1. Managing Employee Performance and Reward
Concepts, Practices, Strategies
2nd edition

2. Being strategic What is strategy?
‘Best practice’ vs strategic alignment
External alignment
Internal alignment
Internal/external alignment
Competitive or business strategy
Organisational structure
Management culture
What aligns with what?

3. Strategy in human resource management
A plan of action for identifying goals and establishing how to achieve them
Strategy-making:
‘Intended’: premeditated, planned, envisioned, holistic, long-term, driven
‘Enacted’: emergent, evolutionary, short-term, reactive, iterative, negotiated, partial, derived
HRM strategy:
An integrated ‘bundle’ of human resource principles, policies and practices associated with how human resources can best be utilised within an organisation to ensure organisational effectiveness and support organisational success

4. The ‘best practice’ approach
Basis:
There is one set of superior human resource practices that can be applied in virtually any context to achieve competitive advantage and deliver ‘win-win’ for all parties
Versions and exponents:
Theory Y (McGregor)
1980s Harvard School (Walton, Beer, Spector, Lawrence)
High-involvement management (Lawler, Pfeffer, Guest, Long & Shields)
Mutual gains model (Kochan, Osterman)
High-performance work systems (Appelbaum, Cappelli, Huselid, Becker)

5. The ‘best practice’ approach
Which practices?
The Pfeffer-digm (Jeffrey Pfeffer, 1998)
Employment security
Selective hiring
Self-managed teams or teamworking
High pay contingent on company performance
Extensive training
Reduction of status differences
Information sharing

6. The ‘best practice’ approach
Strengths:
Consistency of practice
‘Off the shelf’
‘Best practice’ benchmarking
Wide agreement as to what constitutes ‘worst practice’
Some evidence that it does work

7. The ‘best practice’ approach
Weaknesses:
Human resource policies alone cannot deliver overall competitive advantage
Ignores organisational specifics/differences
Insensitive to contextual factors, including national differences
Internal inconsistencies, e.g. selective hiring vs egalitarianism
Disagreement about which practices are ‘best’; e.g. group vs individual incentives
Prone to ‘faddism’

8. External alignment External contingencies
Product market competition and conditions
Labour market conditions
Social and political factors
Opportunities
Threats
Competitive/ business strategy
‘External alignment’

9. HRM strategy, policies and practices
Internal alignment
Internal contingencies
Organisational structure, size, age, technical base
Management culture/style
Workforce profile
Strengths
Weaknesses
‘Internal alignment’
HRM strategy, policies and practices

10. Internal/external alignment
Product market competition and conditions
Labour market conditions
Social and political factors
Internal
Organisational structure, size, age, technical base
Management culture/style
Workforce profile
Opportunities
Threats
Strengths
Weaknesses
Competitive/ business strategy
HRM strategy, policies and practices
‘External alignment’
‘Internal alignment’
Internal/external alignment

11. Four key elements of strategic alignment
COMPETITIVE
STRATEGY
MANAGEMENT
CULTURE
PERFORMANCE AND REWARD
SYSTEMS
ORGANISATIONAL STRUCTURE

12. Competitive or business strategy (Miles & Snow, 1978)
‘Defender’
Defend market from competitors
Operate in stable product/service markets
Narrow product/service range
Risk-averse, reactive
Compete on basis of low cost or high quality
Maximise efficiency of existing technical methods

13. Competitive or business strategy (Miles & Snow, 1978)
‘Analyser’
Cautious diversifiers, typically in related product/service markets
Market followers

14. Competitive or business strategy (Miles & Snow, 1978)
‘Prospector’
Market opportunists and aggressive diversifiers
Operate in changing product/service markets
Market-wide range of often unrelated products/services
Proactive; first movers
Compete on basis of innovation
Flexible and agile
Strategic risk-taking

15. Organisational structure (Burns & Stalker, 1961)
The framework of roles, relationships
and rules that provide organisational
cohesion and integration.

16. Organisational structure (Burns & Stalker, 1961)
‘Mechanistic’
High formalisation
High centralisation
Narrow span of control
High standardisation
Examples:
Military
Multi-divisional firms
Bureaucratic government departments
Unions
Centrally controlled franchises (e.g. McDonald’s)

17. Organisational structure (Burns & Stalker, 1961)
‘Organic’
Low formalisation
Low centralisation
Wide span of control
Low standardisation
Examples:
Decentralised networks/franchises (IGA, Amway, community banks, eBay)
Joint venture projects (movies, software development)
Employee-owned firms/collectives

18. Management culture ‘Traditional’ Detailed division of labour
Vertical communications
Strong technical or bureaucratic control systems
Hierarchical/top-down decision-making
Labour as a ‘factor of production’
Task compliance
Internal labour market/promotion/training
Commitment to employer
Unionised
Relational psychological contract

19. Management culture ‘High involvement’ Fluid division of labour
Lateral communications
Shared decision-making
Devolved/consultative
External recruitment
Employees seen as high-value ‘contributors’
Commitment to profession
Non-unionised
Transactional psychological contract

20. Aligning strategy, structure, culture, espoused contracts and performance requirements