2022代写书HRM Essay VIRTUAL HR: STRATEGIC Human RESOURCE manangement i
VIRTUAL HR: STRATEGIC Human RESOURCE manangement in THE 21st CENTURYDavid
This article explores the emergence of virtual HR in organizations as aresponse to the increased presence of external structural options to performHR services as well as the growing sophistication of information technologies.We examine the motives that are encouraging HR managers to implementthese virtual arrangement and, drawing from transaction cost economicsand the resource-based view of the firm, we present an architecturalframework that can be used to understand and map the underlying structureof virtual HR. Theoretical and research implications are discussedthroughout the article.
INTRODUCTIONStrategic human resources management (SHRM) in the 21st century. Itsounds so futuristic. But as the saying goes, the future is now. The pressuresand priorities of HR in the new century are already widely known today. Thelandscape is fairly clear: globalization, diversity, information technology, intellectualcapital, and the like are at once increasing organizational variation andproviding a catalyst for innovative approaches to collaboration and integration.As the pace of change accelerates, product life cycles are getting shorterand this places a premium on organizational flexibility, capability, and rapidresponse. Firms compete less on products and markets and more on eompetenties,relationships, and new ideas. Talent-if not the rarest of commodities-isamong the most resilient, renewable, and adaptive. People are an organization’smost important asset. But you’ve heard all that or you wouldn’t bereading this.Direct all correspondence to: David P. Lepak, Robert H. Smith School of Business, Department of Managementand Organization, University of Maryland, 3341 Van Munching Hall, College Park, MD 20742. E-mail:[email protected] Resource Management Review, Copyright 0 1998Volume 8, Number 3, 1998, pages 215-234 by JAI Press Inc.All rights of reproduction in any form reserved. ISSN:1053-4822216 HUMANRESO~RCEMANAGEMENTR~IEW VOLUME 8, NUMBER 3.1998In this article, we focus on how the HR function is being structured to helpfirms compete as we approach the 21st century. Specifically, we explore thenotion of virtual HR: a network-based structure built on partnerships andtypically mediated by information technologies to help the organization acquire,develop, and deploy intellectual capital. To do so, we first examine a setof four objectives in HR and use this as a foundation for discussing why outsourcing,partnerships, and other forms of virtual HR have become so prevalent.Next, we place virtual HR within the context of organization theory anddiscuss some of the enabling mechanisms of information technologies. Third,#p#分页标题#e#we present a model of how firms can begin to map their portfolio of HR activitiesinto an overall architecture of virtual HR. Finally we offer some directionsfor future research in SHRM.People, Pressures, and PrioritiesTo understand the nature of virtual HR within firms, it is important tounderstand the factors that contribute to an increased reliance on outsourcing,partnerships, and other forms of network based structural arrangements. Ingeneral, the emergence of virtual HR can be seen as a result of the oftenincreasing demands placed on the HR department as organizations continue tostrive to sustain a competitive advantage. More to the point, as firms attemptto compete through people, HR functions are being called on to pursue fourseemingly contradictory objectives. First, HR depa~men~ are being asked tobe much more strategic (Snell, Youndt, & Wright 1997). As Alvares noted:The bottom-line business of human resources must be the delivery and/ordevelopment of human capital that enable the enterprise to become morecompetitive, to operate for maximum effectiveness, and to execute its businessstrategiess uccessfully( 1997,p. 9).For about the past decade or so, the mantra of HR has been “be a strategicbusiness partner.” The importance of involving HR in development, planning,and implementation of competency-based strategies has been well-communicated(Beatty & Schneier 1997; Ulrich 1997). Even so, a recent study of 1050companies by the Hackett Group (1998) shows that HR professionals typicallydevote less than a third of their time to the most crucial strategic HR initiatives(e.g., employee development, hiring the best people, training, career management,performance management) (PR Newswire 1998). Instead the bulk oftheir time is still consumed with lower value-added, routine activities. Whilethe word has been enthusiastically received, most HR functions have a way togo to be full strategic partners.
In addition to-or perhaps part of-this strategic role, HR functions arealso being asked to provide a greater amount of flexibility in the programs,policies, practices, and services they provide (Wright & Snell 1998). Achievingstrategic fit in HR today rarely means stable fit and, increasingly, strategicmanagement means change management. According to the 1,700 HR professionalsresponding to a 1997 ~~r~ey ~~~urn~~ Resource B-ends Report, workVIRTUAL HR 217in organizational change and involvement with senior management in businessstrategy contributes substantially more to an organization than do traditional#p#分页标题#e#HR administrative activities (Employee Benefit Plan Review 1997).When asked to name the skill whose importance had increased most in recentyears, these respondents indicated that change management was their clearchoice.Third, HR functions are being asked to take a hard line on costs. Just aseffectiveness has its twin priority of efficiency, strategic HR has its complementof cost containment. The typical organization spends approximately$1,500 annually per employee on HR-related issues, but this amount can doubleor triple in less efficient organizations (Employee Benefit Plan Review1997). A portion of these costs are associated with the development and implementationof HR systems and processes themselves, but a good chunk is overhead.Managers are increasingly being asked to prioritize where they can bestutilize their time, talents, and resources, and where they can find places to cut.For