Patrick M. Wright and Scott A. Snell

1. Chapter 12Toward a Unifying Framework for Exploring Fit and Flexibilityin Strategic Human Resource Management Patrick M. Wright and Scott A. Snell

2. Introduction • “The pattern of planned human resource deployments and activities intended to enable the firm to achieve its goals • Two types of congruence or fit: • Vertical fit-HRM practices and strategy process • Horizontal fit-HRM practices and resource allocation • SHRM is concerned primarily with developing the organizational capacity to adapt to changing environmental contingencies

3. Constructs of Fit and Flexibility • Definitions • Congruence or fit • “The degree to which the needs, demands, goals, objectives and/or structure of one component with the needs, demands, goals, objectives and/or structure of another component” • Flexibility • “A firm’s abilities to respond to various demands from dynamic competitive environments” • High-flexibility • “Scan the environment, evaluate markets and competitors, and to quickly accomplish reconfiguration and transformation ahead of competition”

4. Fit versus flexibility or fit and flexibility • Two relationships between fit and flexibility • “Orthogonal” perspective • fit and flexibility are opposite ends of the same continuum • “Complementary” perspective • variables are independent of one another • Differences between two perspectives stem from differences regarding the time frame and goals of the research

5. Fit versus flexibility or fit and flexibility • Time frame • Orthogonal view concerned with firms at one point in time and argue that both fit and flexibility cannot exist simultaneously • Complementary view looks at longer time horizon and explores adaptation processes • Goals of research • Orthogonal concerned with description (what firms actually do) • Complementary provide prescription (what firms ought to do)

6. Fit and Strategic HRM • Conceptualizations of fit in strategic HRM • Strategy--HRM practices fit • Different firm strategies require different role behaviors from employees and choose based on their ability to elicit the behaviors required to implement a chosen strategy • Strategy--employee skills fit • “Different strategies require different types of people…for effective performance” • Strategy--employee behavior fit • Fit between a firm’s strategy and the types of behaviors exhibited by employees • Different strategies call for different role behaviors

7. Model of Strategic HRM • Figure 12.1 p. 211 • Top half fit component (Fit) • Firm seeks to fit HRM practices, employee skills and employee behaviors to the immediate competitive needs of the firm as dictated by the strategy • Lower flexibility component (Flexibility) • Develops the organizational capacity to respond to a variety of competitive needs other than those dictated by the current strategy

8. Strategic HRM and Fit • Strategy formulation process consists of the mission and goals of the firm, followed by an examination of the internal resources and external developments that lead to the choice of a given strategy • The model depicts a process where the firm’s strategy dictates the required skills and behaviors • Desired HRM practices are then operationalized into actual HRM practices • Actual HRM practices developed influence the actual skills and behaviors of the human resources • Organizational performance is fed back into the strategy formulation process

9. Strategic HRM and Fit • Assumptions • Decision makers are able to identify all of the skills and behaviors • Decision makers can specify and control all HRM practices • Environment is relatively stable or predictable so HR strategy decision makers can work in a way timely enough to ensure they will achieve a fit with the environment • Dynamic environments assumptions are harder to accept • Achieving fit over time may be dependent upon the extent to which flexibility exists in the system

10. Flexibility in Strategic HRM • HRM scholars recognize the need to build flexibility into the firm • Framework focuses on three points: • Developing HR systems that can be adapted quickly; • Developing a human capital pool with a broad array of skills; and • promoting behavioral flexibility among employees

11. Flexibility in Strategic HRM • Flexibility-based components expand in four ways • Some HRM practices are focused on more than just one fit • Recognizes a broader range of skills than those needed to implement the current strategy • Employees possess a broader repertoire of behaviors • Highlights the role of the participative infrastructure in developing, identifying and exploiting emergent strategies

12. Flexibility and Strategic HRM • Two basic types of flexibility • Resource flexibility • Extent to which a resource can be applied to a larger range of alternative uses • Costs and difficulty of switching the use of a resource from one alternative use to another • Time required to switch from one use to another • Coordination flexibility • Extent to which firm can resynthesize the strategy • Reconfigure the chain of resources • Redeploy the resources

13. Flexibility and Strategic HRM • Human resource flexibility • Flexibility in strategic HRM • Extent to which firm’s human resources possess skills and behavioral repertoires that can give a firm options for pursuing strategic alternatives • Extent to which HRM practices can be identified, developed and implemented quickly to maximize the flexibilities inherent in those human resources

