Strategic Human Resource Management and Employment Relations

There are several learnings one can have by studying how changes and differences in an organization’s macroeconomic, legal, political, social, cultural, and technological context impact managing people, or what we generally refer to as human resource management and employment relations (HRM and ER). A significant case in point from the twenty-first century is the catastrophic impacts of the 2008 global financial crisis (GFC) and, more recently, the COVID-19 pandemic on managing people in the organizations directly affected by it (Malik and Sanders, British J Manage. https://doi.org/10.1111/1467-8551.12484 , 2021; Laker et al., How leading companies are innovating remotely. MIT Sloan Management Review: MIT’s J Manage Res Ideas. Retrieved from https://sloanreview-mit-edu.ezproxy.newcastle.edu.au/issue/ , 2020a, Job crafting: how managers can help to make jobs more satisfying. MIT Sloan Management Review. Retrieved from https://sloanreview-mit-edu.ezproxy.newcastle.edu.au/issue/ , 2020b, What to do when you become your friend’s boss. Harvard Business Review. Retrieved from https://hbr.org/2020/09/what-to-do-when-you-become-your-friends-boss , 2020c). The approach taken by this book is to embed learning using theoretical insights balanced with learning from case studies from different contexts. I believe a case-based approach is critical in providing insights into applied disciplines such as HRM and ER and allowing the learner to engage in higher-order learning skills. To this end, this chapter begins with an overview of the case-based approach to learning, highlighting the conditions where such an approach is most effective. A facilitator of learning skills is also acknowledged as necessary in bringing the most out of the specific cases. This chapter also provides an overview of the structure of the book and its associated case studies for developing a higher-order understanding of strategic HRM and ER.

At the end of this chapter, you should be able to: Define the terms strategy, HRM, and strategic HRM Describe the dominant approaches to strategy Identify the key goals of HRM Examine and analyze the relationship between strategy and HRM Analyze the key forces impacting an industry

At the end of this chapter, you should be able to: Differentiate between the best-practice and best-fit school of SHRM Identify the key types of fit in strategic HRM Evaluate the key tenets of best-fit and best-practice schools Apply the concepts of integration and fit to SHRM practices

At the end of this chapter, you should be able to: Define the terms competencies, capabilities, and sustained competitive advantage Define the key elements of the VRIO framework Analyze how resources can be the basis for sustained competitive advantage Evaluate the role of SHRM practices in applying VRIO

At the end of this chapter, you should be able to: Analyze the impact of institutional mechanisms in shaping SHRM and ER practices Analyze the limits of institutional theory in developing differentiation Examine and analyze the relationship between the institutional fit and SHRM and ER

At the end of this chapter, you should be able to: Apply the concept of strategic choice to the study and practice of SHRM and ER Identify the common strategic choice options and their impact on SHRM and ER Analyze the role of HRM and ER in post-merger integration Critically evaluate the contribution of SHRM in M & A contexts

At the end of this chapter, you should be able to: Differentiate between commonly used ethical frameworks Compare and contrast the core competencies required of an HR practitioner in different national contexts Explain the concept of moral intensity Analyze the sources of conflict and dilemmas that HR practitioners are confronted with from an ethical viewpoint

At the end of this chapter, you should be able to: Define the terms HR planning and work design from a strategic perspective Describe the dominant approaches to HR planning Evaluate the effectiveness of commonly used analytical HR planning techniques

At the end of this chapter, you should be able to: Analyse the key elements impacting individual-level performance Analyse the key elements impacting systems-level performance Evaluate the effectiveness of performance management systems Explain the causes of poor performance at the individual and systems level

At the end of this chapter, you should be able to: Review critical theoretical bases of learning and development Analyse the dominant drivers of internal career orientations of individuals Examine and analyse the relationship between strategy and learning and development Analyse the critical drivers of training

At the end of this chapter, you should be able to: Define the terms employee voice and direct and indirect employee voice Identify the reasons for differences in employee voice across geographical boundaries Understand the theoretical basis for employee voice and employee participation Evaluate the contribution of employee voice

At the end of this chapter, you should be able to: Analyse the key barriers to change Describe the four tasks of managing change Examine and analyse the relationship between managing change and HRM practices Identify the key competencies needed by an HR practitioner in managing change

At the end of this chapter, you should be able to: Understand the multiple goals of strategic compensation and benefits Describe the dominant approaches to strategic compensation and benefits Analyze the relationship between strategic compensation and benefits and performance Identify the theoretical bases for determining strategic compensation and benefits

