First, analyzing common features in definitions of SHRUG clarified five features (a close fit between human resource management (HRS) and management strategy, etc. . Second, approaches which investigated the relationship between strategies, HRS practices and organizational performance were reviewed. As a result, the best practice approach has been used frequently and produced useful outcomes comparatively with the contingency approach and the configuration approach.
Thirdly, the intervening factors and cause-and-effect relationships between HRS practices and organizational performance were analyzed. From reviewing previous studies, retention and many factors were found as intervening factors. And it was suggested that placing too much emphasis on he cause-and-effect relationships wasn’t realistic in empirical studies. The last section of this article reconsidered SHRUG in the context of general HRS research. The necessity of the attention paid to single-level practices was pointed out.
SHRUG refers not just to research management strategy and its relationship with HRS, but also to the strategic use of employees, or the adoption of HRS to management strategies, which is conducive to optimal performance. This paper clarifies the process in which SHRUG is linked to organizational performance, while reviewing the theoretical development of SHRUG. In particular, it discusses the current challenges with SHRUG, as well as prospects or future development. Copyright 0 2009 by International Academy of Strategic Management SHRUG: Definition Various definitions have been given to SHRUG.
Some of the more representative definitions are as follows: “It is the pattern of planned human resource deployments and activities intended to enable a firm to achieve its goals” (Wright, 1998: 187); “designing and implementing a set of internally consistent policies and practices that ensure a firm’s human capital (employees’ collective knowledge, skills and abilities) contributes to the achievement of its business objectives” (Hustled, Jackson, Schuler and Randall, 9971 171 and “The SHRUG perspective integrates macro-level theories and concepts to explore the impact of specific configurations, or systems, of human resource activities on organization-level performance outcomes” (Arthur, 1994: 670). 67 2009, Volvo. 1, NO. 2 SHRUG: Special Features The various definitions given above all share the following characteristics. First, the HRS system, composed of various HRS elements, such as practices, IS a subsystem of a management system. Secondly, employees are regarded as a source of sustained competitive advantage; in other words, they are a strategic resource.
According to a resource’s view, skilled unman resources (HRS) are a valuable, rare, imperfectly imitable and can become a core competency in terms of substitutability (Barney, 1991). In addition to HRS, there is a growing trend to regard the HRS system itself as a source of competitive advantage. Although the conventional HRS system also regarded employees as an economic resource, the new thinking emphasizes this idea in the context of overall management strategy. In terms of organizational theory, HRS department is regarded not simply as a staffing department, but as a strategic department with a direct bearing on increasing profitability. Thirdly, from an analytical standpoint, all of the above definitions identify the subsystems as part of the macro- or organization-wide system.
Up to this point, HRS research has centered on micro-level inquiry, such as the evaluation of individual practices and their effect on individuals. SHRUG, on the other hand, deals with practices as a system of the overall organization and treats them as the central theme. In fact, looking at how practices are used by Japanese organizations, One learns that not all have been set up on the basis of achieving a uniform goal or a “grand design. ” Some are ambiguously positioned within the organization. In contrast, the SHRUG theory emphasizes cooperation and consistency between different practices. Cocked and ASCII (1984), for example, claim that the functions cannot be treated separately since the various functions making up the HRS system are mutually and strongly inter-related.
Fourth, all of the above definitions focus on a close fit be;en HRS and management strategy. The proponents of this way of thinking believe that the optimum HRS practices will vary with the management strategy. They stress the importance of how the strategy and HRS system fit together (external fit). Schuler (1992) lists philosophy, policy, program, practices and processes as components of SHRUG. HRS, so far, has placed emphasis on individual practices. However, SHRUG stresses the relationship between the overall policy and strategy of an organization, so when setting up long-term management plans, participation by the HRS staff has become increasingly important.
The Michigan School stressed a hard approach for analyzing practices based on a clearly-defined number of human resources and costs that fit with the strategy, with their relevance to the overall performance of a given organization measured by clear and objective indices (Bombproof, Itchy, & Deviant, 1984). The fifth shared characteristic is a focus on the effects that influence organizational performance. Up until now, HRS has been considered a professional responsibility of the personnel staff. Therefore, Harm’s function for giving professional advice was emphasized, against the line function, which directly contributes to the organizational performance of the production and marketing departments.