14. Resource flexibility and HRM practices • Extent to which HRM practices can be adapted and applied across a variety of situation • Extent to which jobs and situations the practice must be entirely redesigned or redeveloped in order to apply it to a different situation • Extent to which are rigidly applied across varying situations and sites

15. Flexibility and HRM practices • HRM practice and coordination flexibility • Addresses the issue of how quickly the practices can be resynthesized, reconfigured and redeployed • Administrative systems are notoriously intractable (held in place) • Become increasingly bureaucratized • Develop and attain legitimacy • Political processes work to inhibit unobstructed change • Speed with which feedback about the efficacy of an implemented HR system can be obtained • Develop feedback systems that provide accurate and timely information

16. Flexibility and HRM practices • Summary • Achieving fit is not impossible • Certain HRM practices are more amenable to timely changes than others • Certain HRM practices will have a more immediate impact on employee behavior than others • Some changes can be implemented quickly and with almost immediate feedback • Can vary in terms of their ability to be applied effectively across a variety of different situations

17. Flexibility and Employee Skills • Employee skills and resource flexibility • Refers to the number of potential alternative uses to which employee skills can be applied • The speed individuals learn to perform new tasks is becoming increasingly important • Managers must develop flexibility

18. Flexibility and Employee Skills • Employee skills and coordination flexibility • How individuals with different skills can be redeployed quickly in the value chain • Firms are achieving coordination flexibility of skills by using contingent workers • When the project is over workers are released and a new set of contingent workers is brought in • Workforce possesses a variety of skills overall resource flexibility increases

19. Flexibility and Employee Skills • Flexibility and employee behavior repertoires • Flexibility that exists regarding employee behavior also determines the flexibility of a firm • “Skilled and knowledge workers not motivated are unlikely to contribute. Motivated workers who lack skills or knowledge may contribute with little impact on performance” • Boxall • “Can-do” goal-developing skills • “Will-do” goal-eliciting motivation and commitment

20. Behavioral Scripts and Resource Flexibility • Extremely relevant to resource flexibility • Becomes institutionalized • Will decrease behavioral flexibility • Developmental experiences increase the behavioral repertoires

21. Behavioral Scripts and Coordination Flexibility • Become more homogeneous, reducing firm’s diversity of perspectives • Enables the firm to synthesize and deploy the different perspectives in a way that maximizes decision effectiveness

22. Behavioral Scripts and Coordination Flexibility • Summary • Variety of behavioral scripts increase the likelihood of the firm identifying new competitive situations and responding appropriately • Foundational skills allow a plethora of alternative behaviors to exhibit • Firm flexibility is increased

23. Implications for Strategic HRM Practice • SHRM can play an integral role in determining the organization’s flexibility • Table 12.1 p. 221

24. Implications for Strategic HRM Practice • Fit, flexibility and HRM practices • Strategic HRM simultaneously promotes both fit and flexibility • Simultaneous pursuit blends both fit and flexibility • Provide maximal effectiveness

25. Implications for Strategic HRM Practice • Fit, flexibility and strategy formulation • Constant search for ways resources can be redeployed in changing circumstances • Mintzberg • Strategic programming-breaking down a goal into a set of action steps, formalizing those steps for automatic implementation, and articulating the results of these steps • Strategic thinking-taking information from numerous sources and integrating that information into a vision of what direction the business should pursue

26. Implications for Strategic HRM Practice • Fit, flexibility and strategy formulation • Goal is to achieve fit among strategy and HRM practices, employee skills and employee behaviors • Easier to fit the strategy to the skills than to fit the skills to the strategy desired • Promote the development of a workforce • Development of a participative infrastructure

27. Implications for Strategic HRM Practice • Fit, flexibility and competitive advantage • Seeking fit requires • knowledge of the skills and behaviors necessary to implement the strategy • knowledge of the HRM practices necessary to elicit those skills and behaviors, and • competitive advantage stems from resources or capabilities that are valuable, rare, difficult to imitate and nonsubstitutable

28. Implications for Strategic HRM Research • Expands the types of research questions relating to the role of human resources in firm performance

29. Conclusions • Framework and model provides a starting point for future explorations of the concepts of fit and flexibility