The Foundational Theories of HRM
The original notion of HRM had a strong theoretical base. Guest commented that: ‘Human resource management appears to lean heavily on theories of commitment and motivation and other ideas derived from the field of organizational behaviour.’ Several other theories, especially the resource-based view, have contributed to the understanding of the purpose and meaning of HRM. These theories are summarized below.
Commitment theory
The theory of organizational commitment (the strength of an individual’s identification with, and involvement in, a particular organization) was highlighted in a seminal Harvard Business Review article by Richard Walton (1985). The traditional concept of organizational commitment resembles the more recent notion of organizational engagement.
Motivation theory
Motivation theory explains the factors that affect goal-directed behaviour and therefore influences the approaches used in HRM to enhance engagement (the situation in which people are committed to their work and the organization and are motivated to achieve high levels of performance).
The resource-based view theory
Resource-based theory expressed as ‘the resource-based view’ states that competitive advantage is achieved if a firm’s resources are valuable, rare and costly to imitate. It is claimed that HRM can play a major part in ensuring that the firm’s human resources meet these criteria.
Organizational behaviour theory
Organizational behaviour theory describes how people within their organizations act individually or in groups and how organizations function in terms of their structure, processes and culture. It therefore influences HRM approaches to organization design and development and enhancing organizational capability (the capacity of an organization to function effectively to achieve desired results).
Contingency theory
Contingency theory states that HRM practices are dependent on the organization’s environment and circumstances. This means that, as Paauwe explained: ‘The relationship between the relevant independent variables (e.g. HRM policies and practices) and the dependent variable (performance) will vary according to the influences such as company size, age and technology, capital intensity, degree of unionization, industry/sector ownership and location.’ Contingency theory is associated with the notion of fit – the need to achieve congruence between an organization’s HR strategies, policies and practices and its business strategies within the context of its external and internal environment. This is a key concept in strategic HRM.
Institutional theory
Organizations conform to internal and external environmental pressures to gain legitimacy and acceptance.
Human capital theory
Human capital theory is concerned with how people in an organization contribute their knowledge, skills and abilities to enhance organizational capability and the significance of that contribution.
Resource dependence theory
Resource dependence theory states that groups and organizations gain power over each other by controlling valued resources. HRM activities are assumed to reflect the distribution of power in the system.
AMO theory
The ‘AMO’ formula as set out by Boxall and Purcell (2003) states that performance is a function of Ability + Motivation + Opportunity to Participate. HRM practices therefore impact individual performance if they encourage discretionary effort, develop skills and provide people with the opportunity to perform. The formula provides the basis for developing HR systems that attend to employees’ interests, namely their skill requirements, motivations and the quality of their jobs.
Social exchange theory
Employees will reciprocate their contribution to the organization if they perceive that the organization has treated them well.
Transaction costs theory
Transaction costs economics assumes that businesses develop organizational structures and systems that economize the costs of the transactions (interrelated exchange activities) that take place during their operations
Agency theory
Agency theory states that the role of the managers of a business is to act on behalf of the owners of the business as their agents. However, there is a separation between the owners (the principals) and the agents (the managers) and the principals may not have complete control over their agents. The latter may therefore act in ways that are against the interests of those principals. Agency theory indicates that it is desirable to operate a system of incentives for agents, ie directors or managers, to motivate and reward acceptable behaviour.
No comments