At the end of this chapter, you should be able to: Define the terms ambidexterity and public service motivation Analyze the relationship between HRM practices, ambidexterity, and innovation Identify the emerging trends in Green HRM Analyze the impact of employee well-being on the HRM-performance link

At the end of this chapter, you should be able to: Differentiate between different types of crises Discuss the critical approaches in managing people in times of a crisis Identify key individual and organizational capabilities in managing HRM during crises Analyze the role of communication in managing during a major crisis

At the end of this chapter, you should be able to:

The rapid change in technology which is the hallmark of the workplace in the twenty-first century has given rise to unique challenges to Human Resource (HR) Management, not least in the frontline interaction with the outside world such as recruitment and selection. Applicant vetting may go beyond a reference check as technology now gives professionals access to much more information than ever before. For example, as prospective employees as well as applicants often have both personal and professional social network accounts, HR practice has to be expanded from what is possible to what is ethically and morally appropriate – especially when the law is one step behind these rapid changes. In other words, the amount and accuracy of the information that is submitted for the position by applicants is not the main issue anymore. An important concern regards the extent to which HR professionals and other individuals involved in recruitment and selection seek out information online to obtain further information via means (such as websites and social media) that cross both legitimate and ethical boundaries. The following overview and learning exercise provides an opportunity for students to learn and reflect on these issues. We conclude the sections with two lists, one for references cited in the overview and another that includes additional reading suggestions.

Global work-life initiatives present unique challenges for HR departments in multinational enterprises (MNEs) because of the complexity of implementing policies that require sensitivity to local issues such as cultural traditions and legislation (e.g., Bardoel, De Cieri, Indones Psychol J 23:17–23, 2007; Scullion et al., Hum Resour Manag J 17:309–319, 2007; Sumelius et al., Int J Hum Resour Manag 19:2294–2310, 2008). However, discussion specific to work-life management in a global context is limited (e.g., Allen et al., Going global: practical applications and recommendations for HR and OD professionals in the global workplace. Jossey-Bass, San Francisco, 2010; Lewis et al., Int J Hum Resour Manag 18:360–373, 2007). Amid unprecedented levels of global mergers, acquisitions, and international growth, the challenge for HR professionals working in multinational enterprises is to define a global work/life strategy that establishes shared guidelines while allowing for local differences. Although there are a number of common issues faced by working women and men and their families, a global work-life strategy needs to reflect a course of action that is appropriate to the local environment. According to Spinks, Work/life around the world (building a global work-life strategy). Paper presented at the Designing the future, 7th annual work/life conference, Orlando, Florida, 2003) an effective family-friendly strategy requires managers to be cognizant of a number of local factors that influence employees’ work and personal lives. These factors include the culture and tradition, the role of key stakeholders, public policies, community resources and infrastructure, and workplace practices and demographics (Bardoel De Cieri, Indones Psychol J 23:17–23, 2007).

This is the story of SOFMAN, a steel construction firm based in Athens, Greece, that decided to internationalise its operations as an aftermath of the financial crisis that tormented the country between 2010-2015. During a period that the home market was shrinking, the firm earned contracts in Nigeria, Ebola-stricken Sierra Leone, then Central and Eastern Europe. The case study sheds light on how SOFMAN managed to overcome various people management challenges. Lessons learned pertain not only to the management of crisis but also to international, project-based HRM, which is a challenge frequently encountered by construction firms.

Mergers and acquisitions (M & A) occur frequently all over the world and about 70% are categorized as cross-border deals with the aim of multinational firms to undertake investments in foreign countries (Peng, Global business. Cengage Learning/South Western, Mason, 2008). There is evidence that cross-border deals are more difficult to successfully realize than domestic deals because employees not only experience a different organizational culture but also have to interact with a different national culture (Chung et al., J World Bus 49:78–86, 2014). The rule of thumb is that integrations become increasingly difficult as cultural distance and differences increase between the bidder and the target in a M & A context. Most of the studies take it for granted that employees are heavily affected by direct involvement in a cross-border acquisition (e.g., Chung et al., J World Bus 49:78–86, 2014; Nemanich, Keller, Leadersh Q 18:49–68, 2007). Yet, indirect effects of social identification can also affect the lack of direct interaction between employees from both parties (the acquirer and the acquired). This case study deals about a Japanese steelmaker who overtook a German engineering firm specializing in waste disposal business. Challenges in the post-merger integration and especially between the expatriated Japanese managers to the German subsidiary and the German employees are discussed.

