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.
- 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)