Recent debates in HR:
-Most current debates generally focus on the extent and nature of the responses needed in the face of development in the business environment. Three of the most prominent current debates focus on:
-Most current debates generally focus on the extent and nature of the responses needed in the face of development in the business environment. Three of the most prominent current debates focus on:
i. the nature of
the psychological contract
-due to the evolving environmental pressures there is a significant and fundamental change the “psychological contract”. This refers to expectations that employees have about the role that they play and about what the employee is prepared to give them in return. By its nature, the psychological contract is not a written document. Rather it exists within people’s heads.
-while people disagree about the extent to which this change has in fact occurred, there is general agreement about the phenomenon itself and the notion that an “old” psychological contract to which generations of employees have become accustomed is superseded to some extent by a “new” psychological contract which reflects the needs of the present business environment.
Old Psychological Contract (From an employee perspective)
“I will work hard and act with loyalty towards my employer. In return I expect to be retained as an employee provided I do not act against the interests of the organisation. I also expect to be given opportunities for development and promotion should circumstances make this possible.”
New Psychological Contract:
“ I will bring to my work effort and creativity. In return I expect a salary that is appropriate to my contribution and market worth. While our relationship may be short term, I will remain for as long as I receive the developmental opportunities I need to build my career.” – Involves a sense of less job security and less loyalty from employers in return. Instead the employees will be flexible and will be given developmental opportunities in return,
-due to the evolving environmental pressures there is a significant and fundamental change the “psychological contract”. This refers to expectations that employees have about the role that they play and about what the employee is prepared to give them in return. By its nature, the psychological contract is not a written document. Rather it exists within people’s heads.
-while people disagree about the extent to which this change has in fact occurred, there is general agreement about the phenomenon itself and the notion that an “old” psychological contract to which generations of employees have become accustomed is superseded to some extent by a “new” psychological contract which reflects the needs of the present business environment.
Old Psychological Contract (From an employee perspective)
“I will work hard and act with loyalty towards my employer. In return I expect to be retained as an employee provided I do not act against the interests of the organisation. I also expect to be given opportunities for development and promotion should circumstances make this possible.”
New Psychological Contract:
“ I will bring to my work effort and creativity. In return I expect a salary that is appropriate to my contribution and market worth. While our relationship may be short term, I will remain for as long as I receive the developmental opportunities I need to build my career.” – Involves a sense of less job security and less loyalty from employers in return. Instead the employees will be flexible and will be given developmental opportunities in return,
-the key question is, how far has
a change of this nature actually occurred? Are we really witnessing a slow
decline in the old contract and its replacement by the new one? Or have reports
of its death been exaggerated? This is a highly disagreed issue. Evidence of
reduced employee loyalty have been found by Coyle et Al (2000) however Guest et
Al (2000) have found little change in the state of the psychological contract.
ii. Best Fit HR
strategy Vs. Best Practice?
Best-practice
theory : The 'best-practice' theory is based on the assumption that HR
practices observed in high-performing firms can be transformed to other companies
with the same results. Pfeffer's list of seven HR practices for competitive
advantage through people is one of the best known set of best-practices.
1. Employment security
2. Selective hiring
3. Self-managed teams or team working
4. High pay contingent on company performance
5. Extensive training
6. Reduction of status differences
7. Sharing information
In essence, recruiting and retaining talented, team-oriented, highly motivated people is seen to lay a basis for superior business performance or competitive advantage. But this theory, like several other universal models, has been criticised for a variety of reasons:
• Disconnection from company's goals and context
• Disregard of national differences such as management practices and culture
• Inconsistency between the RBV's emphasis on in-imitability and best-practice universalism
Although best-practices are too general, some researchers have found empirical evidence showing a correlation between the application of best-practice theories and company's performance. The reason can be seen in the validity of the underpinning "AMO" (ability, motivation, opportunity) framework.
