Strategic Human Resource Management and Knowledge Workers- a Case Study of Professional Service Firms

1. What questions/issues is the author trying to address? How important are they? Why?

 The author has addressed following issues in the paper.

• Strategic human resource management as an important factor in explaining the performance.

• Experimental evidence on the importance of strategic approaches to HRM.

• HRM function is an essential part for developing strategy in the organization.

• If personal control and cultural control is suitable to control knowledge based firms.

Strategic human resource management can be defined as a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce using an array of cultural, structural and personnel techniques. The author has studied two different firms where one uses performance culture and skilled resources and other does not hold any reliance on the culture due to the change in its senior management. Organizations today have shifted from the traditional concept that human resource is a support function to find and fulfill the resources as when requested by other functions. Now, they believe HR as a part of executive team and discuss the organizational strategy together; they define the headcounts, budget plan and participate in financial and operational decision making. This shift is important to understand and the author has put some light on it through the difference in functionality of two firms.

In the first firm HRM function partially adopted strategic business partnership role, worked closely with senior management to provide support in every day transactional activities and took control and regularly met human resource turnover and recruitment. Second firm tend to incorporate the traditional aspects of HRM, including operational activities and there is lack of guidance provided for partners concerning their people management role. This variation helps to understand the cultural difference in HRM function and it is important to know if strategic approach or traditional approach is better.

2. What basic assumptions/arguments does the author make? What facts/opinions does he present?

 The author has made a comparative analysis of two firms to draw some assumptions based on their human resource approach as described below.

- Strong organizational cultures guide employees the ways of doing things within an organization and enables professionals to engage in effective communication and knowledge sharing.

- Skills, knowledge and abilities enhance human capital in management of knowledge workers.

- Knowledge based firms differ from other industry types because of the nature of their work, which is of a professional intellectual manner that draws on mental abilities rather than physical strength and traditional manual craft.

- PSFs endorse strong professional norms encouraging homogeneity across the organization. Due to the idea of a common knowledge, these firms have a significant impact on developing the identities of professionals and reducing variations between organizations.

- For any PSF to enact a strong culture, it needs to ensure that the professionals in the leadership roles are aware of the firm’s culture and constantly endorse this culture in their everyday interactions

The author has clarified the assumptions through comparative analysis of two professional service firms’ functionality and concluded the performance of first firm (PSF1) partially adopting strategic human resource management to be higher than the other firm (PSF2) applying the traditional approach to HRM.

- PSF1 applied high performance culture as a voyage to self-discovery and provided employees sufficient space to grow and take risks. PFS2 does not hold any strong reliance on culture and workers do not have any understanding on different functions. Employees in PSF1 work closely and are aware of the roles and responsibility of each workers.

- The HRM function considers the operation of the business and it not just provides the traditional HR functional activities (as in PSF2) but also provides the necessary soft skills to professionals in people management roles. PSF 1 HRM function adopts strategic business partnership role, works closely with senior management to provide support in every day transactional activities. But HRM in PSF2 tends to incorporate the traditional aspects of HRM, including operational activities and there is a lack of guidance provided for partners concerning their people management role.

- These variations have led to significant difference in the business results. PSF1 increased its profit in the given year by 2% with less than 1% staff turnover whereas in the same period PSF2 reduced its revenue by 10% with about 18% of staff turnover.

3. How valid are these assumptions/arguments/facts/opinions in the light of theoretical development in the thematic field?

 Different strategic human resource management studies has been grouped under two models- the hard (Michigan) model and the soft (Harvard) model.

The Michigan model is also known as the matching model or best-fit approach to human resource management and considers four elements in HR- selection, appraisal, rewards and development. It focuses on the organizational needs and related actions from HR to address them. It rewards the best performing workers and provides development for the performers. It undervalues the employee perspective and ignores the situation or limitations of workers.

The Harvard model stresses the human aspect of HRM and is more concerned with the employer–employee relationship. It highlights the interests of different stakeholders in the organization (such as shareholders, management, employee groups, government, community and unions) and how their interests are related to the objectives of management and recognizes the influence of situational factors on HRM policy choices. It describes the relation between human resource flows, reward systems, employee influences and work systems. It emphasizes on the fact that employees are equally important in influencing organizational outcomes like any other shareholder.

The hard HRM approach considers employees as a passive factor of production, as an expense and that they can be easily replaced whereas the soft approach emphasizes active employee participation, gains employee commitment, adaptability and contribution of their competences for achievement