached from this theoretical
perspective. Thus, the ‘strength’ of the signals can be assessed alongside
variables such as coherence of the messages received.
Features such as the distinctiveness of the signal, visibility, clarity,
frequency, consistency, understandability, and relevance of HR practices
to goal achievement are brought into focus alongside aspects of em-
ployee perceptions.
For example, Pernkopf et al. (2021) use signalling theory to interpret
the recruiting process. They note how traditional recruiting activities are
marked by information asymmetry and uncertainty among applicants.
The researchers note how new technologies change the picture and how
94 A stock-take and promising avenues for future research

applicants interpret the signals available. Their results show ‘that while
congruent signals increase employer attractiveness and mixed‐signal
situations reduce it, distinct evaluative patterns emerge when potential
applicants reflect and judge employers’ (2021: 392).
Further research on signal strength and HR attributions is reported
by Meier-Barthold et al. (2022). Employees’ perceptions about the
intentions behind their organization’s HR practices are shown to be
important. The ‘content’ of an HR system and the processes of com-
municating this content drive employees’ attributions. This article forms
part of a wider body of recent work related to explicating the mecha-
nisms and processes involved in linking HR policies and practices to
signalling theory and employee perceptions and attributions (e.g., Guest
et al. 2021; Alfes et al. 2021). Future research opportunities arise in
relation to contexts where HR signals may be weak, ambiguous, or even
contradictory. Likewise, research in Australian emergency service
organizations illustrates how reliability-seeking organizations such as
these require alignment between HR policies and the challenges and
priorities they face (Kellner et al. 2023).
There is extensive speculation about the potential impact of auto-
mation and artificial intelligence as these technologies spread across
industrial sectors and occupational categories, but these concerns have
seemingly not yet been fully evidenced in the mainstream HR journals.
From these journals, it is difficult to see any new themes which are
assuming a position of dominance. That said, a much wider range of
current issues is to be found in journals such as Industrial & Labor
Relations Review and Organization Studies, each of which tackles wider
economic and social trends beyond human resource management prac-
tice directly. Likewise, big-picture issues, as reported in earlier chapters,
are found reflected in a number of research monographs. For example,
the review of precarious work in six advanced economies by Arne
Kalleberg highlighted the significant fact that while precarious work was
characteristic of virtually all societies historically, the recent growth of
this form of employment after decades of social progress represents a
momentous reversal of trends in the management of work (Kalleberg
2018). Few studies nowadays report the kind of diffusion of SHRM
policies and practices of the kind found some decades ago. As Kalleberg
notes, it is all too easy to paint a dystopian future for work; the key
lesson is to seek ways to shape positive work design of the kind described
by Osterman with regard to care workers (Osterman 2017). This is a key
agenda item for human resource managers of the future.
Our second source, the think-tank and government-sponsored
reports, presents yet another, and rather different, perspective on con-
temporary HR-related topics. An important example from the UK is the
report Good Work: The Taylor Review of Modern Working Practices
 A stock-take and promising avenues for future research 95

