Strategic Human Resource Management: A Guide to Action

257 Pages·2008·1.17 MB·English

by  Michael Armstrong

i
STRATEGIC
HUMAN RESOURCE
MANAGEMENT
ii
For free online support material please go to the Kogan Page website:
www.koganpage.com/strategichrm
Password:SHRM53756
iii
STRATEGIC
HUMAN RESOURCE
MANAGEMENT
A GUIDE TO ACTION
4TH EDITION
Michael Armstrong
London and Philadelphia
iv
Publisher’s note
Every possible effort has been made to ensure that the information contained in this book is
accurate at the time of going to press, and the publishers and author cannot accept responsi-
bility for any errors or omissions, however caused. No responsibility for loss or damage occa-
sioned to any person acting, or refraining from action, as a result of the material in this
publication can be accepted by the editor, the publisher or the author.
First published in Great Britain and the United States in 1992 as Human Resource Management:
Strategy and Action
Second edition published as Strategic Human Resource Management: AGuide to Action2000
Third edition 2006
Reprinted 2006
Fourth edition 2008
Apart from any fair dealing for the purposes of research or private study, or criticism or review,
as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be
reproduced, stored or transmitted, in any form or by any means, with the prior permission in
writing of the publishers, or in the case of reprographic reproduction in accordance with the
terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms
should be sent to the publishers at the undermentioned addresses:
Kogan Page Limited Kogan Page US
120 Pentonville Road 525 South 4th Street, #241
London N1 9JN Philadelphia PA19147
United Kingdom USA
www.koganpage.com
© Michael Armstrong, 1992, 2000, 2006, 2008
The right of Michael Armstrong to be identified as the author of this work has been asserted by
him in accordance with the Copyright, Designs and Patents Act 1988.
ISBN 978 0 7494 5375 6
British Library Cataloguing-in-Publication Data
ACIPrecord for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Armstrong, Michael, 1928–
Strategic human resource management : a guide to action / Michael Armstrong. -- 4th ed.
p. cm
Includes bibliographical references and index.
ISBN 978-0-7494-5375-6
1. Personnel management. I. Title
HF5549.A89784 2008
658.3(cid:2)01--dc22
2008017601
Typeset by Saxon Graphics Ltd, Derby
Printed and bound in India by Replika Press Pvt Ltd
v
Contents
Introduction
PART 1 THE CONCEPTUALFRAMEWORK OF STRATEGIC HRM
1 The concept of human resource management 5
HRM defined 5; Human resource systems 8; Aims of HRM 9;
Characteristics of HRM 12; Reservations about HRM 17
2 The concept of strategy 21
Strategy defined 22; The concept of strategy 23; The formulation
of strategy 28
3 The concept of strategic human resource management 33
Strategic HRM defined 33; Basis of strategic HRM 34;
Principles of strategic HRM 35; Aims of strategic HRM 35;
Concepts of strategic HRM 37; Perspectives on strategic HRM 39;
The best-practice approach 40; The best-fit approach 42;
Bundling 46; The reality of strategic HRM 48; Practical
implications of strategic HRM theory 49
vi l Contents
PART 2 THE PRACTICE OF STRATEGIC HRM
4 HR strategies 53
What are HR strategies? 53; What is the purpose of HR
strategies? 54; Overall HR strategies 54; Specific HR strategies 59;
Criteria for an effective HR strategy 61; How should HR
strategies be developed? 62; Developing HR strategies 66;
Implementing HR strategies 70
5 The strategic role of HR 72
The strategic nature of HR 72; The strategic partner model 73;
What being strategic means 75; The strategic role of HR
directors 76; The strategic role of heads of HR functions 77;
The strategic role of HR business partners 78; The strategic
contribution of HR advisers or assistants 78
6 The impact of strategic HRM 79
How HR impacts on organizational performance 79;
How strategic HRM concepts impact on practice 85
7 Strategic HRM in action 86
Formulating HR strategy 86; The content of HR strategies 96;
Corporate issues 98; Achieving integration 101; What are the
most characteristic features of strategic HRM in action? 104
PART 3 HR STRATEGIES
8 Human capital management strategy 107
Aims of human capital management 108; The link between HCM
and business strategy 108; Developing a human capital
management strategy 109; Conclusions: the role of human capital
management strategy 114
9 High-performance strategy 115