Of course, the now older HRS system also analyzed productivity, turnover rate and financial performance, as well as how they related to one another. SHRUG, in contrast, emphasizes its relationship with an organization’s financial performance ? The ultimate goal of management. In this way, SHRUG has re-directed the HRS theory from its microscopic focus on individual employees to something more macroscopic, in the context of system theory and strategy theory, looking at Harm’s role in organizational performance and the ultimate management goal. How individuals are viewed is problematic. If employees are simply regarded as a source of sustained competitive advantage, it is likely that their human aspects, as people with a full range of emotions, may be neglected.
From an organization theory point of view, an organization is made up of two factors: the “work organization” as a sum total of the work to be performed, and the “human organization” made up of people who carry out that work. Greater respect given to the human element, thanks to the SQL (Quality of Working Life) movement, is one of the main features of the modern HRS theory, and this “human respect” must be maintained and advanced in today’s organizations. 68 decide on various issues, e. G. , management strategy, new product development and HRS practices; (5) Empowerment of lower-level employees and active closure of internal, organizational information; (6) Skill-based salaries and a rewards system, such as gain sharing; and (7) Aggressive support to enhance employees’ knowledge and skills.
Prefer (1998) in his “high commitment work practices” lists seven practices: job security, selective recruiting self-management teams and empowerment, high merit-based rewards, broad-range employee education, equality in working conditions and sharing of work performance data. Hustled (1995) defined HRS practices that bring large benefits to any organization, under any conditions, as the “high reference work practices (system). ” He believed that these practices increase employees’ skills, knowledge and capabilities and raise their motivation, while phasing out those who do not produce results, thus securing the retention of quality employees.
Appellate (2002) lists the following three practices as components of a high performance work system: (1 ) Organizational structure that encourages employees’ discretion. This core element involves active employee participation in decision-making, such as changing daily work routines and frequent communication with other employees in carrying out work. 2) Securing highly skilled employees by hiring capable employees or by enforcing formal education/ training. (3) Implementation of external reward system to increase employees’ work efficiency, such as a performance-based individual or group salary system, profit-sharing system and employee stock options. From the SHRUG viewpoint, how do these practices affect the organization?
Previous studies show that the implementation of these practices promoted employees’ knowledge, skills, motivation, information and empowerment (Lealer, 1992; Prefer, 1998). These practices are regarded as an investment in human capital (Arthur, 1994). As investing in human capital is thought to increase future productivity, it is justified by organizations. Previous studies proved, to some extent, that there was a correlation between SHRUG: APPROACHES Developing on the basics discussed above, the following three approaches have been suggested as to the relationship between management strategy, and organizational performance (Delver & Dotty, 1996). Theoretically, they have developed in the following order: best practice approach contingency approach configuration approach.
Best Practice Approach This is the simplest approach out of the three and is eased on a view that particular relationship between HRS practices and organizational performance is related in a universally effective way (Delver & Dotty, 1 996), in the sense that there is a single, best way to implement HRS practices (Fisher, Contended, & Shaw, 1999). This is called the “universalistic perspective?’ and is considered to be globally applicable, without any regard to cultural differences. Unlike the other approaches, however, the best practice approach does not explicitly discuss how management strategy and HRS practices fit with each other. Some of the representative best practice approach models include the (high) commitment model, the high involvement model and the high performance work practices (systems) model.
This approach was developed on the premise that a greater commitment from employees improves performance. There are many commonly applicable practices involved in this approach, as it encourages employee participation. This approach also suggests that the employee will identify organizational goals as his or her personal goals and that he or she will voluntarily commit themselves to behavior conducive to greater efficiency. Based on scientific management methods, the best practice approach is often contrasted with the control model, which is characterized by bureaucracy and a hierarchical structure. Now, let us look more specifically at the practices involved in the best practice approach.
Lealer (1986) promoted high involvement management based on the following seven principles: (1 ) Organizational climate that promotes employee participation; (2) Leadership or top management clearly displaying future management vision; (3) A flat organization with a smaller staff department; (4) Setting up task forces and project teams that can 69 2009, Volvo. 1, No. 2 ate a problem. One can evaluate any strategy at the organizational, business and functional levels (Dyer & Holder, 1988), but with different levels considered, the results are more likely to differ. Another problem is the scarcity of empirical studies that can be used, compared to the best practice approach. This means that this approach may not be contributing in any specific manner to the actual daily workings Of management. These practices and organizational performance (Arthur, 1 994; Hustled, 1995; Sickbay’s, 2002; Koch & McGrath, 1 996; MacAfee, 1995).
