The debate between shareholder primacy and stakeholder theory concerns the legal obligations of corporate directors. Introduction A corporation is never just a machine for making money. It is a legal institution, a social system, and a vehicle for allocating power, risk, and responsibility. That is why one of the most important debates in corporate governance continues to divide scholars, executives, regulators, and investors: should corporations exist primarily to maximize shareholder value, or should they balance the interests of all the people and institutions affected by their actions? This debate is commonly framed as shareholder primacy vs. stakeholder theory. Shareholder primacy says the corporation's central obligation is to its owners, the shareholders. Stakeholder theory says the corporation owes duties to a wider circle of affected parties, including employees, customers, suppliers, creditors, communities, and sometimes society at large. This is not a purely academ...
This post covers Human Resource Management: its core functions, its strategic role, and the models that explain how it operates. The analysis draws on paired international and emerging-market cases, including Google and Safaricom, to test the frameworks against practice.
By Kateule Sydney — Researcher and Writer | Last Verified: 2026-09-29 | Published by Kat-Syd Resources Hub
Human Resource Management: the functions, the models, and the strategic role
Table of Contents
What Human Resource Management Actually Is
Human Resource Management is the set of policies, practices, and systems that influence the behavior, attitudes, and performance of the people who work in an organization. It covers everything from how people are hired to how they are developed, rewarded, and managed out. Michael Armstrong, in Armstrong’s Handbook of Human Resource Management Practice, defines HRM as a strategic and coherent approach to the management of the organization’s most valued assets, the people working there.
The discipline has three defining features:
- Strategic orientation — HR decisions are tied to the firm’s long-term direction, not only to current vacancies
- Integrated practices — recruitment, development, and reward work as a system, not as isolated activities
- Line management involvement — HRM is executed by managers at all levels, not only by the HR department
Most organizations that claim to practice HRM actually practice personnel administration with a modern title. The difference is whether the people decisions are made against a strategy or only against immediate operational needs.
HRM is delivered through four primary activities:
- Resourcing — workforce planning, recruitment, and selection
- Development — training, career management, and capability building
- Reward — pay, benefits, and non-financial recognition
- Relations — employee voice, compliance, and the management of the employment relationship
The interpretive insight is that HRM is not a function that sits beside the business. It is the function through which the business acquires, develops, and retains the capability it needs to execute.
The Core Functions of HRM
The functions of HRM are the recurring activities the discipline performs to support the organization. They are not separate silos. They interlock, and weakness in one degrades the others. David Ulrich, in Human Resource Champions (1996), framed the function as four roles: strategic partner, administrative expert, employee champion, and change agent.
The core functions of HRM are:
- Workforce planning — forecasting how many people, with what skills, the firm will need
- Recruitment and selection — attracting and choosing candidates who fit the role and the firm
- Training and development — building capability in the workforce for current and future roles
- Performance management — setting expectations, reviewing results, and addressing shortfalls
Key point: the functions work as a chain. If selection is weak, training spends its budget fixing what hiring should have prevented, and performance management inherits problems it cannot solve.
Three additional functions carry the firm’s longer-term obligations to its people:
- Compensation and benefits — paying fairly and competitively within the firm’s means
- Employee relations — managing voice, grievances, and the employment relationship
- Compliance — meeting employment law, safety standards, and equal-opportunity obligations
Firms that treat these functions as administrative overhead tend to spend more on them over time, not less, because problems compound when the function is not managed as a system.
Case Study
Google and Safaricom illustrate two different but coherent versions of HRM operating at scale, each adapted to its market and strategy.
Google built a well-documented HRM system around data: structured hiring, internal mobility, and people analytics that feed back into policy. The firm treats HR decisions as testable hypotheses, and its People Operations function operates as a strategic partner rather than an administrative service. Safaricom, Kenya’s largest private employer, runs HRM as a national capability pipeline: structured graduate programmes, internal progression, and an employer brand anchored in training, career development, and community presence through the M-PESA network.
The two firms operate in different markets and different regulatory environments, and neither HRM system would transfer cleanly to the other. What they share is that HR is tied to strategy, run as a system, and measured rather than assumed.