(Taylor 2018). This is the report of the independent review of employ-

ment practices in the modern economy commissioned by the Prime
Minister. We referred to this publication in Chapter 5. The report notes
the historically high levels of participation in the labour market and
observes that the UK has one of the most flexible labour markets in the
world. It records a notable shift towards more flexible forms of working,
yet full-time, permanent work still constitutes most of the employment in
the UK (63.0%). The review finds that flexible work benefits some people
and that it helps maintain high levels of employment. But it does not
work for everyone, and the report records many problems stemming
from poor employment practices associated with precarious work and
the gig economy (Taylor 2018, p. 27).
Public policy and labour law have been behind the curve in relation to
these developments in most countries. In Canada, the Ministry of Labour
for Ontario commissioned a Changing Workplaces Review to respond to
the secular shift towards precarious work. This initiative stemmed from a
concern that existing labour laws were not adequate for dealing with the
new fragmented and precarious employment landscape (Mitchell and
Murray 2017). The report offered tentative suggestions and indicated the
need to approach new forms of regulation with some caution.
The sources found by looking through the third window into con-
temporary and future-oriented themes, i.e., the practitioner-oriented
magazines (such as Harvard Business Review and HR Magazine) tend to
put the spotlight on practical and positive activity. For example, HR
Magazine in its 2022–2023 editions covered topics such as creating loyalty
among employees, positive action regarding LGBT+; HR’s role in pro-
moting more representative socio-economic representation; and policy
developments activity in relation to the menopause. The Harvard Business
Review has, in the past, published some significant articles that have
shaped the HR debate – notably, for example, the landmark article ‘From
Control to Commitment’ (Walton 1985). But recent issues of this journal
have devoted less space to mainstream HR topics of a policy nature and
shifted instead to more tactical people-management concerns.
Fourth and finally, a different perspective on the present and the
future can be gleaned by drawing on a different well-spring: that is,
interpretations from the practitioner interface. From our various en-
gagements with senior managers in a wide range of industry sectors and
country settings, we are able to construct a picture of the kind of issues
which occupy the concerns of contemporary practitioners.
As noted in earlier chapters of this book, context matters a great deal.
Accordingly, emergent themes and issues are likely to be situationally
related. Patrick Wright, as part of his direct engagement with senior
practitioners, has observed that in several leading corporations in the
USA, a notable development is the changing expectations placed on the
96 A stock-take and promising avenues for future research

leaders of the HR function. In the USA, these leaders are increasingly

termed the Chief HR Officer (CHRO). Whereas previously CHROs only
sometimes directly reported to the Chief Executive Officer (CEO), and
only rarely dealt with the wider board of directors, today they tend
almost always to report directly to the CEO and they also frequently
interact with other directors on the board. This trend has been driven by
three factors. First, the ‘War for Talent’ placed human capital on the
radar screen of CEOs, and they have consequently demanded that the
CHRO oversee the delivery of talent to the firm. Second, numerous
corporate scandals focused the attention of directors on the remunera-
tion packages of their CEO and how these might drive dysfunctional
decision-making. Thus, boards increasingly rely on the CHRO as the
interface between them and the CEO in the process of setting pay. Third,
some high-profile failures of CEOs have caused board members to rec-
ognize CEO succession as one of their most important governance
responsibilities. Increasingly, CHROs act as the liaison among the board
members, the incumbent CEO, and the potential CEO candidates. All
these factors have increased both the visibility and importance of the
CHRO. Research agendas for the future in this regard thus relate to the
variety of ways in which CHROs are playing this more critical role, what
competencies are required, and what difference they are making.
Paradoxically, a significant current theme in many contexts is how
occupants of senior HR positions are perceiving and responding to the
many cost-saving pressures catalogued in this book. Despite the many
reversals from high-road practices and towards low-road practices that
have been noted, there has been a surprising paucity of investigations
tracking the part played by the HR function in these processes. High-
profile spokespersons for the profession tend not to talk openly about
the pressures they and their colleagues face; and academic researchers
have, in the main, not yet got around to shedding light on these matters.

Future-oriented research agendas

So, taking all of the above sources into account, the future research
agenda(s) for the domain of strategic human resource management
remains open and wide ranging. Many of the big, long-standing issues
remain unresolved and ripe for imaginative forms of investigation.
Which forms and combinations of fit and flexibility are conducive to
performance outcomes? Which forms of workforce management can
yield sustained profitability? Can the forms which are economically
viable also (to adapt Osterman’s phrase) ‘do good while doing well’?
How much scope for choice about HR strategy really exists under
contemporaneous conditions when competition is heightened because of
global reach through technology and a highly mobile international
 A stock-take and promising avenues for future research 97