example, the now-famous turnaround of Continental Airlines began withan edict from CEO Gordon Bethune that its HR-based strategy had to be selffunding-its marginal cost had to be zero (Carrig 1997). Such cost restrictionsare commonplace in strategic HR; the link to strategy is tethered by increasedaccountability.Finally, while everything else around them may be changing, HR functionsare still being asked to maintain their role as service provider to managers andemployees. The roots of HR, of course, go back to these technical-functionalroles, and responsibility for employment relationships will likely continue tobe the foundation of HR (Ehrlich 1997; Kerr, & Von Glinow 1997; Ulrich 1997).In short, HR departments are charged with simultaneously being strategic,flexible, efficient, and customer-oriented.Anything, Anytime, AnywhereMeeting these objectives is a pretty tall order for HR managers, but one thatparallels what nearly all organizations face in today’s business environment.Compared to hierarchical organizations of the past that held all assets internally,today’s firms are increasingly organized as networks, focusing on theircore competencies and partnering with others to expand their strategic scopeand adaptability in turbulent environments. Some have referred to these asvirtual organizations (Ashkenas, Ulrich, Jick, & Kerr 1995; Davidow & Malone1992; Miles & Snow 1992; Powell 1990; Snow, Lipnack, & Stamps 1998).The concept of virtual organization borrows from the information technologyliterature where computers use peripheral storage devices such as a harddrive to augment its active memory (i.e., RAM). The beauty of “virtual memory”is that operating systems (e.g., Windows) manage the swapping of databetween the hard disk and active storage so, to the user at least, it appears asif the computer has far more active memory than it actually does (Raymond#p#分页标题#e#1994). The analogy between virtual memory and virtual organizations shouldbe obvious. Firms concentrate on their core competencies and outsource pe218HUMAN RESOURCE MANAGEMENT REVIEW VOLUME 8. NUMBER 3, 1998ripheral work to other firms, all the while managing the network so that theircustomer views the relationships as seamless (Davidow & Malone 1992; Hamel,DOZ, & Prahalad 1989; Mohrman & Lawler 1997). When done successfully,these virtual firms are able to simultaneously increase efficiency, flexibility,and responsiveness. And in these cases, it may truly appear that the organizationcan do “anything, anytime, anywhere.”While interest in virtual organizations has primarily focused on the firm asa whole, a parallel transformation has been occurring within HR. Indeed,many executives are rethinking how they organize the HR function to make itmore flexible and focused while still providing a full complement of HR services.In an attempt to meet their strategic objectives, many HR functions arebecoming more virtual in nature, increasing their reliance on external sourcesto perform part, if not all, of these HR activities (Brenner 1996; Snell 1994;Stewart 1996).From a strategic HR standpoint, this makes logical sense. Outsourcing canhelp firms minimize costs by externalizing administrative tasks that do notcontribute directly to a firms competitive success; thereby enabling HR departmentsto focus on value-creating activities (Alvares 1997; Car-rig 1997; Davidson1998; Quinn & Hilmer 1994). As a result, external relationships may helpfirms meet the often conflicting demands of efficiency and strategic support. Inaddition, outsourcing allows managers to allocate resources on an ad hoc orjust-in-time basis. Rather than investing significant resources to establish andmaintain an in-house capability to provide a HR service that may be neededinfrequently or for only a short period of time, firms may turn to externalspecialists to provide the services when needed. Further, as the needs of theorganization change, managers can contract with external vendors to performspecialized services that the organization cannot perform internally (Dess,Rasheed, McLaughlin, & Priem 1995). Indeed, the growth of professional servicemarkets has helped HR staffs shift from traditional specialists to moreflexible generalists capable of responding to broader business issues; thereby,enabling HR professionals to meet their charges of strategic focus and customerresponsiveness. Not surprisingly then, recent evidence suggests that between77 and 93 percent of firms outsource at least part of their HR functionand another significant percentage (56 percent) plans to increase the role ofoutsourcing in their HR functions (Davidson 1998; Jeffay, Bohannon, Laspisa#p#分页标题#e#1997).TOWARD A THEORY OF VIRTUAL HRDespite the increasing role of outsourcing and other forms of externalizationwithin HR, researchers still know very little about virtual HR. To frame virtualHR for purposes of research, it might be useful to position it within existingliterature of organization theory. From one perspective, virtual HR can beviewed as a special case of organizations trying to cope with uncertainty. AsVIRTUAL HR 219organizations encounter environmental complexity, they traditionally havetended to differentiate their internal structures and created specialized subunitscapable of responding to distinct aspects of the environment. The morevaried the environment, the more extensive the differentiation (Scott 1992).This model for organizing was ideal in rigid hierarchical firms striving to lowercosts and increase efficiency. In today’s business environment, however, uncertaintystems as much from technological and market change as it does fromcomplexity. Simply differentiating within the firm is often not sufficient fortoday’s virtual structures.To adapt to en~ronmen~l and competitive pressures, virtual organizationshave altered the fundamental nature of structural differentiation. Whereashierarchical firms tended to differentiate within their incorporated boundaries,virtual organizations extend beyond their boundaries to establish collaborativestructures with external specialists (cf. Baker 1992). Within the HRfunction, the growth of professional employer organizations (PEOs) and otherHR service firms has provided structural alternatives for