HRM and performance: the vulnerability of soft HRM practices during recession and retrenchment

• Published date: 01 November 2016
• Author: Hugh Cook,Christopher Forde,Robert MacKenzie
• DOI: http://doi.org/10.1111/1748-8583.12122
• Date: 01 November 2016

HRM and performance: the vulnerability of soft

HRM practices during recession and retrenchment

Hugh Cook, Leeds University Business School

Robert MacKenzie, Karlstad University

Christopher Forde, Leeds University Business School

Human Resource Management Journal, Vol26, no 4, 2016, pages 557–571

This multi-method case explores how change in HRM implementation can impact performance metrics in a

recessionary climate. Qualitative HR outcome data are mapped against financial metrics to explore adoption

of hard-line HRM practices in a major UK retailer. Despite record profits throughout the recession, the

organisation responded strategically to worsening conditions in the labour market, firstly to maintain

operationalflexibility, but then to opportunistically enlargejobs and intensify work to help achieveimmediate

gains in financial metrics,including a gain of 37 per centin profit per employee over3 years. These gainswere

achievedby derailing commitment-basedapproaches to HRM, pointingtowards the vulnerabilityof soft HRM

systems during timesof austerity or retrenchment.

Contact: Dr Hugh Cook, Lecturer in Employment Relations and HRM, Leeds University Business

School, MauriceKeyworth Building, Leeds LS2 9JT, UK. Email: bushstc@leeds.ac.uk

Keywords: financial performance; retail; recession; commitment

INTRODUCTION

This study sheds light on how the changing implementation of HRM practices impacts

immediate financial metrics in a context of recession. Market discipline may drive

HRM decisions (Thompson, 2011), and publicly listed firms are increasingly influenced

by shareholder value metrics (Appelbaum et al., 2013); however, as seen in this article, such

imperatives can lead to the derailing of a commitment-focused model of HRM. Recessions not

only foster HR retrenchment measures for firm survival (Teague and Roche, 2014) but also

create labour market changes which typically alter the power balance in HRM dynamics,

providing opportunity to increase work intensity in order to decrease labour costs. This article

aims to elaborate on the links between HRM implementation and recession to show how

diminished labour market power is capitalised upon to impact positively on short-term financial

value metrics. The article contributes to debates around HRM outcomes of publicly listed firms

at the workplace level, and the potential for recessionary changes to the labour market to push

firms away from commitment-focused HRM and towards more hard-line practices.

An embedded single case study involving semi-structured interviews complemented by

documentary data and company financial metrics was conducted at Ultico,

1

aleadingUK

retailer.The research traces Ultico’sstrategic HRM response to changesin consumer behaviour

associated with thepost-2008 recession. Whilst no compulsory redundancies were required,a

major reduction in employee turnover created an unexpected obstacle for management

strategy, in terms of implementing changes to shiftpatterns across the UK business, combined

with a programmeof store expansion. In turn, the contextof high unemployment also fostered

a change in HRM dynamics, which facilitated a strategic response that abandonedthe hitherto

espoused dedication to commitment-focused HRM. Rather than merely compensating for the

potential impactof the recession, changes in HRM practicescontributed to a major increase (37

per cent) in profitper full-time-equivalent (FTE)employee. Qualitative datauncover the detail

HUMAN RESOURCEMANAGEMENT JOURNAL, VOL26, NO 4, 2016 557

©2016 John Wiley& Sons Ltd

Pleasecite this article in pressas: Cook, H., MacKenzie,R. and Forde, C. (2016).‘HRM and performance:the vulnerabilityof soft HRM practicesduring

recessionand retrenchment’.HumanResourceManagement Journal,26: 4, 557–571

doi: 10.1111/1748-8583.12122

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