Dorian LPG is a 200-year-old family shipping company that currently represents 10% of the world’s very large gas carrier (VLGC) LPG fleet and holds the second position globally. The company had a long experience in managing tanker vessels, transporting cargo for the world’s largest oil companies. The owner’s decision to enter a different market, that of liquefied petroleum gas (LPG) carriers, led to a fleet diversification and expansion programme that was materialised in a short time frame. The company raised funds from Norway and US stock exchange markets and ordered – initially – six new, technologically advanced, fuel-efficient and with large capacity vessels. Dorian took advantage of favourable market conditions and expanded its order book to 16 more vessels. The company had more than tripled its fleet within a period of less than 2 years; that is a great achievement for any shipping company. The rapid fleet expansion raised a great challenge of people management, both in terms of number, training and qualifications of the sea-going personnel, as well as of the people ashore. The number of Dorian shore staff only in its main branch office in Greece grew from 17 in 2002 to 47 people in 2017. Its sea staff grew from approximately 100 seafarers in 2002 to around 1000 in 2017. Dorian’s people management programme that focused especially on the recruitment, training and compensation cost about US$ 5 million. An extensive human resources (HR) planning for both sea- and shore-based personnel was designed, taking into consideration the special characteristics of the niche market, the stringent quality standards of the clients, and the availability of the right labour on the right time. While Dorian’s main source of strategic competitive advantage is its large, modern, young eco-class VLGC fleet, the management team acknowledges that the only thing that can make a difference in the long run is the management of people that man the fleet or direct the crew from ashore.

Systel Technologies is an embedded telecom solutions company that helps businesses across the telecom value chain to accelerate product development life cycles. It was established in 1989 in the USA and later moved its headquarters to Bangalore, India, in 1991. Currently it has three divisions, namely, the semiconductor division, terminal equipment division, and networking services division (with a proposal to set up a fourth division on wireless LAN technology), and employs about 2400 people at offices in India, Canada, China, Germany, Japan, Sweden, the UK, and the USA. The company is known for its performance-oriented work culture and innovative human resource policies and practices, which they periodically review and revise to accommodate the changes in the product-market situations and the corresponding changes in the organizational structure/design and processes. Accordingly, they recently conducted a review of their performance appraisal system under the initiative of a newly appointed HR Manager (Nitin Parekh) who had specialized expertise and experience in performance management. Based on the inputs received from discussions with the various stakeholders, Nitin designed a new system of performance appraisal, which had many progressive features such as joint identification of KPAs (Key Performance Areas) by the employee and his/her manager; building of KPAs around four functional clusters, namely, project, process, people, and developmental; goal setting based on KPAs and clusters; making the superiors’ (including the CEO’s) goals known to the subordinates; reducing the impact of rating errors (such as severity, leniency, and central tendency) through the statistical process of normalization; accommodating the requirements of the IT-enabled work system, where the employees are often required to work under several managers in different locations/countries and in virtual teams; ratings based on scale points indicating the extent to which the expectations are met; and the creation of a “comprehensive portal” where the raters can access all the details of the employee’s performance. Although the new system was generally well-received by the employees, the feedback collected by a consultant after 1 year of its implementation showed that there were still a few areas of concern for the employees. Based on the employees’ feedback, the consultant made a few suggestions, which included the introduction of the 360-degree appraisal system; conducting the appraisal training to help employees participate effectively in the appraisal process; initiating adequate follow-up on the outcomes of the appraisal including the training for better job performance; and developing a corporate-level policy on employee compensation (where the appraisal outcomes could also be considered). Nitin was wondering what he should recommend to the top management.

When one of India’s foremost news magazine puts you on their front page, then you have certainly arrived. However, when the issue is closely read by stock market analysts who are understanding the dynamics of Indian stock market, then there is something happening which is disruptive to say the least and a black swan to say the most. The person in question is Ramdev Baba of Patanjali, the most dynamic businessman in India, who continues to create a complex supply chain of products based on his learnings not from Harvard but Haridwar, a pilgrimage site in the foothills of Himalayas. So why are the investors and consumers putting their bets behind this monk, fondly called Baba Ramdev by his followers? And here we enter the heart of the paradox. At one level he is a sadhu, an aesthetic and a monk, and as a monk he has to leave his family, adopt a new name and live a frugal life in a monastery or ashram as it is called in India. In these ashrams the monks are usually engaged in religious practices, reciting hymns, offering prayers, doing rituals, doing meditation and reading religious scriptures. Ashrams have Hindu devotees coming to them for listening to religious discourses of the monks and conduct religious activities. Baba Ramdev has done all this and continues to do so, yet paradoxically, surprisingly and astonishingly he has been able to use the ethos and working principles of ashram ecosystem to create India’s most ruthless, ambitious and expansive business organization with global ambitions. He himself is one the richest men in India.