managers that werenot available even a few years ago. Essentially, these options enable HR functionsto increase their differentiation by partnering with specialists outside thefirm. Relying on external specialists allows HR to simultaneously respond toincreasing complexity while remaining nimble enough to cope with the increasingpace of technological and market change.Yet while outsourcing and other forms of pa~nership may increase both thescope and flexibility of structural di~erentiation, they make structural integration-the flip side of differentiation-that much more challenging (Galbraith1973; Lawrence & Lorsch 1967). As HR becomes more externally differentiated,HR departments must devise innovative methods for coordinating andaligning dispersed activities. Whereas firms traditionally have relied uponmanagers, task committees, liaisons, and the like to coordinate across increasinglyspecialized subunits, information technology (IT) now provides HR witha much more powerful mechanism to support and sustain externalized HRrelationships (cf. Davidson 1998; James 1997; O’Connell 1996).Snell, Pedigo, and Krawiec (1995) suggested that IT might influence structural#p#分页标题#e#integration within HR in three si~i~c~t ways. First, IT can influence theoperational aspects of HR by streamlining operations and alleviating much ofthe administrative burden. For example, advances in IT may enable firms toconnect with outside parties capable of providing HR services more efficientlyand effectively than they could provide in-house. Even when these services areretained internally, IT can help reduce costs and improve productivity byautomating routine tasks and practices, (Groe, Pyle, & Jamrog 1996; James1997). The 1997Survey ofHuman Resource B-ends conducted by Aon consultingand the Society for Human Resource Management showed that 62 percent offirms use information technology to automate compensation and an additional22 percent say they are considering using it for this purpose. Similarly, over 33percent of firms use IT for benefits administration with an additional 40 percentconsidering it for that purpose (Employee Benefits Plan Review 1997).220 HUMAN RESOURCE MANAGEMENT REVIEW VOLUME 8. NUMBER 3.1998Second, IT can influence relational aspects of HR by increasing the timelinessand service levels with employees and managers, as well as outside partners(Snell, Pedigo, and Krawiec 1995, p. 163). By providing line managers andemployees with remote access to HR data bases and information, and increasingtheir ability to connect with other parts of the corporation as well asoutside service providers, managers and employees can perform HR activitiesthemselves; thereby reducing response time and improving service levels(Brockbank 1997; O’Connell 1996; Wilcox 1997). In addition, IT often facilitatesthe sharing of data and information necessary to establish and maintainrelationships with external HR partners that provide customized services tohelp meet a firm’s unique needs. Not surprisingly, the 1997 Survey ofHumanResource B-ends indicated that use of information technology has increasedmanagement’s satisfaction with HR in 43 percent of responding firms. Similarly,use of information technology had increased employee satisfaction withHR in 29 percent of firms.Finally, perhaps the most dramatic impact of IT on structural integrationwithin HR is its transformational role. As IT has enabled people to communicateacross geographic boundaries and share information, it has eliminatedbarriers of time and space. As a consequence, IT has played a pivotal role insupporting virtual teams and network organizations. For example, NorthernTelecom (Nortel) relies extensively on the Internet, active Web pages, teleconferencing,and a data network to facilitate teamwork from over 350 locations inmore than 60 countries (Solomon 1998). Similarly, British Petroleum uses acombination of PeopleSoft, Oracle, and NetDynamics to integrate its HR administration#p#分页标题#e#and development across more than 70 countries (PR Newswire1998).The bottom line is that information technology is an invaluable tool forcoordinating and integrating the dispersed activities that increasingly extendbeyond the boundaries of traditional hierarchies HR. The basic principles oforganizational design-differentiation and integration-remain the same.But they are manifesting themselves in substantially different ways todaythan at the beginning of the century.The Downsides of Virtual HRAs firms continue to push their structural limits it is clear that HR can bedeployed in a multitude of ways to achieve its different objectives. But for all ofthe benefits of outsourcing and other forms of virtual arrangements, there arepotential downsides as well. Too often, outsourcing decisions in HR are drivenby cost considerations without an eye toward broader strategic issues. Asnoted above, HR departments are often charged with becoming more strategicand efficient. And while executives may recognize the opportunity to cut overheadcosts-and purchase skills or services from an outside source-theirfocus tends to be short-term, and their tactics often backfire during implementation.According to the Hackett Group’s (1998) study,VIRTUAL HR 221Outsourcing remains a major HR cost. The cost to perform outsourced fimctionscan run as high as $415 per employee annually, on average, or 28percent of total per-employee HR costs. Yet only 1.6 percent of HR time istypically spent managing these third-party suppliers, and the expected reductionin costs often doesn’t materialize. The white lie of outsourcing isthat it’s a silver bullet guaranteed to lower costs and reduce the worry . . .Instead, costs often increase and headaches multiply because outsourcing isundermanaged and poorly monitored.In addition to cost considerations, the potential loss of operating control overthe.specific facets that are externalized is a significant possibility (Dess et. al.1995). As firms continue to enter contracts and partnerships with externalparties they may find themselves locked into specific arrangements, making itdifficult to adapt to changing organizational needs. Related, a continued relianceon external sources may erode HR’s internal ability to execute activitiescritical