labour supply? Can the high-end practices extend into industry sectors
which have become conventionally subject to low-wage casualised
labour such as catering, retail, hotels, and elderly care? Do the oppor-
tunities for mutual gains extend far enough to allow the inherent costs of
the high-commitment model to be offset by the positive outcomes such
as loyalty, commitment, lower absence, and the like? What role will be
played in the future by collective forms of worker representation
alongside the more individualized forms?
Likewise, what is the future role for state regulation? Running in par-
allel with each of these questions is a second-order set of questions con-
cerning how HR specialists act in relation to them. Do they seek to set the
agenda, or more passively react to imperatives established by more pow-
erful members of executive teams? Framing this question in another way:
how are employment policies constructed and how will they be in the
future? What kinds of values and logics are built into the process? Implicit
in these kinds of questions, but in some ways extending to a level beyond,
are research agendas which tackle higher-level political and economic is-
sues concerning, for example, the influence wielded by investors in their
various forms – venture capitalists, managerial buyouts, stock markets,
pension funds, hedge funds, private investors, banks, and peer-to-peer
lenders. Nested within these ‘big questions’ remain a host of traditional
research areas and these are likely to remain relevant: recruitment and
selection practices, training and development provision, diverse forms of
compensation, forms of workforce engagement, and similar enduring is-
sues. Whatever the future may hold, there is clearly no shortage of rich
research themes for scholars of SHRM to pursue.
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Index

Note: page numbers in italics refer to figures.

ability, motivation, and opportunity Batt, R. 22, 71–73

(AMO) perspective 28 Becker, B. 28, 30, 50, 79, 81
Academy of Management Journal 28 Behavioural Perspective 18, 79
adaptation 82 Beltrán-Martin, I. 79, 81, 84, 85–86
adaptive capacity 82 best practices 9
administrative experts 56 Bhattacharya, M. 83, 84
advanced manufacturing Birkinshaw, J. 82
technology 20 black box 22–23, 50, 93
agency theory 67 Blair, T. 69
agility 82–86 Bloodworth, J. 68
Akerlof, G. 59 Bos-Nehles, A. C. 24
Alfes, K. 24, 94 Boston Consulting Group and 52
alignment 82, 90 Boudreau, J. 13
alternative work arrangements 69 boundaryless career 37
Amazon 64, 72 Bowen, D. E. 23
ambidexterity 76, 82, 84 Boyatzis, R. 52
American Society for Training and Bryar, C. 72
Development 52 bundling 28
analysers 18 business life-cycle, linking SHRM
analytics 59 to 15
analytics designer and interpreter business partners 6, 56
54, 74 business strategy: definition of 11;
angel investors 2 SRHM linking to 14–15
annual performance reviews 40 Butterick, M. 91
Apple 63 buy and build approaches 67
architects 49
Arrow, K. 59 Caldwell, R. 49
Arthur, M. B. 20, 21, 79–80 call centres 22
artificial intelligence (AI) 72–73 Canada 94
automation 94 capability 58
Autor, D. 68 capitalism, varieties of 71
Cappelli, P. 22
Baird, L. 19, 80 career management 37
Bad jobs 63 Carr, B. 72
Barney, J. 19 centres of expertise 6, 56
Barocci, T. 15 Chadwick, C. 78
 Index 121