Best-fit theory : The contingency or "best-fit" approach questions the universality assumption of the best-practice perspective. Instead it emphasises the fit between HR activities and the organisation's stage of development ("external-fit"). According to the "best-fit" theory, a firm that follows a cost-leadership strategy designs narrow jobs and provides little job-security, whereas a company pursuing a differentiation strategy emphasises training and development. This approach is a counterpart to the "one strategy fits all" seen in Pfeffer's seven best practices. The 'best-fit' school, therefore, argues that all SHRM activities must be consistent with each other (horizontal fit) and linked to the strategic needs of the business (vertical fit).
1. Employment security
2. Selective hiring
3. Self-managed teams or team working
4. High pay contingent on company performance
5. Extensive training
6. Reduction of status differences
7. Sharing information
In essence, recruiting and retaining talented, team-oriented, highly motivated people is seen to lay a basis for superior business performance or competitive advantage. But this theory, like several other universal models, has been criticised for a variety of reasons:
• Disconnection from company's goals and context
• Disregard of national differences such as management practices and culture
• Inconsistency between the RBV's emphasis on in-imitability and best-practice universalism
Although best-practices are too general, some researchers have found empirical evidence showing a correlation between the application of best-practice theories and company's performance. The reason can be seen in the validity of the underpinning "AMO" (ability, motivation, opportunity) framework.
Best-fit theory : The contingency or "best-fit" approach questions the universality assumption of the best-practice perspective. Instead it emphasises the fit between HR activities and the organisation's stage of development ("external-fit"). According to the "best-fit" theory, a firm that follows a cost-leadership strategy designs narrow jobs and provides little job-security, whereas a company pursuing a differentiation strategy emphasises training and development. This approach is a counterpart to the "one strategy fits all" seen in Pfeffer's seven best practices. The 'best-fit' school, therefore, argues that all SHRM activities must be consistent with each other (horizontal fit) and linked to the strategic needs of the business (vertical fit).
However, 'best-fit' approach has been criticised
for the following reasons:
• Lack of alignment with employee interests, compliance with prevailing social norms and legal requirements
• Too simplistic view of business strategy (the reality is more complex than only innovation, cost-reduction and quality-enhancement strategy in the Schuler and Jackson model)
• Too much focus on existing competitive strategy (reactive) rather than on-going environmental changes (proactive)
• Lack of alignment with employee interests, compliance with prevailing social norms and legal requirements
• Too simplistic view of business strategy (the reality is more complex than only innovation, cost-reduction and quality-enhancement strategy in the Schuler and Jackson model)
• Too much focus on existing competitive strategy (reactive) rather than on-going environmental changes (proactive)
iii. Predictions
about the future of work:
-this is a highly speculative debate, but predictions about the future of work are very important now from a public policy perspective. Why? --> Judgements about employers’ HR needs in the future must determine decisions about education and training now. Government actions in the fields of economic policy, employment legislation and immigration are also affected.
- Authors such as Handy and Greenfield argue that the world of work (i.e. the type of work we do and the nature of contractual arrangements will change profoundly as we complete our journey out of the industrial era into a new post-industrial age.
Consequences will be:
1. A marked shift into knowledge work. In the future, most people will be employed to carry out tasks which involve the generation, interpretation processing or application of knowledge. We will see further declines in manufacturing activity. More specialists will be employed (demand for professional and technical people will increase, which demand for lower skilled, manual workers will fall). This means that from an employer’s perspective, sustaining competitive advantage will mean more effective capacity to create and deploy knowledge than others.
1. A marked shift into knowledge work. In the future, most people will be employed to carry out tasks which involve the generation, interpretation processing or application of knowledge. We will see further declines in manufacturing activity. More specialists will be employed (demand for professional and technical people will increase, which demand for lower skilled, manual workers will fall). This means that from an employer’s perspective, sustaining competitive advantage will mean more effective capacity to create and deploy knowledge than others.
2. Jobs
will become more rare, where fewer people will occupy defined jobs in
organisations. More people will work on a self-employed basis, carrying out
time-limited projects for organisations. Due to the volatile nature of
business, firms will not be able to guarantee long term work and long term
employment contracts will reduce. (lower job security).
Note these consequences are rational as they are based on the face of recent business trends and globalisation. They are quite persuasive, yet highly controversial.
