Oxford Handbook of Human Resource Management

(Steven Felgate) #1



    1. 1 Designing Internally Coherent HRM Systems




It is a very diYcult task to actually design an internally consistent HRM system in
which all HRM practices are internally aligned and reXect the policies and overall
HRM philosophy of the organization. First, any HRM system must be appropriate
for the organization’s competitive strategy: helping the organization achieve its
strategic and tactical goals. As many researchers have pointed out, diVerent envir-
onments and contextual settings require distinct sets of practices (e.g. Becker and
Huselid 1998 ; Delery and Doty 1996 ). While this problem is often seen to relate
more to external rather than internalWt, we believe that it has signiWcant implica-
tions for internalWt.
Several internal and external factors inXuence an organization’s strategy and
the externalWt, which, in turn, inXuences the eVectiveness of internalWt (Boxall
and Purcell 2003 ; Wright and Snell 1998 ); there is clearly a reciprocal relationship
between external and internalWt. Ignoring externalWt can lead to an overly rigid
HRM system and may cause inertia. Also, the critical HRM goals (e.g. labor
productivity, social legitimacy, and organizational Xexibility) create complex
and possibly paradoxical demands with regard to the HRM system, leading to
‘strategic tension’ (Boxall and Purcell 2003 ). These demands need to be managed
and balanced in an eYcient way. An organization’sXexibility or agility with regard
to its HRM system is, thus, essential for internalWt over time and long-term
organizational success (Boxall and Purcell 2003 ; Dyer and Shafer 1999 ; Wright and
Snell 1998 ).
Abell’s concept of ‘dual strategies’ highlights the fact that successful organiza-
tions have to adapt by ‘mastering the present and pre-empting the future’ (Abell
1993 : 296 ). In the context of HRM, this indicates that organizations have to adjust
their HRM systems over time for them to remain eVective in light of changing
external and internal forces (Dyer and Shafer 1999 ). For instance, changes in the
environment, in theWrm’s strategy, or their workforce needs should trigger mod-
iWcations in aWrm’s HRM system. Otherwise, these systems, internally aligned or
not, could become misaligned with contextual forces (Boxall and Purcell 2003 ).
The detailed examination of these dynamics, however, is beyond the scope of this
chapter. We concentrate on internalWt per se but want to emphasize the fact that
internalWt is dynamic, not static.
Second, the entire HRM strategy must dictate a coherent bundle of HRM
practices and policies which align and support each other. As mentioned previ-
ously, however, there are diVerent types of internalWt. To date, most researchers
have focused only on what we term inter-practice areaWt within an HRM system
(Wt across diVerent HRM practices within one HRM system). This is just one type
of internalWt and may be an overly simplistic view of this concept. As Lepak and
Snell ( 1999 ) highlighted with their HRM architecture, organizations likely have
distinct HRM systems for diVerent groups of employees, reXecting the employee


hrm systems and the problem of internal fit 389
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