Chang, E. 93 Di Pietro, F. 2, 68
Chang, S. 84 digitalization 72–73, 89
change agents 56 disability 93
Changing Workplaces Review 69, 95 divisionalising 45–46
Chartered Institute of Personnel and Doellgast, V. 5
Development (CIPD) 52 Doty, D. H. 21, 77, 79
Chief Executive Officer (CEO) 96 Du Pont 46
Chief HR Officer (CHRO) 96 dual economy 63
China, lockdowns in 2 Dyer, L. 23
Clark, K. D. 23 dynamic capability 13
clerk of works 49
cluster organizations 45 eco-systems 6
Coase, R. 59 Ehrnrooth, M. 26
coherence 12 emergent strategy 12
collective bargaining 5, 43, 62, 66 employee attributions 24
Collins, C. J. 23 employee champions 56
Combs, J. 26, 27, 30 employee engagement 8, 43–45
commitment maximisers 20 employee experience 8
commitment-oriented practices 28 employee reactions, concept of 24
compensation 40–41 employee relations 4
The Competent Manager (Boyatzis) 52 employment engagement 43–45
competitive advantage 5, 7, 11, 13, 14, employment management 4; High
19, 66 Road approach 8; Low Road
Competitive Advantage through People approach 8
(Pfeffer) 62 employment relations 43–45, 88–89
complementary perspective 82–83 entrepreneurship 66–68
compliance manager 54 Equality, Diversity and Inclusion
Connelly, B. L. 93 (EDI) 2, 16
contingency models and frameworks equity financing 2
14–17 ESG 74
contracts managers 49 European Foundation for the
coordinated market economies Improvement of Living and
(CMEs) 71 Working Conditions 65
coordination flexibility 83 external fit 10
cost-reducers 20
COVID-19 pandemic 1–2, 64 Facebook 88
credible activist 53 The Fall of the Labor Share and the
cultural constraint hypothesis 27 Rise of Superstar Firms (Autor
culture 26–27 et al.) 68
culture and change champion 53–54 Fang, M. 26
cycle of HR practices 33 Fell, A. 49
Felstead, A. 64
de facto strategy 12 financialization 67, 90
Dean, J. W. 20, 21 financing, forms of 2
decision science 13 fissured workplace 69
defenders 18 fit 76–81; as covariation 77; as gestalts
Delery, J. E. 21, 77, 79 77, 79–80; as matching 77; as
Delfanti, A. 72 mediation 77, 79; as
Deliveroo 70 moderation 77–79, 81; as
Deloitte 52 profile deviation 77, 79
design 13 flexibility 82–86
deskilling 72 flexibility-oriented HRM systems
determinants 19–21 (FHRM) 86
122 Index

Fombrun, C. J. 15 hourglass economy 9, 63

four-task model 79 HR Analytics 59–60
franchising 69 HR competences 48–61; backstory
freelancers 14, 68 49–51; defining 51–53;
furloughs 64 domains of 53–55; HR
departments 55–60; key
gainsharing 41 principles 52; Ulrich
Garavan, T. 93 competency model 53–55, 54
Gardner, T. 28 HR Context/Deliverables
General Motors 46 dimension 58
Gerhart, B. 26, 28, 81 HR departments 55–60; dimensions of
Gibson, C. 82 57, 57–58; power of
gig economy 44, 68–69, 70, 95 organization effect 56; roles
globalization 42, 71–73, 75 within 56; waves of HR value
Gold, M. 3 creation 59–60, 60
good practices 9 HR design dimension 58
Good Work: The Taylor Review of HR Magazine 92, 95
Modern Working Practices HR Practices 59
(Taylor) 44, 69, 94–95 HR practices and performances: black
Google 63, 88 box 22–23; bundling in,
Grant, R. 11 concept of 27; demonstrating
Gratton, L. 23 relationships between 21–22;
Great Resignation 65 positive relationships 26–27;
green HRM 73–74 process models 21–22;
Guest, D. E. 4, 24, 25, 29, 93 value 30
HR Professionals 59
Haggerty, J. J. 50 HR strategy dimension 58
Hall, P. A. 71 HR theorizing 90–92
Hamel, G. 11 HR Work Style 59
Hammonds, K. H. 50 human capital 5, 14
Han, J. H. 78 human capital curator 54
hard and soft HRM 9 human capital management 4
Harvard Business Review 92, 95 Human Resource Champions
Harvard Model 5 (Ulrich) 56
Haskel, J. 63, 64 human resource development (HRD)
Hauff, S. 80 41–43
Hayek, F. 59 Human Resource Information Systems
health and wellness management 43–45 (HRIS) 36
hedge funds 2 human resource management (HRM):
Hewlett Packard 88 cultural, structural and
High Road approach 8, 90 personnel techniques 8–9;
High-Performance Work Practices 21 definition of 4, 7–8; ebb and
High-Performance Work Systems flow of 66–71; green 73–74;
(HPWS) 3, 8, 22, 33, 78–79, nature of strategy in 10–11;
81, 86, 91 theory and practice 9–10
high-performance working 88 human resource planning (HRP)
High-Performance Workplaces 34–37; idealized model of 35
theory 8 human resources 5
Hired: Six Months Undercover in Low Huselid, M. A. 21, 28, 30, 50, 77, 79,
Wage Britain (Bloodworth) 68 80–81
Hofstede, G. 26 Hyatt Regency Hotels 69
homeworking 64 hypertext organizations 45
Hoque, K. 3 Hyun Chin, H. 93
 Index 123