Nowadays, organizations in many national and societal contexts face the challenge of managing an increasingly diverse workforce. Yet, diversity does not mean the same in different countries and companies, and HR managers are seldom aware of this. As a result, every diversity campaign has its blind-spots. For managing human resources and employment relations strategically, this is a relevant finding. It suggests that HR first needs to identify what diversity ‘means’ to those involved, prior to being able to manage diversity globally or internationally. Also, national and local HR managers can learn from alternative approaches to diversity in other countries. Based on this insight, this chapter highlights the meanings of diversity in the German context, using the example of the German automotive supplier Robert Bosch. It also provides the reader with the techniques for a more holistic diversity management.

Ms. Wolf is the Director of a large agency, a branch of a national public administration dealing with formal compliance and respect of the law. Her “military branch” is made of civil servants working as inspectors. Ms. Wolf has recently noted a growing level of absenteeism, conflicts at work, and rising employee turnover. Not being an expert in the field, she has started reading a book on people management but what she reads does not look totally convincing to her. She read: “Happy employees → happy customers → happy employees.”

Over the last 20 years the Italian education system has lived an intense and tormented epoch of reforms and radical changes culminated in the introduction of school autonomy and decentralisation. Such institutional pressures have created, in the Italian school system, contradictory effects at an individual and organisational levels leading to employee resistance or indifference on one hand and investment in training for developing coping strategies on the other. The Italian school system comprises of teachers – the largest professional group of workers within public schools, who are also viewed as individual participants of change. Managing professionals and their professions is increasingly gaining momentum as organisations realise the importance of attracting and retaining key talent and human capital. Managing change in a professional setting such as in the case of school teachers can be difficult as the nature of their profession affords them high autonomy; paradoxically, at the same time, there is a low level of observed cohesiveness amongst the teachers.

Therese Sevaldsen was the Head of Human Resources at Philips Middle East and Turkey, based in the regional headquarters in Dubai, UAE. Throughout her years at Philips, she had led major HR transformation projects. Her passion, dedication and expertise had placed her as an influential role model at Philips. She was known to be business oriented, passionate about people and a strong advocate for women in leadership. She adopted a leadership style which was inclusive and based on trust. In addition, she tried to be an inspirational leader, providing clear direction, encouraging her team to challenge the status quo and leading them to implement new innovative HR solutions that better served internal and external customers. Prior to her role at Philips, Therese was the Head of HR for Schneider Electric in Dubai, a Fortune 500 Company with 2000 employees across 14 countries and 1 billion EUR revenue. Before this she had a number of business partner roles in Schneider Electric and other companies in the lighting and high tech industry. Therese was a mother of two school-aged boys. She enjoyed balancing her personal life with a very successful career. Activities like building Lego structures with her boys and family Sci-Fi movie evenings gave her immense pleasure. She had just returned from a Best Practices session, held this morning at the Dubai Business Women Council, as part of the International Women’s Day celebrations for 2017, in which her CEO had spoken about the various steps Philips was taking to ensure gender equality. It was only 2 days before that Therese and her team at Philips MET had received news that they had won an award for being among the best places to work within the UAE. This accolade was further validation for the key value espoused by Philips, which had people at its core (Exhibit 1). Further, as the Performance highlights in 2015 indicated, 1.7 billion lives had been improved by Philips Green Products alone, 0.88 billion lives by Philips Care Products and 0.3 billion by Philips wellbeing products (Philips Annual Report 2015, and Exhibit 2).

When the first COVID positive case was reported in April 2020 in the densely populated Dharavi locality in Mumbai, India, health professionals warned that the situation could very quickly balloon into a catastrophe. Much to everyone’s panic, the infection had spread indeed. However, in about 2 months, one of Asia’s largest slums had made a dramatic U-turn from being on the brink of a collapse to a potential template of best practices which could be adopted in the fight against the novel coronavirus. The man helming the battle was Kiran Dighavkar, Assistant Commissioner at Mumbai’s municipality. As it was impossible to socially distance residents who are crammed together in tiny spaces, the approach was to proactively ‘chase the virus’ (Ganesan 2020) instead of waiting for cases to come to the authorities. Till mid June 2020, Dighavkar’s team had checked temperature and oxygen levels of 47,500 households and screened almost 700,00 people in the congested dwelling since the first case appeared (Pandya 2020). The initiatives seemed to have borne fruit.

