Strategic Human Resource Management: A Guide to Action

the development of new products, markets and technologies. They

create change in their markets and are the forces to which competitors

must respond. Prospectors have low levels of formalization and special-

ization and high levels of decentralization. They have relatively few hier-

archical levels.

2. Defenders, which operate in a more stable and predictable environment
   than prospectors and engage in more long-term planning. Their
   emphasis is on defending their markets, and they do little research and
   development. Defenders focus on efficiency by relying on routine tech-
   nologies and economies of scale. They have more mechanistic or bureau-
   cratic structures than prospectors and obtain coordination through
   formalization, centralization, specialization and vertical differentiation.

44 l The conceptual framework of strategic HRM

Table 3.1 Fitting HR characteristics to competitive strategies

Innovation Strategy Quality Strategy Cost Leadership Strategy

Jobs that require close
interaction and coordination
among groups of individuals.

Relatively fixed and

explicit job

descriptions.

Relatively fixed and explicit job

descriptions.

Performance appraisals that
are more likely to reflect
longer-term and group-based
achievements.

High levels of

employee

participation.

Narrowly designed jobs and

career paths that encourage

specialization.

Short-term and results-oriented

appraisals.

Jobs that allow employees to
develop skills that can be used
in other positions in the firm.

A mix of group and

individual criteria for

appraisal that is mostly

short-term and results-

oriented.

Close monitoring of market pay

levels for use in making

compensation decisions.

Compensation systems that
emphasize internal equity
rather than external or market-
based equity.

Relative egalitarian

treatment of employees

and some guarantees of

employee security.

Minimal levels of employee

training and development.

Pay rates that tend to be low
but allow employees to be
stockholders and have more
freedom to choose the mix of
components.

Extensive and

continuous training

and development of

employees.

Practices that maximize
efficiency by providing means
for management to monitor and
control closely the activities of
employees.
Broad career paths to reinforce
the development of a wide
range of skills.

Source:Schuler and Jackson (1987)