Oxford Handbook of Human Resource Management

This means that single-factor explanations of HRM goals (such as, ‘employers
simply seek to manage people in a way consistent with their competitive strategy’)
are likely to be misleading. Without reverting to excessively complicated frame-
works, what other factors are needed? In manufacturing, surveys and case studies
indicate that the impact of competitive strategy on HR strategy is aVected by the
dominant technology used in the sector and theWrm (Boxall 1999 ; Purcell 1999 ;
Snell and Dean 1992 ; Youndt et al. 1996 ). In labor-intensive, low-technology
manufacturing, labor costs are typically in competition and Wrms commonly
seek to employ labor at least cost, as Schuler and Jackson ( 1987 ) predict (Table 3. 1 ,
Wrst row). Where these pressures are intense,Wrms are often observed shifting their
production facilities to low-cost countries or ‘oVshoring’ workforces (Boxall and

Table 3.1 Predicting HR strategy: two different scenarios despite the same type

of competitive strategy

Firm’s

choice of

competitive

strategy

Nature of

productive

technology in

the sector

Worker actions and impacts of

state regulation

Implications for HR strategy

Cost

leadership

Low

technology,

often highly

labour-

intensive

operations and

large scale

Where workforces are

strongly unionized, this often

strengthens the drive to

locate operations in low-wage

countries. Among lightly

unionized workforces,

employment regulation

sets the lower bound of

wages and conditions.

HR strategy is dominated by

the need to survive in an

environment where labor costs

are in competition.

Prediction: firms seek out

low-wage sites where output

is high and quality is

acceptable. Firms will pay

the going rate in the local

labor market but avoid

paying premium conditions or

over-investing in training.

Cost

leadership

High

technology or

highly capital

intensive; often

low staff

numbers but

key specialist

skills very

important to

operations

If organized into unions,

workers may extract more of a

wage premium but this is not

likely to affect the economics

of the firm unless work

practices are inefficient

or unduly inflexible. Regulation

by the state is not likely to have

much relevance because wages

and conditions are high in the

sector.

HR strategy is based on

developing and motivating

workers to maximize the

benefits of the technology

(which will help to achieve

the cost leadership strategy).

Prediction: high-wage,

high-skill models of labor

management are cost effective.

Investments in creating

‘high-performance work

systems’ are likely to be justified.

Source: Adapted from Boxall and Purcell 2003: 59.

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