to competitiveness (cf. Bettis, Bradley, & Hamel 1990). In these cases,HR may actually decrease its ability to meet and support their firm’s strategicobjectives as well as limit its flexibility if outsourcing is pushed too far orpoorly managed.While the notion of virtual HR is inherently appealing, its managementrequirements are at once interesting and potentially confusing. How do wedistinguish between activities that are done internally versus those that are#p#分页标题#e#done externally? How do firms coordinate across these activities? How do firmseffectively manage the different facets of virtual HR to meet their objectives?What is the nature of the relationships? Are we talking about outsourcingtasks, human capital, technology, processes, or practices? How does this allrelate to strategic considerations? There are a lot of questions about the managementof virtual HR, but they all center on a common theme: the challenge ofvirtual HR lies in managing the web of relationships and the permeable boundariesthat separate organizations. And as firms increasingly rely on internaland external arrangements to perform their HR activities, research and theoryare needed that help us understand the overall architecture of virtual HR; thatis, how the various components of virtual HR fit together and are managed tomeet HR’s strategic objectives (cf. Davidson 1998; Nadler, Gerstein, & Shaw1992).Mapping the Architecture of Virtual HRFortunately, researchers have made great strides in understanding whichcomponents of a firm’s HR architecture should be managed internally or externally.These “make” or “buy” decisions are consistent with research in transactioncost economics (Williamson 1993) and the resource based view of the firm(Barney 1991; Hamel & Prahalad 1994) which reinforce the fact that there area host of structural options within virtual HR to meet their strategic objectives.Advocates of transaction cost economics (e.g., Coase 1937; Williamson1975), for example, propose that the ideal governance mode or structural arrangementfor the management of assets or resources depends on the extent to222 HUMAN RESOURCE MANAGEMENT REVIEW VOLUME 8, NUMBER 3. 1998which they are specific to a particular firm. In the context of HR, this perspectivesuggests that firms are more likely to internally deploy HR activities astheir firm-specificity increases. Adopting a resource-based perspective, Hameland Prahalad (1994) suggest that firms should focus their efforts on resourcesthat are core to a firm’s competitiveness. Similarly, Quinn (1992) suggests thatfirms should outsource those activities that are not critical to a firm’s success;thereby freeing up resources to focus on core competencies. Though the focus ofthese theoretical perspective vary, we believe that they converge on two dimensions-value and uniqueness-that serve as strategic criteria for determiningwhich HR activities are candidates to be externalized and those whichare not (Lepak & Sell in press). We discuss these dimensions more fullybelow.Value of HR Activifies. Organizational resources (i.e., skills, knowledge, technologies,relationships, tasks, functions, etc.) are valuable when they help a#p#分页标题#e#firm enact strategies that improve efficiency and effectiveness, exploit marketopportunities, and/or neutralize potential threats (Barney 1991; Porter 1985;Ulrich & Lake 1991; Wright & McMahan 1992). Thus, the value of an HRactivity depends on its ability to help firms achieve a competitive advantage ordevelop core competencies. Functions that are not valuable (i.e., critical or coreto firm competitiveness) are candidates to be externalized while those that arevaluable are likely to be retained internally (~hesbrough & Teece 1996; Saunders,Gebelt, & Hu 1997).The key question then is what makes something valuable. On the one hand,value is “the amount that buyers are willing to pay for what a firm providesthem” (Porter 1985, p. 38). Thus, HR activities must somehow contribute towardcustomer-based perceptions of value (Beatty & Schneier 1997; Hamel 8zPrahalad 1994; Snell, Youndt, & Wright 1996). In the case of HR, there are ahost of proximate or “functional” customers (i.e., managers, employees, jobapplicants, contractors, partners, etc.) who depend directly on HR’s services.But ultimately strategic value extends beyond HKs own customers and requiressatisfying the needs of the customers of the firm as a whole. The greaterthe benefit to the customer, the greater the value of the activities.In addition to benefits derived through HR activities, however, the value of aHR activity is also influenced by costs accrued in its use (Jones & Hill 1988;Jones & Wright 1992). In this light, we can conceive of value as the strategicbenefits derived from a particular HR activity relative to the costs associatedwith its deployment. For example, though extensive internal training mayhelp firms create a highly talented workforce, doing so requires a significantinvestment of time and money. These costs may diminish the utility or valuegenerated from training. Similarly, in many companies’ benefits administrationplays a much smaller strategic role than does the training function, whichmay directly enhance the skill base of a firm. This is not to say that benefitsadministration is not important, but rather its strategic value is likely to beless. There may be firms, however, in which the effective deployment of benefitsad~nistration is a critical component of HR’s success. This possibility raisesVIRTUAL HR 223an impo~ant point-the extent to which a HR activity such as ree~itme~t,training, compensation, or performance appraisal is valuable is likely to varyfrom firm to firm depending on the strategic context of each firm.Uniqueness of W? Activities. Along with value, the strategic architecture ofHR builds on the uniqueness of HR activities (cf. Hamel & Prahalad 1994;Quinn & Hilmer 1994). Combining transaction cost economics and the resource-#p#分页标题#e#based view of the firm, uniqueness can be thought of in terms of firmspecificity(Williamson 1991) or scarcity in the external market (i.e., rare>(Barney 1991). For example, companies such as Disney, Southwest Airlines,and Nordstrom frequently have been singled out for their