What is strategic human resource management?
What is strategic human resource management?

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What is strategic human resource management?

Inner contexts

Organisational characteristics that constitute the inner context include features that can be crucial to the practice of HR. Examples of such factors include:

  • the occupational profile of the organisation (for example, whether constituted by scarce and highly paid skilled staff or a more lowly paid, low-skilled workforce)
  • the ownership (e.g. whether an owner-managed, family firm or a large, shareholder-owned PLC)
  • the history and culture of the organisation (e.g. whether there is a history of mistrust and conflict or conversely a context of high trust and goodwill).

Another example of an inner context which can impact significantly on HR practice is those organisations which have become part of the ‘third sector’ – that is, co-owned enterprises, social enterprises and mutual organisations. These bodies typically seek to work on a values-based approach and the notion of bosses and workers is complicated with notions of members and co-owners.

If you were a newly appointed HR specialist to an organisation you would need to learn about all of the aforementioned and, in addition, you would also need to know about the key units and departments – which groups are considered core to the operation and what are the contours of power and influence in the organisation.

The John Lewis Partnership: a video case study

Activity 2: Inside John Lewis

Timing: Allow around 20 minutes for this activity.

A very good example of the need for an HR specialist to take account of an organisation’s ‘inner context’ can be found in the case of the John Lewis Department Stores. These stores are part of the wider John Lewis Partnership – a co-owned retail business with multiple divisions, including food retailing as well as the department stores. Any attempt by a new HR manager to make strategic choices about HR would need to first take close account of the features of the inner context. The video clip below should make this point abundantly clear.

Watch the video clip and answer the following question:

Download this video clip.Video player: Bonus day
Skip transcript: Bonus day

Transcript: Bonus day

AUTOMATED VOICE:
Going up. Going down. Going up. Doors Closing.

[MUSIC PLAYING]

NARRATOR:
The 11th of March, 2009, the directors of a very British institution have let our cameras behind the staff only doors to see how they cope with the worst recession in their history. Even in difficult times, it's a business that prides itself on looking after its employees, otherwise known as partners.
MALE PARTNER 1:
It's like a family, and lots of people work together. My wife works for the Partnership as well.
FEMALE PARTNER 1:
I've been in John Lewis for-- this my 23rd year.
INTERVIEWER:
Really?
FEMALE PARTNER 1:
So quite some time.
NARRATOR:
It's an extraordinary business owned by the people who work there.
MALE PARTNER 2:
It's our business. I mean, it's not owned by shareholders. We own this company.
JULIA FINCH (CITY EDITOR, GUARDIAN):
So yeah, it's very odd for such a huge organisation to be essentially owned by its staff.
NARRATOR:
Today is the most important day in the John Lewis calendar.
FEMALE PARTNER 2:
Ooh, I think this is what we've been waiting for.
NARRATOR:
It's bonus day, when the department store's 29,000 partners get a share of the profits.
EXECUTIVE 1:
First we work out how much profit we've made in a year. Then we set aside the amount of capital we need to invest for the future. And then the balance is then distributed as bonus.
NEWCASTLE BOSS:
Fantastic.
FEMALE PARTNER 2:
Secret addressee only.
NARRATOR:
Thanks to the recession, expectations are low.
FEMALE PARTNER 3:
I reckon 10 or 11 per cent.
FEMALE PARTNER 4:
Probably, I would say around about 10% more.
BRISTOL BOSS:
Good morning!
ALL:
Morning!
BRISTOL BOSS:
I don't feel I heard that. Morning!
ALL:
Morning!
JOAN:
What I'm hoping for is about 15 per cent, but I think it will be about 10, the way things are. But 10 is better than nothing. Good afternoon, you're speaking to Joan at John Lewis. How may I help?
NEWCASTLE BOSS:
Good morning, everybody!
ALL:
Morning!
NEWCASTLE BOSS:
Thank you for coming along this morning to hear the bonus announcement.
ALL:
Woohoo!
ANDY STREET:
No question that today's the best day of the year for the Partnership, because it's when being a Partnership really comes home to every single partner.
LONDON BOSS:
Well, welcome everybody to arguably the most eagerly awaited moment of the year.
ALL:
Seven, six, five, four, three, two, one.
BRISTOL BOSS:
And here we are, drumbeats. Wooh!
LONDON BOSS:
Wait. Wait a minute. It's stuck. It's stuck.
NEWCASTLE PARTNER:
13 per cent!

