Case Study On

Investigating the use of Strategic Human Resource Management In French Small and Medium-sized Enterprises

Submitted To: Submitted By: Dr. Nilanjan Sengupta Yadav(69)

Ms. Rashi

B-13

KIAMS,

Summary:
The study attempted to understand the position of strategic human resources management in the small and medium-sized enterprises (SME) in France. The aim of the research was to respond to the calls of several authors to multiply HRM studies in SME and to enrich the knowledge about SHRM in another context than North America and large companies, most often studied. The study starts with describing how Traditional HRM function was in charge of primarily administrative management of human resources, controlling them to minimize their costs and how Partisans of SHRM disagreed with this vision. The main question to be addressed was: What is the place of SHRM practices in Small and Medium-sized Enterprises (SMEs) in France? France was chosen for the study because The French context could have been an interesting Counter example because it is marked by the legal constraints and the institutions, in particular Unions and also because the authors considered that other countries could be a source of information to fill their gaps in knowledge in the U.S. Their interest to study French SMEs can be also justified by the Frenchs capacity for adapting and creating wealth. The interest aroused in studying SMEs because: Large companies can implement various HRM practices in the multiple units they control. Consequently, the data collected cannot reflect their complex reality. However, SMEs had frequently one site of production and they are often very specialized. In addition, the type of management applied is in general unified. Thus, biases related to the collected data are weak compared to those of large companies. Moreover, in SMEs the change of firms owners is less frequent than that of managers, which facilitates and increases longitudinal research objectivity. The author then talks about the Strategic paradigm change which defines how SHRM emerged through the change of strategic vision , and the relationship between HRM and strategy as the combination of vertical fit and horizontal fit . Vertical fit was defended by several important strategic models : by Porters Model and by Miles and Snows Model. SHRM in small and medium-sized enterprises: SHRM supposes the construction of a coherent system of mobilizing HR practices which ensures the co-operation of employees through a higher implication level (in opposition to employees control), in order to increase firms economic and social performance.

The author chose the following definition of SHRM which he felt will try to analyze in the French context, in opposition to traditional HRM. Several studies and works were carried out in order to analyse the SHRM practices and its impact on the organisations performance. The study attempted to improve the methodological weaknesses emerged during the process and provide us complementary elements necessary to the comprehension of the HRM in the small and medium-sized firms Methodology Adopted: The data were obtained from the REPONSE survey, which was conducted by DARE and BVA Institute by face to face talks with the leaders of the firms and a part of the employees and trade unions officials, on a representative sample of 2978 French business-units of more than 20 employees in 1998, and 2930 French business-units of the same size in 2005. A longitudinal sample was obtained by combining the data of both RESPONSE surveys of 1998 and 2005. In REPONSE the respondent was typically asked to identify whether a particular practice was in use. These practices were strategic or administrative. SHRM practices primarily composed of HRM activities qualified in literature as commitment practices or Human-Capital-Enhancing: autonomy, training, annual talks, links with training, links with promotion, individual wage increases, profitsharing, participation, information and communication.

Administrative HRM practices contain a set of HR practices qualified as traditional by the theorists in SHRM: job description, control, collective wage increases and collective bonus. These practices are also described as control practices or technical practices.

Now based on the Factor Analysis Method And Ward Method , Five factorial axes were identified and three SMEs groups were distinguished. Group 1 adopts Administrative HRM. In this group, HRM practices seem very little developed. Business units of this class make very little efforts for the development of their employees. The expenditure devoted to training is too weak . Business units of this group grant less individual increases and more collective ones. Group 2 is Hybrid HRM. This group is compounded of mixed strategic and administrative practices. Business units of this group use on one hand relevant practices of administrative HRM, like control and description of the tasks, wages (collective increases) and collective bonus. On the other hand, SHRM practices like links with training or promotion, individual wage increases, profit-sharing and information are more developed. However, practices like autonomy, participation as well as communication are very little developed in this group. Group 3 is SHRM.

