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 authors cannot accept responsi-bility for any errors or omissions, however cause
i STRATEGIC HUMAN RESOURCE MANAGEMENT iii STRATEGIC HUMAN RESOURCE MANAGEMENT A GUIDE TO ACTION 3RD 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 authors cannot accept responsibility for any errors or omissions, however caused No responsibility for loss or damage occasioned 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 in 1992 as Human Resource Management: Strategy and Action Second edition published as Strategic Human Resource Management: A Guide to Action 2000 Third edition 2006 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: 120 Pentonville Road London N1 9JN United Kingdom 525 South 4th Street, #241 Philadelphia PA 19147 USA www.kogan-page.co.uk © Michael Armstrong, 1992, 2000, 2006 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 7494 4511 British Library Cataloguing-in-Publication Data A CIP record 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. 3rd ed p cm Includes bibliographical references and index ISBN 0-7494-4511-4 Personnel management I Title HF5549.A89784 2005 658.3⬘01 dc22 2005024402 Typeset by Saxon Graphics Ltd, Derby Printed and bound in the United States by Thomson-Shore, Inc v Contents Preface ix PART THE FRAMEWORK OF STRATEGIC HUMAN RESOURCE MANAGEMENT Human resource management Human resource management defined 3; Models of HRM 4; Aims of HRM 6; Characteristics of HRM 8; Reservations about HRM 13; HRM and personnel management 16 Strategy: concept and process Strategy defined 19; The concept of strategy 20; The fundamentals of strategy 22; The formulation of strategy 24 19 Strategic human resource management: concept and process Strategic HRM defined 29; The meaning of strategic HRM 30; Aims of strategic HRM 30; Approaches to strategic HRM 31; Limitations to the concept of strategic HRM 35; Conclusion 35 29 HR strategies HR strategies defined 37; Types of HR strategies 38; Criteria for an effective HR strategy 42 37 vi l Contents PART STRATEGIC HUMAN RESOURCE MANAGEMENT IN ACTION Formulating and implementing HR strategies Fundamental process considerations 48; Characteristics of the process 49; Developing HR strategies 52; Setting out the strategy 64; Conducting a strategic review 65; Implementing HR strategies 69 47 Improving business performance through strategic HRM How HR impacts on organizational performance 72; How HRM strategies make an impact 75; How strategic HRM concepts impact on practice 77 71 Roles in strategic HRM The strategic role of top management 79; The strategic role of front-line management 79; The strategic role of the HR director 81; The strategic role of HR specialists 81 79 PART HR STRATEGIES Strategies for improving organizational effectiveness Strategies for improving organizational effectiveness 90; Strategies for organizational development 91; Strategies for organizational transformation 95; Strategies for culture management 99; Strategies for knowledge management 106; Commitment strategy 110; Strategies for developing a climate of trust 112; Quality management strategies 114; Continuous improvement strategies 115; Customer service strategy 115 89 Resourcing strategy Resourcing strategy defined 117; The objective of resourcing strategy 117; The strategic HRM approach to resourcing 118; Integrating business and resourcing strategies 118; Bundling resourcing strategies and activities 119; The components of employee resourcing strategy 120; Human resource planning 120; Resourcing plans 123; Retention strategy 126; Flexibility strategy 130; Talent management strategy 130 117 10 Learning and development strategy Strategic HRD 133; Strategies for creating a learning culture 136; Organizational learning strategies 137; 133 Contents l vii Learning organization strategy 138; Individual learning strategies 139 11 Strategies for managing performance Performance management 142; Performance management defined 142; Purpose of performance management 143; Performance management concerns 143; The scope of performance management strategy 144; The process of performance management 145; Conclusion 147 141 12 Reward strategy Reward strategy defined 149; Why have a reward strategy? 149; Characteristics of reward strategy 150; The structure of reward strategy 150; The content of reward strategy 151; Guiding principles 154; Developing reward strategy 155; Effective reward strategies 157; Reward strategy and line management capability 158 149 13 Employee relations strategy Employee relations strategy defined 159; Concerns of employee relations strategy 160; Strategic directions 160; The background to employee relations strategies 161; The HRM approach to employee relations 161; Policy options 163; Formulating employee relations strategies 163; Partnership agreements 164; Employee voice strategies 166 159 References Further reading Author index Subject index 169 179 185 189 ix Preface This third edition of Strategic Human Resource Management has been substantially revised to incorporate the latest research and thinking A number of chapters such as those concerned with strategic HRM in general in Parts and have been almost completely rewritten, as has Chapter 12 on reward strategies A new chapter on enhancing organizational effectiveness has been included and revisions made to all the other chapters The book is set out under the following headings: • Part 1: The framework of strategic human resource management This provides an introduction to HRM, the general concept of strategy and the process of strategic HRM • Part 2: Strategic human resource management in action This describes the formulation and implementation of HRM strategies, the impact of strategic human resource management, the strategic contribution of the HR function, and roles in strategic HRM • Part 3: HR strategies This covers each of the main areas in which HR strategies are developed, namely: enhancing organizational effectiveness, resourcing, learning and development, managing performance, reward and employee relations Part The framework of strategic human resource management Human resource management In this chapter, the concept of human resource management (HRM) is defined initially and the various models of HRM are described Consideration is then given to its aims and characteristics The chapter concludes with a review of reservations about HRM and the relationship between HRM and personnel management HUMAN RESOURCE MANAGEMENT DEFINED Human resource management is defined as a strategic and coherent approach to the management of an organization’s most valued assets – the people working there who individually and collectively contribute to the achievement of its objectives John Storey (1989) believes that HRM can be regarded as a ‘set of interrelated policies with an ideological and philosophical underpinning’ He suggests four aspects that constitute the meaningful version of HRM: l a particular constellation of beliefs and assumptions; l a strategic thrust informing decisions about people management; ... Thomson-Shore, Inc v Contents Preface ix PART THE FRAMEWORK OF STRATEGIC HUMAN RESOURCE MANAGEMENT Human resource management Human resource management defined 3; Models of HRM 4; Aims of HRM 6; Characteristics... employee relations 1 Part The framework of strategic human resource management Human resource management In this chapter, the concept of human resource management (HRM) is defined initially and... framework of strategic human resource management This provides an introduction to HRM, the general concept of strategy and the process of strategic HRM • Part 2: Strategic human resource management