It has been shown that the best practice approach, by implementing employee participation in management and greater ointment, improves overall organizational performance. However, researchers differ in their observations when such practices are viewed more closely, one by one. Thus, they were not able to agree upon a list of uniform practices that the best practice approach aims to achieve. Also, Chase (1998) claims that Japanese businesses are shifting from a commitment model to an innovation model, and that the former is no longer the best practice. This claim, however, has not been proven. In other words, a best practice other than the commitment model has not been investigated.
Furthermore, the so-called “best reactive” has not been investigated sufficiently to determine if it is universally applicable across different times and localities, such as in non-European cue Trial spheres. This is another point that needs to be verified. Configuration Approach The configuration approach is the most complicated of the three approaches, as it pursues the practices identified to be effective in the best practice approach, while coordinating them with the management strategy considered in the contingency approach. So far, there has been a focus on coordination and consistency (horizontal and internal fit) between the different HRS practices by engendering the practices as a system or a bundle (Macadamia, 1995), thus analyzing their relationship with organizational performance.
The underlying premise of the configuration approach is: The effects of individual HRS practices on organizational performance vary due to the complex interactions between such practices; for example, due to the presence or absence of other practices (Hustled, 1995). By first observing the interaction between different practices, a set of consistent practices is identified, which will produce synergistic effects. The application of this consistent set of practices is considered to affect performance ore than all of the individual practices combined. In other words, the introduction of a set of highly coordinated, consistent practices is expected to bring out high organizational performance. The configuration approach, therefore, is thought to be an ideal type among different concepts, rather than being empirically observable (Delver & Dotty, 1996).
Theoretically, the configuration approach is a compromise between the elements of the best practice approach and the contingency approach, aimed at achieving both the internal fit and the external fit these two approaches allow. In this sense, it could implement the shortcomings of these two approaches. Eventually, analyses using the configuration approach should be pursued in SHRUG. Actually, however, as seen in the study by Hustled (1 995), the fit Contingency Approach In the SHRUG approach, the contingency approach is implemented most frequently after the best practice approach, in which other organization-level variables, especially the management strategy ranked high in HRS and Its fit (vertical and external fit), are emphasized. This means that the higher the fit between management strategy and HRS, the higher the expected organizational performance.
For example, the cost reduction strategy is expected to fit with HRS practices, such as the greater hiring rate of short-term and temporary workers and reduced salary payments. In this approach, proponents believe there are several practices that fit with the strategy to improve organizational performance, and this is where it differs from the best practice approach. Many previous studies have examined the fit with the management strategy type (defender/ prospector/ analyzer) of Miles & Snow (1978) and the strategy type (cost leadership/ differentiated/ concentrated strategy) of Porter (1980), without arriving at a uniform result (Awaited, 2002).
When examining the contingency approach, different studies use different strategy levels, which creep organizational performance, other than HRS practices. In other words, we need to inquire into intervening factors to clarify the missing link between practices and organizational performance. Writing about the relationship between HRS and organizational performance, Wright & McMahon (1992) proposed the following six theories to present explanatory models: behavioral perspective, cybernetic models, agency/transaction cost theory, resource-based view of the firm, power/resource penitence models and institutional theory. Out of these six, the behavioral perspective (approach) refers directly to intervening factors to describe the relationship between HRS practices and organizational performance.
The behavioral perspective focuses on employee behavior as one of the intervening factors. In other words, the behavioral perspective assumes that the strategy induces HRS practices, eventually leading to many profitable results by stimulating and controlling employee behavior (Wright & McMahon, 1992). The behavior in this case includes, in addition to work-related behavior, voluntary non-work-related behavior, participation and remaining in the organization and the HRS system (Katz, 1964). FIGURE 1 is a schematic representation of the behavioral approach made from an empirical analysis viewpoint, using studies from Awaited (2002) and Monarchism (1996) for reference. 1) has not been verified by the small number of empirical analyses.
Since no reasonable measuring methodology has been established, the configuration approach is still in a developmental stage, requiring further investigation.