HRM practices of this group are particularly developed. Work organization is very active and innovating and training activities are often committed. Individual wage increases and profitsharing are also include, rather in an individualizing way. Individual discussion is a current practice in order to evaluate requirements in training and careers development. Finally based on the Descriptive analysis and the Explanatory factors the following results were deduced: The result depicts a progression of strategic HRM practices and a regression of administrative HRM practices (i.e. administrative HRM practices recorded a clear decline). It implied that SME can also adopt flexible HRM practices. The result signifies that the hybrid HRM model is particularly important in the analysis of HRM practices in the French case, since it appears like a transitory cluster between administrative HRM and strategic HRM. It was also observed that the organizations choice of HRM practices depends on the coercive power exerted by its external actors and that choosing a flexible model as the SHRM is rather hesitant in France and raises an incremental change rather than radical. Another explanation concerns the hybridization of HRM practices which could also be resulting from a compromise between the various firms stakeholders, because of contradiction between SHRM principals with cultural values of the French.

Individualization of the wage and performance carried by SHRM model make it not easily applicable in some European companies. It is perceived by employees like a threat to gains in terms of equity and justice which are symbolic for collective responsibility. Conversely, SHRM is better established in the USA because the culture of American people is based on the notion of merit as vector of individual responsibility. This can well be explained by the Kurt Lewins change interpretation model: Force Field Analysis: The change is no longer considerate as an event but as dynamic forces that balances acting in opposite directions. Two series of forces exist: those pushing in favour of change and those acting in favour of status quo because of their resistance to change.

It was deduced that the SMEs companies need qualified and motivated employees to produce value and to have a competitive advantage. SHRM practices are more important to succeed in the case of SMEs subjected to strong environmental constraints. The most favourable periods to changes are those of weak growth and recession, when companies would not have other choice.

Finally, implementation of SHRM practices in some SMEs is a considerable contribution to the comprehension of HRM in SMEs. Especially as HRM is often considered as informal in SMEs. The result goes in the same direction as the research showed incidence of SHRM practices on firms performances.

Miles and Snows Typology Based on Miles and Snows Model Analyzers tends to fit in the best, as per the analysis of HRM practices in the French case.

Earlier Defender strategy was adopted and the research showed that the French are gradually moving towards or rather adapting the SHRM practices now.

Justification: The result depicts a progression of strategic HRM practices and a regression of administrative HRM practices (i.e. administrative HRM practices recorded a clear decline). It implied that SME can also adopt flexible HRM practices.

Another point that came up was that a Hybrid Model is universally being adopted by most of the French SME s , the model signifies that the French are more keen towards being Analysers.

Analyzers are organizations

1. Which operate in two types of product-market domains, one relatively stable, the

others changing. 2. In their stable areas, these organizations operate routinely and efficiently through use of formalized structures and processes. 3. In their more turbulent areas, top managers watch their competitors closely for new ideas, and then rapidly adopt those which appear to be the most promising. Basic strategy set:

A mixture of products and markets, some stable, others changing Successful imitation through extensive marketing surveillance Avid follower of change Growth normally occurs through market penetration Growth may also occur through product and market development

Characteristics & behaviour:

Dual technology core, moderate efficiency Dominant coalition is marketing, applied research, and production Planning is both intensive and comprehensive Structure is matrix, functional and product Control difficult; must be able to trade off efficiency and effectiveness

Coordination is both simple and complex Managerial is dual efficiency versus past, effectiveness versus similar organizations

Justification:

The result signified that the Hybrid HRM Model is particularly important in the analysis of HRM practices in the French case, since it appears like a transitory cluster between administrative HRM and strategic HRM. Hybrid HRM Model is a system of hybrid HRM which draws from both HRM
systems carried by companies whose strategy is based on differentiation or lowers costs.

It was also observed that the organizations choice of HRM practices depends on the coercive power exerted by its external actors and that choosing a flexible model as the SHRM is rather hesitant in France and raises an incremental change rather than radical. Another explanation concerns the hybridization of HRM practices which could also be resulting from a compromise between the various firms stakeholders, because of contradiction between SHRM principals with cultural values of the French.

**Based on Porters Model out of the 3 strategies i.e. strategies of differentiation, of costs and of focus, the French can be best related to the Strategy of Focus. The company which pursues a strategy of focus will adopt an intermediate model which mixes the assets of the two preceding strategies. This type of company will be inclined to favour, a system of hybrid HRM which draws from both HRM systems carried by companies whose strategy is based on differentiation or lowers costs.