High-performance work system defined 116; Characteristics of a
high-performance work system 116; Components of an
HPWS 117; Impact of high-performance work systems 117;
Developing a high-performance strategy 121
10 Corporate social responsibility strategy 126
Strategic CSR defined 127; CSR activities 127; The rationale for
CSR 128; Developing a CSR strategy 130
Contents l vii
11 Organization development strategy 132
Organization development defined 132; OD strategies 133;
Assumptions and values of OD 133; Activities incorporated in the
OD strategy 134; Strategies for organizational transformation 136
12 Employee engagement strategy 140
Engagement and organizational commitment 140; The
significance of engagement 141; Engagement and discretionary
behaviour 142; What is an engaged employee? 142; What are the
factors that influence engagement? 143; Strategies for enhancing
engagement 145; Measuring engagement 148
13 Knowledge management strategy 149
The process of knowledge management 149; Sources and types
of knowledge 150; Approaches to the development of knowledge
management strategies 151; Strategic knowledge management
issues 151; Components of a knowledge management
strategy 153
14 Employee resourcing strategy 154
The objective of employee resourcing strategy 154; The strategic
HRM approach to resourcing 155; Integrating business and
resourcing strategies 155; Bundling resourcing strategies and
activities 156; The components of employee resourcing
strategy 156; Human resource planning 157; Employee value
proposition 160; Resourcing plans 161; Retention strategy 163;
Flexibility strategy 167
15 Talent management strategy 168
Talent management defined 168; The process of talent
management 170; Developing a talent management strategy 173
16 Learning and development strategy 175
Strategic human resource development (SHRD) 175; Strategies
for creating a learning culture 178; Organizational learning
strategies 178; Learning organization strategy 180; Individual
learning strategies 181
17 Reward strategy 183
Reward strategy defined 183; Why have a reward strategy? 183;
Characteristics of reward strategies 184; The structure of reward
strategy 184; The content of reward strategy 185; Guiding
principles 188; Developing reward strategy 189; Effective reward
strategies 191; Reward strategy and line management
capability 192
viii l Contents
18 Employee relations strategy 193
Employee relations strategy defined 193; Concerns of employee
relations strategy 194; Strategic directions 194; The background to
employee relations strategies 195; The HRM approach to
employee relations 195; Policy options 197; Formulating
employee relations strategies 197; Partnership agreements 198;
Employee voice strategies 200
PART 4 THE STRATEGIC HR TOOLKIT
1 Strategic human resource management toolkit 205
References 226
Subject index 241
Author index 246
1
Introduction
Strategic human resource management (SHRM) is an approach to the devel-
opment and implementation of HR strategies that are integrated with
business strategies and enable the organization to achieve its goals.
In essence, strategic HRM is conceptual; it is a general notion of how inte-
gration or ‘fit’ between HR and business strategies is achieved, the benefits
of taking a longer-term view of where HR should be going and how to get
there, and how coherent and mutually supporting HR strategies should be
developed and implemented. Importantly, it is also about how members of
the HR function should adopt a strategic approach on a day-to-day basis.
This means that they operate as part of the management team, ensure that
HR activities support the achievement of business strategies on a continuous
basis and are consciously concerned with seeing that their activities add
value.
To understand strategic HRM it is first necessary to appreciate the
concepts of human resource management and strategy as covered in
Chapters 1 and 2 respectively in Part 1 (the framework of strategic HR). The
concept of strategic human resource management (strategic HRM) is then
examined in detail in Chapter 3.
Part 2 of the book is concerned with the roles of management and HR in
strategic HRM and with the processes of developing and implementing HR
strategies. Part 3 covers each of the main areas of HR in which strategies are
developed. The book concludes with a toolkit providing guidance on devel-
oping HR strategy through a strategic review.