world-class employeeorientation and culture development programs. These programs are not onlyunique, they are difficult to imitate.As noted in the transaction cost perspective (Williamson 19751, firms aremore likely to internalize activities when the transaction costs of doing so arelower than those costs that would be incurred through relying on open marketrelationships. As HR activities become more idiosyncratic to a particular firm,relying upon an external arrangement may prove infeasible and/or incur excessivecosts since these activities are not likely to be readily available in the openmarket. And if rare, they may be extremely costly to acquire, thereby diminishingtheir potential value. In direct contrast, HR activities that are generic orstandardized across firms may not justify the costs of their internal deployment.Since external vendors or specialists may provide these services more effrciently,externalization may be appropriate for such activities. In the context ofvirtual HR, these theoretical perspectives suggest that managers will forgo thedeployment of WR activities to the market when it is more efficient to do so.In addition to the uniqueness of any single HR activity or resource, uniquenessmay also stem from the firm-specific combination of different HR activities.Configurational views of HR highlight the importance of combining HRactivities for competitive advantage (Delery & Doty 1996; Lepak & Snell inpress). For example, extensive training and socialization, when coupled with adevelopmen~l performance appraisal, may have the long term effect of developinghuman capital that is quite unique to a particular firm, more so than ifeither HR practice were used in isolation. In the context of virtual HR, thisraises an important caveat for outsourcing and partnering: externalizing partsof an overall HR con~~ration may dimi~sh the uniqueness of the entiresystem, thereby jeopardizing its strategic contribution.Building on these points, we can conceive of HR activities as spanning twocontinua (cf. Carrig 1997). On the one hand, HR activities can range from thosethat are directly instrumental for achieving organizational objectives (i.e., highvalue) to those that may be primarily administrative or transactional in nature(i.e., low value). Further, these activities may be routine (i.e., low uniqueness)or extremely idiosyncratic (i.e., high uniqueness). As shown in Figure 1, whenwe combine the dimensions of value and uniqueness, we can begin to understand#p#分页标题#e#how virtual HR can be structured to achieve the four strategic charges ofenhanced efficiency, flexibility, strategic focus, and customer-responsiveness.224 HUMAN RESOURCE MANAGEMENT REVIEW VOLUME 8. NUMBER 3.1999HighUniquenessIdiosyncraticHR activitiesCoreHR activitiesPeripheralHR activitiesTraditionalHR activitiesLow HighValueFigure 1. Virtual HRWhen HR activities are both valuable and unique, we can view them as coreactivities that firms will likely deploy internally to achieve competitive advantage(cf., Barney 1991; Stewart 1997). This makes intuitive sense when weconsider that these activities may not be available in the external market;thereby precluding externalization. In addition, these functions are valuable;that is, their strategic benefit exceeds the managerial and bureaucratic costsassociated with their use. As a result, firms have strategic incentives to retainand internally deploy these HR activities (Prahalad & Hamel 1990; Reed &DeFillippi 1990). For example, given their unique needs and the clear strategicvalue of its employees, Microsoft expends a significant amount of time, money,and energy to ensure that its recruitment and selection activities generate jobcandidates capable of helping Microsoft stay on the cutting edge. Given theirlarge volume of applicants, this is no simple task. Yet, while recruitment andselection would likely be deemed core at Microsoft, the value of investing inrecruitment and selection might be significantly less in another firm. In otherwords, though the characteristics of HR activities that fall within this quadrantmay be the same across firms (i.e., valuable and unique), the particularset of HR activities that will fall within this quadrant will likely vary from firmto firm.As shown in figure 1 valuable HR activities that are more generic andwidely spread throughout an industry are unlikely to occupy core HR space.These traditional aspects of HR are important for most firms but they are oftenfairly standardized. Rather than develop these HR activities internally, thegrowing supply of external vendors, advances in information technology, andincreasing sophistication of HR software and databases provide numerousoptions for HR managers to perform these activities. For example, many firmsare pursing on-line career development centers that enable employees to useVIRTUAL HR 225computers and the Internet to map their own career options (Warner & Keagy1997). While these systems may be valuable to a firm, their development anduse do not require significant internal investments. In an effort to allocatelimited resources toward the most valuable HR activities, organizations maypurchase and retain standardized HR activities and systems from external#p#分页标题#e#sources to realize significant savings in developmental expenditures whilegaining instant access to a wide variety of capabilities (Quinn 1992).Compared to traditional HR activities, generic activities that have morelimited value-added may be treated as peripheral. As the information neededto develop and implement these activities becomes more codified in industrystandards, design specifications, and the like, external sources may prove amore efficient source to provide or design these services (Chesbrough & Teece1996). As a result, these HR activities are likely candidates to be outsourced toexternal vendors (Davidson 1998). For example, in today’s environment firmsmay contact companies such as Peoplesoft and Manpower to handle theirrecruitment and staffmg needs on a moment’s notice. As noted above, firms areincreasingly outsourcing administrative tasks such as payroll and benefits andpension administration that often do not require any firm-specific customization(Davidson 1998). This