Ignjatovic, M. 80 McClelland, D. 51–52

Implemented HR Practices 23 McMahan, G. 6, 76
In Search of Excellence movement 46 Meier-Barthold, M. 94
income inequality 63 Meshoulam, I. 19, 80
industrial relations 4 Miles, R. 18
institutional complementarities Milliman, J. 82
theory 71 Mintzberg, H, 12
intangible assets 63
intangible economy 63 National Organizations Survey 50
integrated manufacturing 20 networks 45
interaction orientation 85 Neumark, D. 22
internal fit 10 neuroscience 3, 93
International Labor Organisation 65 new normal 2
Islamic finance 2 Ngo, H. Y. 83
Nishii, L. 24
Jackson, S. E. 14, 18 Nobel Prize winners 59
Jiang, K. 22, 28–29
John Lewis Partnership 2 online labour platforms (OLPs) 89
just-in-time inventory control 20 organization capability 58
organization design 45–46
Kalleberg, A. 94 organizational ambidexterity (OA) 82
Katou, A. 25, 85–86 organizational culture management
Kaufman, B. E. 91 45–47
Ketkar, S. 83 organizational learning 43
Khurana, R. 34 organizational strategy and structure
Kim, K. 3 15–16
Kirkpatrick, I. 3 organizations 56
Klotz, A. 65 orthogonal perspective 82
knowledge work 73 Osterman, P. 94, 96
knowledge workers 42 Ostroff, C. 23
Kochan, T. 15, 44 outsourcing 35, 42, 46, 49, 51, 63, 69,
Kuvandikov, A. 68 72, 90

labor unions 43–44, 65–66 P&O Ferries 69

Lado, A. A. 19 paradox navigator 53
Langevin-Heavey, A. 28 Patel, P. C. 84
Lawler, E. 50 payment by results (PBR) 40
LGBT+ 95 peer-to-peer lending 2
Lengnick-Hall, C. A. 19 people management 4
Lengnick-Hall, M. L. 80 performance: HR practices and 20;
Lepak, D. P. 20, 36, 79, 80 reward management and
leveraged buyouts 2 38–40
liberal market economies (LMEs) 71 performance management 38–40
Lindert, P. H. 63 performance management systems 39
Living and Working in Europe 2 performance outcomes 16–17, 18–31
lockdown laws 1 performance-related pay (PRP) 40–41
Loi, R. 83 Pernkopf, K. 93
Low Road approach 8, 88, 90 personnel administration 4
personnel management 4
MacDuffie, J. P. 21, 27, 78 Pfeffer, J. 62
management practices 6, 88 Planned HR Practices 23
manpower planning 36 plurality of interests 43
McBer and Company 52 Porter, M. E. 43
124 Index

