What is Harvard Model of HRM?
Harvard Model of HRM is an HR strategy framework that helps organizations utilize their human resources in accordance with their strategic needs. When an organization’s employees are properly managed, it is more likely to achieve its objectives. Simultaneously, deciding how to effectively use human capital will help an organization meet its goals and priorities. This results in better HR outcomes which will have long-term consequences for the business, employees, and society.
This model was initially introduced in 1984 in the book “Managing Human Assets” by Michael Beer, Bert A. Spector, and Richard E. Walton, who were a group of experts at Harvard University.
The Harvard Model of HRM emphasizes focusing on human resources rather than on outcomes. It implies that continually looking for better methods to utilize people will lead to profitability. This model has helped HR leaders and strategists look at HRM from a broader perspective. It balanced employees, operations, and management by offering a framework for effective HR activities. The Harvard HR Management model focuses on areas like recruitment, training, performance, compensation recognition, and so on.
When organizations adopt this model, it allows general managers to become more familiar with their teams and improves the level of communication and understanding. It also fosters an environment where employees are engaged and motivated in their work.
Harvard Framework Model of HRM
The components not only help identify an organization’s needs but also assist them in addressing them. The 5 primary components of Harvard Model of HRM are:
1. Stakeholder Interest
The Harvard Framework Model of HRM begins with stakeholders’ interests. It emphasizes considering the values, input, and perspectives of the stakeholders before developing any HRM policies to create a fair and equitable workplace environment. These policies can be related to recruitment, training, performance, staff development, workplace safety, and other HR-focus areas. All interests, including stakeholders’ and an organization’s, are balanced to ensure the policies meet the needs of all the parties involved. These stakeholders can be the management, government, community, employee groups, or even unions.
2. Situational factors
Before choosing the policies to be developed, factors influencing the HRM policies are called situational factors. These factors can be categorized into internal and external factors. Internal factors cover organizational culture, corporate strategies, structures, and human resources. External factors include the labor market, economic situation, technological environment, legal environment, competition, and public policies.
All these factors must be analyzed as they help understand how humans operate. They also help choose the HRM policies to reach the organizational objectives. Also, the external and internal factors must be balanced.
3. HRM policies and policy choices
This component covers the actual strategies that must be pursued to achieve the organizational goals. They are designed in such a way that they are compliant with the laws and regulations and capable of adapting to the changing organizational environment and conditions. These include everything related to HR function. Once these policies are designed, they enable the organizations to focus on their core objectives and achieve their long-term goals.
HR policies require work systems and reward systems to function. It determines the approach to be taken towards work and rewards such that employees are positively influenced.
4. HR outcomes
HR outcomes is possibly the best-known component of this model. These outcomes of HR policies can be tangible or intangible. Some examples included improved employee retention, recruitment, better job satisfaction, increased engagement levels, motivation, communication, and many more. These outcomes make a significant contribution to the overall objectives of the organization. These outcomes can also be classified into: Commitment, congruence, competence, and cost-effectiveness.
5. Long-term consequences
The main objective of the Harvard Model of HRM is to execute an HR strategy that gives long-term consequences. According to this model, if the HRM strategies meet the employees’ needs, the organization will be able to compete with the external competition while also benefiting the employees, society, and the community (stakeholders).
Some long-term consequences are improved customer service, enhanced organizational culture and values, improved retention, and even profitability.
Harvard Model of HRM example
For example, let’s say that a company wants to cut costs. If it has decided to achieve this by reducing the number of employees, it can start to evaluate its decision by considering the stakeholders’ interests. It considers the interests of employee groups or the management before deciding. Through the Harvard Model of HRM, the company comes to the conclusion that the above decision will lead to lower morale, decreased motivation, and increased turnover among the remaining employees. These could be the outcomes. As for the long-lasting consequences, the above decision could impact the company’s reputation, profitability, productivity, and bottom line.
Hence, the company may reach its goal by investing in training and development. This not only improves the knowledge, skills, and motivation of the employees (outcomes), but also leads to increased profitability and a positive work culture.
Overall, this model helps HR take informed decisions while also considering an organization’s strategic needs. By focusing on utilizing people wisely and taking into account all the interests and factors, HR will be able to make policy decisions that help reach the goals.
Harvard Model of HRM: Advantages and Disadvantages
The Harvard Model of HRM has been adopted successfully by many companies and is recognized to be influential and significant. Some of its advantages are:
1. Improved HR workflows
Harvard Model of HRM primarily focuses on developing the best HR policies that help achieve the strategic goals of an organization. It focuses on areas such as recruitment, selection, placement, promotion, performance evaluation, termination, etc.
2. Better work and reward systems
This model requires organizations to design their own reward and work systems. Reward systems refer to monetary motivation, pay systems, etc. Work systems cover how work is designed and how people are aligned. These systems help connect the HR strategies to the overall objectives of the business.
3. Better management
Since the Harvard Model of HRM helps understand the interests of various stakeholders in the company, a fair workplace is fostered, and their needs are fulfilled. This leads to better management of people as all the necessary interests are balanced.
4. Broader HRM context
When organizations look at their human resource management in a broader context, there will be a balance among employees, operations, and management. It identifies the role employees play in business success or failure. Accordingly, attempts are made to align the interests of the stakeholders with the organization’s needs.
5. Increased well-being of human capital
When the interests of employees are considered, it helps improve their work output and prioritize how human capital can be motivated so that they move forward with a bigger goal in mind.
6. Alignment between HR and organizational strategies
The Harvard Model of HRM breaks down the roles of the HR department and focuses on how its activities and policies fit in the organization’s growth. This not only helps identify how human resources can contribute to what the organization wants, but also helps achieve the goals.
While this model has the reputation of being successful, it has its own limitations and disadvantages. They are:
1. Time-consuming process
The Harvard Model of HRM requires a business to ensure the involvement and contribution of employees throughout the organization, which is a time-taking process. It requires acquiring information, its classification, and an analysis of human resources management.
2. Hard to put into action
One of the main disadvantages of this model is that while it tells HR the benefits of meeting all the stakeholders’ interests, it never focused on how to implement it. Organizations may create their own model but may not know how to execute it.
3. Lacks advice
As to why businesses will face difficulties in executing this model, it is because it lacks the exact advice required for creating effective strategies.
Frequently Asked Question (FAQs)
Q1. Who developed the Harvard model of HRM
The Harvard Model of HRM was developed in 1984 by Michael Beer, Bert A. Spector, and Richard E. Walton, who were a group of experts at Harvard University.
Q.2 Which model draws from Harvard HR model?
The Warwick Model is drawn from the Harvard Model of HRM. It was developed by Chris Hendry and Andrew Pettigrew at the University of Warwick.
Q.3 How many components are there in the Harvard model?
There are five components in the Harvard Model of HRM – Stakeholders’ interests, situational factors, HR policy choices, HR outcomes, and long-term consequences.
Q.4 What is the difference between the Matching model and the Harvard model?
While the Matching Model of HRM holds a less humanistic view when managing the HR system and employees, the Harvard Model of HRM considers an employee’s welfare, interests, and development.
Q.5 What are the six dimensions in the Harvard model of HRM?
The six dimensions in the Harvard Model of HRM are –
- Situational factors
- Stakeholders’ interests
- HRM policy choices
- HR outcomes
- Long-term consequences
- Feedback loop through.