Political [Personnel] Economy - a Political Economy Perspective to Explain Different Forms of Human Resource Management Strategies

By Nienhuser, Werner | Management Revue, January 1, 2004 | Go to article overview
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Political [Personnel] Economy - a Political Economy Perspective to Explain Different Forms of Human Resource Management Strategies


Nienhuser, Werner, Management Revue


Political [Personnel] Economy a Political Economy Perspective to Explain Different Forms of Human Resource Management Strategies**

A political economy approach to explaining the existence of different human resource strategies is developed in this article - in short: a political personnel economy. The starting point is a critical analysis of the abstinence of politics and power and the resulting explanation deficiencies of traditional microeconomic approaches and of the transactions cost theory. The Marxian labour process theories also discussed in this article, while certainly "political", primarily exhibit problems related to the theory of action as a foundation. A micro-analytical theory of action-based version of a political economy approach is therefore outlined and applied to the explanation of different human resource management strategies.

Key words: Human Resource Management, Strategies, Power, Political Economy, Transactions Cost Theory; Microeconomics, Politics

1. Objective and approach

What are the reasons behind the different human resource management strategies human resource management strategies understood as patterns of action for "dealing with" the human resources or the work force of an organization? Why do we on one hand have human resource management strategies, where the majority of employees have a long-term employment contract with the organization (up to a "life-long" employment guarantee), and where good working and wage conditions prevail, while on the other hand there are certain strategies that are characterized primarily by very short-term employment contracts and are frequently associated with poor working conditions and relatively low wages? Economic approaches to an explanation trace the origin of the different human resource management strategies back to the actors' primarily the employers' - aspirations for efficiency. Often neglected here are the differences in power between the employer and employee, but also other political aspects of the exchange between "capital" and "labour". In this article, I suggest a Political Economy Perspective as an explanatory approach (see also Nienhuser 2002). For this approach, I resort mainly to considerations of power and exchange theory that exhibit parallels to microeconomic approaches, in particular from the realm of institutional economics, but I also pull from thoughts from the neo-Marxian labour process concepts.

My starting point is the fact that human resource management has four problems to solve; problems that overlap to some extent with respect to content, but that are most often discussed separately in the literature on the subject: the production costs problem, the transaction costs problem, the transformation problem and the problem of appropriation and safeguarding the power structure: The first task of human resource management must be toward a solution as to how to procure labour-power at a "favourable" price. Secondly, the costs of setting up and adapting the operational labour-power, but mainly the costs of the exchange itself, must be kept at a low level. This overlaps partially with the third task, the transformation problem: "Purchased" labour-power must continuously be transformed into labour actually done. And the fourth task of human resource management is to help facilitate for the capitalists the smoothest possible appropriation of the values produced by the employees. Another factor of this equation is to reproduce the exchange system, i.e. ultimately the power structure and authority system: Functional ideas on the part of the actors regarding a "fair and just" exchange (thus the subject of equitable wages is an important personnel management topic) must be stabilized via the macro-exchange system, that is: via the economic and social system. Economic theories influenced by neo-classics consider only the first problem, while newer institutional economic approaches also take the transaction costs and transformation problem into account to some extent.

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