Chapter 5 Strategic Human Resource Management Within a Resource-capability View of the Firm Ken Kamoche

Resources have been described as: Strength or weakness of a given firm which includes tangible and intangible assets Skill-based competencies ‘Core competencies’ Core skills All assets, capabilities, organizational processes, firm attributes, information and knowledge ‘A bundle of potential services’ Stocks of available factors that are owned or controlled by the firm

Creation of HR strategic assets depends on: The internal organizational process The firm’s ability to recruit from the external labor market in the first place Its capacity to prevent the loss and erosion of valued expertise

Human Resources The accumulated stock of knowledge, skills and abilities that the individuals possess,which the firm has built up over time into an identifiable expertise Effectiveness-both a measure of the firm’s ability to link its human resources to its strategic objectives and a behavioral manifestation of expertise

Human resource capabilities “Organizational routines’--’the relatively constant dispositions and strategic heuristics that shape the approach of a firm to the non-routine problems it faces’ Human resource policies and practices not merely administrative procedures for managing human resource flows, but as the behavioral patterns that underpin the HR capabilities

HR retention capacity and resource barriers Retention capacity-qualitative concept that supports the sustainability of HR capabilities by retaining high performers and enabling low performers to better themselves Stock of expertise long-term capacity to retain key personnel

HR retention capacity and resource barriers Company’s ability to build and manage new strategic capabilities depends on its: existing organizational attributes its configuration of assets and capabilities distribution of managerial responsibilities and influence ongoing set of relationships that endure long after any structural change

Human Resource Competencies Competence: individual’s underlying characteristic which is causally related to superior performance Competencies: work-related knowledge, skills and abilities, abilities needed for non-routine tasks, sets of behavior patterns The resources and capabilities provide the basic direction for the firm’s strategy, they are the primary source of profit for the firm

Human Resource Competencies HRCs should be conceived of in terms of: skill-based and behavioral capabilities, and the firm’s ability to generate the stock of knowledge and collective learning that enable it to provide core products/services principally through people Competencies within an open systems perspective focus on how the vision and action of managers can foster or hamper the generation of competencies which they refer to as managerial, input based, transformational and output based

Renewing and Leveraging Competencies The test of value in competencies is their sustainability HRCs will decay due to the loss of valued employees, inadequate training, ineffectual retention capacity, lack of integration between HRCs and core competencies and possible imitation by rivals Leveraging competencies is consistent with the concept of the learning organization as it relates to the accumulation and utilization of knowledge: acquiring and diffusing knowledge across the firm is now recognized as critical for success

From HRCs to Strategic Assets SHRM: the intangible nature of the value of human resources and human resource outcomes does not easily lend itself to quantitative analysis Studies show a positive relationship between: financial performance and the degree of integration between corporate strategy and the HRM function the strategic implications of activities such as selection, deployment, compensation and motivation management of employee know-how and innovative individual skills HRCs are capable of being converted into strategic assets if they satisfy the following conditions: scarcity, inimitability, nonstitutability and appropriability

Appropriability The capacity of the firm to retain the added value it creates for its own benefit ‘Ownership’ or ‘possession’ raises the question of the legitimacy of a firm’s proprietorial claims over its staff and their skills. Rent appropriation by the firm cannot presuppose the institutionalization of human resources since organizations do not ‘own’ people or HRCs in the same way they own patents or physical property Political influence perspective notion of SHRM acknowledges the contribution of industrial relations

Appropriability Efforts to reconcile ideological differences and achieve some form of consensus: integrative bargaining Transaction cost: ‘do the parties to the exchange operate harmoniously, or are there frequent misunderstandings and conflicts that lead to delays, breakdowns, and other malfunctions?’ ‘Hegemonic despotism’--achieving control through consent rather than force

Conclusion HR strategies are both an ideologically driven organizational tool of control and a transaction-based approach to mediate the employment contract and define a configuration of social relations by characterizing and grading people Failure to establish a mutually acceptable mode of rent distribution may engender self-interested behavior and conflict, eventually undermining the HRCs and hindering their conversion into strategic assets Examine how rent distribution serves not merely to reward effort but also to mediate the incongruity of interest between the individual and the organization, and amongst individuals