portfolio careers 37 skill development 42

Posthuma, R. A. 43 skills gaps 75–87
power of organization effect 56 Smith, C. 3
practice areas 32–47; compensation Snell, S. A. 20, 21, 36, 80, 82, 83, 84
40–41; cycle of HR practices Snow, C. C. 18
33; employment engagement social exchange theory 18
43–45; employment relations social purpose 16–17
43–45; health and wellness sorting effect 41
management 43–45; human Soskice, D. 71
resource development 41–43; Spence, M, 59
human resource planning and squeezed middle 63
resourcing 34–37; organization star performers 34
design 45–47; performance stock-exchange-focused financing 70
and reward management Storey, J. 33
38–40; recruitment and strategic human resource management
selection 37–38; talent (SHRM) 4–5, 10–11; business
management 41–43 life-cycle, linking to 15;
Prahalad, C. K. 11 business strategy, linking to
precarious work 37, 63, 69, 88 14–15; changing contexts of
private equity 67 62–74; definition of 6; fit,
process models 23, 94–95 flexibility. and agility and
productivity 6 75–87; future of 88–97; HR
productivity agreements 66 competences and 48–61;
prospectors 18 importance of 13–14; major
Pudil, P. 93 variables of concern in 6–7;
mapping field of 4–17;
quiet quitting 65 organizational strategy and
structure, linking to 15–16;
Rabl, T. 27 performance outcomes and
Ramstad, P. 13 16–17, 18–31; practice areas
recruitment 37–38 and 32–47
regulation 69–71 strategic partners 56
reputation 57–58 strategic positioners 53
resource flexibility 83 strategy: de facto 12; emergent 12; as
resource-based theory (RBT) 19 plan 11–13
resource-based view (RBV) 5, 11, 88 strong cultures 46
resourcing 34–37 Su, Z. X. 28, 78
Reuschke, D. 64 sub-contracting 63, 70, 89
reward 38–40 succession planning 37
role behaviours 18 Svetlik, L. 80
Royal Dutch Shell 36 system strength 23, 33

Salas-Vallina, A. 29 Takeuchi, R. 22
Sanchez, R. 83 talent management 41–43, 88
Sanders, K. 24 targeting practices 23
Schuler, R. S. 14, 18, 23 Taylor, M. 69, 94–95
selection 37–38 team focus 12
Sett, P. K. 83 technology: deskilling and 72; as driver
shared services 6, 56 of exchange 71–73; labour
Shaw, J. D. 79 productivity and 73; skill
signalling theory 3, 93–94 requirements and 75
Simon, S. 59 technology and media integrator 54, 74
Sisson, K. 33, 49 Teece, D. J. 13, 82
 Index 125

Temin, P. 63 The Warehouse: Workers and Robots at

Testing for Competences Amazon (Delfanti) 72
(McClelland) 52 Way, S. A. 22, 84–85, 86
Rise of Alternative Work Arrangements Weick, K. 82
in the United States 1995–2015 Weil, D. 69, 70
(Katz and Krueger) 68 Weinsten, H. 32
theory and practice 9–10 well-being-oriented human resource
TikTok 63 management practices
Tobin, J. 59 (WBHRM) 29
total quality management 20 Westlake, S. 63, 64
total reward 40 Where’s the ‘Human’ in Human
total reward steward 54 Resource Management?
Trade Union Congress (TUC) Managing Work in the 21st
Directory 44 Century (Gold and Smith) 3
training 41–42 Why We Hate HR (Hammonds) 50
Troth, A. 4 Williamson, J. G. 63
Truss, C. 23 Williamson, O. 59
Tyson, S. 49 Wilson, M. C. 19
Tzabbar, D. 26, 27 work style 59
workers, as assets 5
Uber 70 workforce analytics 93
Ukraine 2 Working Backwards: Insights, Stories,
Ulrich, D. 6, 52, 53–55, 56, 57 and Secrets from Inside
unions 43–44, 65–66 Amazon (Bryar and Carr) 72
United Nations Global Compact 74 working from home 1–2, 64, 73
United States Army Air Corps 51 Workplace Employment Relations
Survey (WERS) 49–50
value creation, waves of 59–60, 60 World Management Survey 6
varieties of capitalism 71 Wright, P. M. 6, 19, 22, 24, 28, 50, 76,
Venkatraman, N. 76, 79 82, 83, 84, 95
venture capital 2
voluntarist system 66 Youndt, M. A. 21

Walton, R. E. 20 zero-hour contracts 44