[CHEERING]

LONDON BOSS:
Oh, yes!

[MUSIC PLAYING]

NARRATOR:
It's Easter. Sales of products for the home, from dining tables to duvets, are down nearly 10 per cent on last year.
FEMALE STORE CLERK:
We are struggling, obviously, because you don't wake up one day and think, oh, I need to change all my towels. That can always wait another year. People are not moving, so they're not buying new things for their new bathrooms or new bed linens, and so on.
MALE STORE CLERK:
Times are very hard, aren't they?
Yeah. You can tell a difference. Like, two or three years ago, we was busy all the time. But of course, now people haven't got the money to spend anymore, have they?

[MUSIC PLAYING]

JULIA FINCH (CITY EDITOR, GUARDIAN):
He's John Lewis through and through. You cut him in half, and he'd be John Lewis through the middle.
ANDY STREET:
There, there, there.
JULIA FINCH (CITY EDITOR, GUARDIAN):
And from the way he speaks, the way he walks, the way he talks, right through to the way he runs the business.
ANDY STREET:
Gentlemen, are we well?
JULIA FINCH (CITY EDITOR, GUARDIAN):
It's the staff really like him.
ANDY STREET:
Rachel, come and tell me what's going on.
RACHEL:
He's totally unorganisable, if that's a real word. We actually just work round him and sweep up after him. And that's basically how we spend our day.
NARRATOR:
Andy Street is the Managing Director of John Lewis.
ANDY STREET:
Why did I get the job? I hope I got the job because I think people believe that I had a instinctive understanding of what the John Lewis brand was about.
Is that all right? OK?
I haven't got a clue why I got the job, actually. That's a ridiculous question.
AUTOMATED VOICE:
Every Monday morning, the directors gather at Head Office to examine the weekly sales figures.
ANDY STREET:
Right. OK, we'll make a start. As to trade last week, I'm going to let Dan talk about it, but I think we would perhaps describe it as a "thin" week's trade.
DAN:
We turned over 43.2 million pounds. That was 11.6 per cent down on last year and 5 per cent down on budget.
MALE DIRECTOR:
Sports are really struggling with large equipment, which in credit crunch times is hardly a necessity, which is minus 25.
FEMALE DIRECTOR:
It was a second tough Easter week for us, not unexpected. We were minus 14.5.
NARRATOR:
John Lewis is unique on the High Street. It's a partnership created in 1929 by a man called John Spedan Lewis.
JOHN LEWIS:
If a naturalist who was a bit of a gardener, found a seed washed up by the sea, he might plant it and tend it just to see if it was alive. The John Lewis Partnership has been an experiment of that sort, not with the sea, but with an idea for a better way of managing business.
ANDY STREET:
He did see what he then formally set up at the end of the '20s as an alternative to a rampant capitalism, where his family was taking more profit from the business than all the other employees put together, which he thought was immoral. And indeed, the threat of Bolshevism. So it was very clearly, in Tony Blair's language, "a third way."
End transcript: Bonus day
Bonus day
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If you joined this retail organisation as an HR manager, what key features of the inner context do you think you would need to bear in mind?

Make your notes in the box provided below and then click ‘Save and reveal feedback’ to see our thoughts on the question.

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Discussion

There are many characteristic features of this organisation that you would need to take account of if you were to have any chance of making a difference or even surviving in the organisation. The retailer seeks to work within a very distinctive ‘model’, key features of which were designed decades ago by its founder. These include elements of a democratic character whereby employees (partners) expect to have a voice, to have democratic structures and to be treated as a co-owners of the business. The annual bonus is an expression of their share in rewards but they also expect – and other senior managers expect – that this is but one part of a wider sense of co-ownership which carries rights and responsibilities.

The existence of this model does not prevent change but it does influence the way changes can be introduced, and the nature and justification of any proposed changes.

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