is a logical decision in those cases where theseactivities contribute little, if any, to the competitiveness of the firm. Relying onoutside vendors enables organizations to reduce overhead costs by accessingcapabilities from external specialists who can perform these activities moreefficiently.Lastly, when unique HR activities are not directly instrumental for creatingcustomer value, we can view them as idiosyncratic. For example, companiessuch as IBM, AT&T, and Ford long maintained a cadre of industrial psychologists,lawyers, and accountants to conduct personnel research for them. TheseHR research departments produced custom-made reports that were focused onstrategic decisions within HR and the firm as a whole. However, over time,most firms have drastically reduced or eliminated HR research functions becauseof their limited or infrequent strategic value. In their place, most firmshave established ongoing relationships with consulting firms (e.g., AndersenConsulting, Deloitte and Touche) and university-based research centers (e.g.,Cornell’s Center for Advance Human Resource Studies, USC’s Center for EffectiveOrganizations). Partnerships may provide a structural alternative thatmeets the firm’s unique requirements without drawing resources away fromother, more directly valuable functions. As with a contracting approach, establishinga partnership allows a firm to capitalize on an external party’s specializedknowledge without incurring the costs of internal development. However,in contrast to a short-term contractual arrangement, ongoing partnershipsimply that firms and external parties work together over time to co-design andexecute HR activities that meet the unique needs of a firm.Applying the Architecture of Virtual HR#p#分页标题#e#As this discussion illustrates, a particularly important challenge for managersadopting an architectural perspective to map virtual HR is determining226 HUMAN RESOURCE MANAGEMENT REVIEW VOLUME 8. NUMBER 3.1998TABLE 1Levels of Virtual HRLevelHR Sub-functionsHR PracticesPrimary OrientationDecisions regarding the structuring of HR sub-functions such asHR planning, recruitment/staffing, training and development,performance appraisal, and compensation.Decisions regarding the structuring of HR practices within an HRsub-function such as (within staffing) planning, college recruitment,interviewing, EEO/AA record keeping, test administration,selection decisions.which HR activities are most and least important from a strategic point of viewand deciding the most appropriate structural alternative for their deployment.In other words, managers must determine which activities fall into whichquadrant. However, there is not likely to be a single dominant architecturethat all firms should emulate or a listing of which HR activities should bedeployed in each quadrant. Rather each firm’s architecture will likely differ, aswhat is core in one firm may be peripheral in another. For example, in someorganizations recruitment, selection, and training may be core while compensationand benefits are peripheral and performance appraisal is more traditional.In other firms, compensation and performance appraisal may be themost critical facets of the HR function. The possible combinations as to whatHR activities within the architecture of virtual HR fall into each quadrant areendless. To complicate the management of the HR architecture further, firmsmust simultaneously make these distinctions at multiple levels of analysis. Asshown in Table 1, HR can be virtual at either the sub-function or practiceslevels.At the sub-function level, firms may differentiate how they manage theentire HR department. As table 1 indicates, this level of analysis involvesdecisions pertaining to the deployment of entire sub-functions (e.g., recruitment,training and development, compensation systems, etc.>. For example,managers may decide to handle all staffing activities internally, outsource allcompensation, and partner with external vendors to develop and conducttraining programs.While some firms may outsource entire sub-functions, it may be more likelythat firms will handle some activities within a particular sub-function internallywhile outsourcing others. In other words, in addition to the sub-functionlevel of analysis, firms must make decisions regarding the individual practiceswithin each sub-function. For example, within the compensation sub-function,it is becoming more common for firms to maintain control over primary or final#p#分页标题#e#compensation decisions while outsourcing the administration of payroll andbenefits programs to external specialists and partnering with consulting firmsto conduct wage surveys and job evaluations. In contrast, some firms mayVIRTUAL HR 227HighUniquenessLowIdiosyncratic HR activities:Customized distancelearningCore Training Activities:Curriculum design anddevelopment; Proprietaryskills trainingPeripheral HR activities:Safety training, Basic skillstraining, Facilities~n~ernent~ CourseSchedulingTraditional HR activities:Course Management andday-to-day ~ini~~tio~LO%ValueHighFigure 2. Hypothetical Example of Virtual Traininginternally conduct their own wage surveys and job evaluations, believing thatthese practices are too unique and valuable to delegate to outside parties.These decisions regarding whether or not to outsource sub-unctions andpractices determine what a particular firm’s HR architecture will look like.And though firms may enact. similar architectures, as noted above, most architectureswill likely differ as factors influencing the value and uniqueness of HRactivities differ across firms. As a result, it is not possible to depict an idealarchitecture. However, to illustrate the broad applicability of this architecturalperspective we draw from companies as diverse as Corning, one the one hand,and Caribbean Hotel Management Services (CHMS) on the other, to discuss ahypothetical example of virtual training within HR. The hypothetical mappingof virtual training is shown in Figure 2.As noted above, those training activities that are deemed core to a firm’scompetitiveness are often handled internally. In many firms, for example, itwould be rare for a firm to abdicate overall responsibility for the direction andstrategic