Mr Sanna is the mayor of a renowned tourist city in Sardinia. The country is inhabited by families who work in tourist-hotel structures and several breeders and farmers who have found luck in the pastures and fertile hills surrounding the country; moreover, the families of civil servants live there. The tourists adore the country’s food, and wine culture and fragrances of the native Mediterranean in the air smells brush the land, and people enjoy the golden sand and crystalline blue seas. The inhabitants are hospitable, and the town is charming, tidy and clean.

Unconscious bias is a massive problem in the workplace, especially in recruitment, promotion, and performance management and is a significant barrier in efforts to improve diversity and inclusion. Moreover, one of the most crucial sources of competitive advantage is based on human resource efforts through attracting and retaining talented individuals. Competitiveness in recruitment has led organizations to spend more time, effort, and resources in developing tools for the efficient selection of employees with the required skills and aptitude to meet current and future organizational needs (Albert E., 2019; Stone et al., 2015). So how can technology, data, and science help? And what steps does it need to take to minimize bias through technologies like artificial intelligence (AI) rather than perpetuate it? That’s the topic for this week’s podcast, where my guest is Polly, a talent matching platform. With Polly, we will try to understand how AI and behavioral science can help companies reduce bias in recruiting and finding the right person for the right place.

Human Resource Outsourcing has been growing steadily and has already become a $5 bn industry by 2020 (Burden 2019). This trend is likely to continue in the post-pandemic economic scenario as organizations try to cut costs and improve margins. Consequently, the role of inhouse Human Resource Management (HRM) is shrinking as well as its ability to contribute as a strategic partner. This case looks at the new, emerging role of HRM wherein it has to reinvent the ways through which it is going to provide strategic edges to an organization. An important component of this reinvention will be the role that HRM function will play in the context of organizational identity. Organizational identity is one of the few organizational variables in a postmodern organization wherein the expertise of the HRM function is critical. This case focuses on various aspects of organizational identity and the role HRM function can play in addressing them.

This case illustrates the importance of paying attention to the behaviors of individual managers in all organizations, beyond their formal, assigned roles. The case emphasizes the importance of paying attention to the informal relationships in the workplace. Most, if not all, organizations have no way of measuring the informal relationships, even though those are known to have significant impact on individual performance, intent to stay, and ultimately the organization’s bottom line. Supervisors are known to create in-groups and out-groups among their subordinates, based on personal factors, such as race, gender, and perceived threat. This ends up leading to low performance from those cast in the out-group, who often end up leaving the organization. While it is difficult to include these “under the radar” interactions in formal evaluations, organizations need to acknowledge the existence of such behaviors and work towards minimizing their impact on organizational processes. In addition, organizations should avoid creating division among employees by instituting two-tier systems for employees who have the same qualifications.

Like every morning, Mr Dollard, the CEO of Food & Un-Food Distribution, enters his office, but this time, the personnel and sales managers, Mr Hused and Mr Tracky, are waiting for him. “Just another?” asks Mr Dollard. “There are two”, Hused replies and continues “And they are two from the same shop, and with these, we have risen to 10 resignations since the beginning of the year”. “In the commercial area, we are not doing better”, says Tracky, “we have a drop in turnover in about a third of the stores”. “I don’t know what to do anymore”, Dollard complains.

This case study highlights many challenges in an Australian banking context. The difficulties identified address performance, people management, leadership, training, and change management. The case study focuses on an environment where banking products are a commodity and are differentiated by delivering the best possible service. Within this case study, there are complex interactions following the development of an individual’s career spanning over several months. Elizabeth is employed to firstly manage a large call centre team focused on the delivery of customer service. She is then promoted to a product management role to manage a product set of credit cards for the bank. She comes straight from university into a management role concentrated on coordinating a large team of call centre operators. Elizabeth immediately identifies the gaps between the desired state of performance and the current state. She then faces challenges in her promotion into a new role as product manager for the credit card product set.

Mister Bob is the Hospital Administrator of a vital hospital in southern Italy. In the last year, he has registered a growing level of absenteeism and primarily voluntary turnover of the nurses who work in the hospital he manages. Nurses’ voluntary turnover is a worrying global phenomenon that affects service quality. Retaining nursing staff within hospitals is an essential factor in reducing the negative influence of voluntary turnover on quality care and organization expenses.