The Shift from Personnel Administration to Strategic HRM
Strategic HRM is the practice of aligning HR policies and practices with the firm’s strategy so that people decisions support competitive advantage. The shift from personnel administration to strategic HRM was driven by research showing that HR practices influence firm performance, not only employee satisfaction. David Ulrich and Wayne Brockbank, in The HR Value Proposition (2005), argued that HR must deliver value to customers and investors, not only to employees.
The shift is visible in three practical differences:
- From transaction to outcome — the measure of HR is the capability it delivers, not the volume of requests handled
- From compliance to strategy — legal minimums are the floor, not the ambition
The remaining differences show up in how HR is organized, who does the work, and what the function is measured against.
The full set of differences between personnel administration and strategic HRM is:
- From department to line — managers own people outcomes, with HR as partner and coach
- From policy to practice — policies exist to enable execution, not to substitute for it
- From annual cycle to continuous — performance, feedback, and development run throughout the year
The interpretive insight is that the shift is not about renaming the function. It is about changing who owns the outcome, what the function measures, and how fast it responds to changing business conditions.
The Models That Explain How HRM Works
The HRM models are the frameworks that explain how HR practices link to organizational outcomes. They are not competing theories so much as different lenses on the same system. The Harvard Model, developed by Michael Beer and colleagues in 1984, treats HRM as a set of stakeholder interests that must be balanced. The Michigan Model treats HRM as a matching process aligned to strategy.
Understanding the models matters because practitioners use them implicitly. Being explicit about which lens a firm is using prevents incoherent practice and clarifies the trade-offs the firm is actually making.
The three primary models are:
- The Harvard Model — HRM balances stakeholder interests and situational factors to produce commitment, competence, and cost-effectiveness
- The Michigan Model — HRM is a cycle of selection, appraisal, reward, and development aligned with strategy
- The Guest Model — HRM is a set of integrated practices that produce superior individual and organizational performance
Each model has different implications. The Harvard Model asks who has a stake. The Michigan Model asks what the strategy requires. The Guest Model asks what practices produce performance. Firms that use all three lenses avoid the trap of treating HRM as a single, static system. The discipline is to keep the strategy, the stakeholders, and the practices aligned as conditions change.
Conclusion
The case evidence from Google and Safaricom establishes that HRM is what a firm actually does with its people, not what its policy manual says. Google built a data-driven HRM system tied to strategy; Safaricom built a capability pipeline tied to national scale. Neither copied the other, and both succeed because HRM is tied to the strategy and run as a system.
My position is that HRM has matured past the debate about whether people are assets or costs. The evidence is clear that HR practices influence firm performance through the capability they build. The open question is not whether HRM matters but whether the firm executes it with the same discipline it applies to finance, operations, or marketing.
The standard treatment of HRM undersells three things: the strategic weight of the function, the chain logic that links its parts, and the cost of leaving HR practice disconnected from strategy. Firms that treat HRM as a strategic partner get the capability their strategy requires. Firms that treat it as administration pay for that choice in turnover, missed execution, and rebuilding costs.
My recommendations follow from that conclusion:
- Link HRM to strategy explicitly — workforce planning must flow from the business plan, not from the vacancy list
- Run HR functions as a system — recruitment, development, performance, and reward must reinforce each other, not operate as silos
- Give line managers ownership — people outcomes belong to operational managers, with HR as partner and coach
- Measure capability, not activity — track quality of hire, development outcomes, and retention drivers, not only transactions handled
- Use the models as lenses — apply the Harvard, Michigan, and Guest frameworks to keep stakeholder, strategy, and practice perspectives aligned
Human Resource Management is the discipline through which a firm’s strategy becomes the capability it needs, and firms that treat it as a strategic function build the capability their strategy demands.
References
- Armstrong’s Handbook of Human Resource Management Practice — Kogan Page
- The HR Value Proposition — Ulrich and Brockbank, Harvard Business Review
- Managing Human Assets: The Harvard Model — Michael Beer, Harvard Business School
- Google hiring and people operations — Google
- Safaricom careers and people practices — Safaricom
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Written by Kateule Sydney — Researcher and Writer
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