linkage of its training activities to an external party. Further, activitiessuch as curriculum design and development and certain forms of proprietaryskills training (in patented technologies, processes, protocols, etc.) wouldlogically be reserved for internal organization and administration.Similarly, training activities that are repeatable and/or broadly deployable,though perhaps not firm-specific, also would likely be handled internally (if thevalue generated justifies its internal expense). For example, many firms wouldlikely dedicate a staff of professionals to handle course management activities.While the content of training programs might change, this staff would haveresponsibility for general oversight and coordination of day-to-day operationsof the training function.228 HUMAN RESOURCE MANAGEMENT REVIEW VOLUME 8, NUMBER 3.1998Perhaps the biggest gray area of virtual HR concerns non-proprietary activities#p#分页标题#e#that have considerable overhead costs. In these instances, both contractingand partnering are viable options. The key difference between these twostructural options is that contractual activities are essentially sent out of thefirm to be performed by an external specialist (and only their product is purchasedby the firm) while partnerships are co-developed and/or performed byexternal specialists internally. The choice between these two essentially comesdown to whether the needs are firm specific or not.In this light we can see that there are a host of low-value activities involvedin training that might be prime candidates to be outsourced. Firms may contractout to external providers the content and delivery of training programssuch as language training for expatriates, safety training, stress management,time management, basic skills training, and the like. These types of trainingprograms are often readily useful to most firms without any firm-specific considerations.Further, facilities management, catering, hotel administration,transportation and scheduling are all necessary but cumbersome aspects oftraining overhead. Some companies still absorb most or all of these costs tomaintain complete control over their corporate university campuses, but increasinglyfirms are opting to cut costs by externalizing these activities.While contracting may be an ideal option for generic non-proprietary activities,a partnership may be more appropriate when the outcome or product ofthe relationship needs to be customized to the firm’s specific needs. For example,the partnership between Caribbean Hotel Management Services (CHMS)and Hocking College extends the idea of joint design and administration, andalso shows the power of information technology in a virtual setting (Theibert1996). CHMS was faced with a situation where it had talented workers withoutthe specific skills they needed to perform well and, worse, the firm islocated in St. Lucia, in the Caribbean ocean. Unable to send its workers toschool overseas, CHMS contracted with Hocking College in Ohio to establish apartnership to provide virtual training. In this arrangement, at the beginningof each academic quarter, Hocking sends a professor to St. Lucia to providetailored training and development for CHMS employees. Once the on-sighttraining is complete, CHMS’s employees continue with their coursework at adistance, using info~ation technologies to submit their lessons and communicatewith their professors at Hocking (Theibert 1996). Through this partnership,CHMS is better able to meet its special training needs by tapping intoexpertise of Hocking’s professors without having to internally develop its owntraining program.Similarly, Corning has developed a partnership with the College Center of#p#分页标题#e#the Finger Lakes (CCFL) to split responsibility for delivering various trainingprograms (DeRose & McLaughlin 1995). In this partnership, CCFL providesperipheral or non-critical training courses and programs while Corning’s internaltraining staff focuses on activities more central to the firm’s competitiveadvantage as well as the overall design of the training program. More importantly,to ensure that CCFL is able to meet Corning’s specific needs, membersfrom CCFL participate in Corning’s strategic training meetings and a CorningVIRTUAL HR 229manager is assigned to oversee the partnership. By establishing a partnershiprather than simply contracting out these training courses, CCFL is ableto customize the training design and delivery to Corning’s idiosyncraticneeds.While this example of virtual training is somewhat hypothetical, it underscoresthe changing nature of HR in many firms. As noted by Ulrich (1997,p. 51, “For years, HR professionals and theorists have emphasized building HRpractices within the firm. The shift to a customer focus redirects attention fromthe firm to the value chain in which it is embedded.” While HR departments inthe past have emphasized functional specialties (i.e., staffing, compensation,EEO regulation), as organizations require greater strategic focus, customerresponsiveness, flexibility, and efficiency, many HR departments are recastingthe way they operate. And as HR becomes more virtual, managing processes,information, and relationships are likely to take on a greater role.DISCUSSION AND CONCLUSIONIn this article we have tried to highlight how the HR function is being structuredas firm’s move into the 21st century. Building on the structural aspects ofdifferentiation and integration, we have explored the notion of virtual HR as aresponse to the strategic charges of being more efficient, flexible, strategic, andcustomer-oriented. And while the transition toward virtual HR presents agreat opportunity for SHRM researchers, we believe that there are severalspecific research issues that are likely to increase in importance in the comingyears.The Changing Focus of l-03 (Practices, Processes, or Relationships?). Perhapsthe most direct research implication for SHRM concerns the actual focus of HRin a virtual environment. Managing virtual HR likely requires HR managersto gain a greater mastery of information and relationships than ever before(Davidow & Malone 1992). As the boundaries of HR continue to expand, HRstaff will be required to alter their professional perspectives and view HRactivities in terms of their value added. And as HR departments continue torely on external parties to perform a greater portion of their activities, thoseprofessionals who remain will likely be called upon to facilitate and nurture#p#分页标题#e#these relationships to ensure smooth implementation. These pressures willrequire a shift in emphasis from reliably implementing valid practices to establishing,supporting, and enhancing the processes and external relationshipsthat directly help firms attain competitive advantage. In short, thechanging focus of HR is likely to require a substantially modified skill set thantraditionally employed by HR professionals.Similarly, as firms continue to push the limits of IT to achieve organizationalobjectives, we would encourage SHRM researchers to examine how IT canfunction not only as a cost reducing tool but as an asset that helps bettercontrol and coordinate across organizational boundaries. Though informationtechnologies have had a dramatic impact on HR, the potential uses of IT have230 HUMAN RESOURCE MANAGEMENT REVIEW VOLUME 8, NUMBER 3,1998not been explored or developed to their full potential. As noted by Snell, Pedigoand Krawiec (1995) IT may serve an operational, relational, and transformationalrole in HR. However, though we are only at the brink of understandingthe different uses of IT, technology investments too often focus solely on theirrole in reducing costs and automating tasks (James 1997). As we strive tounderstand how to better manage virtual HR, we must also gain better insightsin to how we can harness the potential of IT.Overcoming Barriers. HR activities are also notoriously intractable and oftenrepresent one of the major sources of bureaucratic inertia within firms. Once inplace, it is difficult to change a system that has both a practical and symbolicimpact on the organizational members. There will likely be a certain degree ofmanagerial resistance to these changes as well. For example, the continuedreliance on IT may serve as a threat in that IT may actually provide a mechanismto disband HR professionals altogether (Stewart 1996). Further, a potentialdownside for HR managers is that IT may enable line managers to solvetheir own HR problems, thereby diminishing traditional value added of HR (cf.Beatty & Schneier 1997). In this light, a significant charge for HR managersand researchers is to understand how organizational change processes can beused to implement virtual HR and overcome these obstacles. Researchers suchas Kotter (1995) and Ulrich (1997) have discussed how organizations can overcomeindividual resistance and successfully implement change efforts. Thatresearch could be expanded to help us understand how to successfully adopt avirtual structure in HR.
Managing the HR Architecture. As IT and external differentiation continueto increase in prominence in HR, SHRM researchers may need to approachHR as a multi-layered architecture consisting of an assortment of options atboth the sub-functional and practice level. The architectural frameworkdiscussed above highlights the fact that there are a host of structural optionsfor virtual HR. Yet, we still know very little about how to manage these structuralarrangements as a portfolio or system. Though the task of managinga single contractual relationship or partnership may not seem that complicated,as we consider managing multiple relationships, practices, and subfunctionsbetween different structural arrangements, managing the entire HRarchitecture can be a fairly daunting task. As this web of relationships assumesa more prominent role in HR, SHRM researchers may want to drawfrom network analysis and theory to better understand these arrangements(Brass 1995).HR managers must also keep in mind the firm’s strategic needs and objectives.For example, while internalization, the most traditional role of HR (i.e.,centralized operations), may support the strategic charge of organizationalefficiency, contracting, partnering, or purchasing HR support are options thatmay be more conducive to attaining flexibility and customer-responsiveness. Ifkeeping track of all these different facets of virtual HR were not difficultenough, as the competitive environment changes and organizations adapttheir strategic and operational approaches, what is core and peripheral inVIRTUAL HR 231virtual HR will likely change as well (Lepak & Snell in press). For example,HR managers may engage in peripheral activities that have no immediatestrategic value but might pay off in the future or HR managers may disbandHR activities that have become relatively obsolete due to environment or organizationalchanges. Research that examines these temporal aspects of valueand uniqueness in virtual HR would prove particularly valuable as SHRMresearchers strive to understand how the HR function can firm’s obtain andsustain a competitive advantage.We would also encourage researchers to explore the circumstances underwhich different combinations of internal development, partnering, contracting,and the like are most appropriate. In the past, SHRM researchers have focusedon identifying a specific set of practices and systems that are needed to helporganizations achieve a single strategic goal such as cost, quality, innovation,and the like. One of the aims of that stream of research is the creation of a listof best practices that are optimal in all situations, or at least for a givenstrategy. That research might be extended to the context of virtual HR to help#p#分页标题#e#us understand how to manage different structural combinations of HR activitiesin certain circumstances to enhance HR’s ability to meet its strategicobjectives. While there may not be an optimal HR architecture that applies toall firms, research that examines the positive or negative synergistic effectsstemming from combining different HR components in a firm’s virtual HRarchitecture would be especially useful to understand the linkages betweenvirtual HR, strategy, and firm performance.In conclusion, current trends concerning externalization and informationtechnologies suggest that HR in the 21st century may look dramatically differentfrom HR in the past. 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