Update: Human
Resources—
A Manager's Business
At Stanford Business School, every MBA student is taught how to manage a company's most important resource, its employees.
BY JANET ZICH
Human resources is no longer a polite euphemism for the personnel office, and that department is not the corporate dead end it once was. As Business School faculty
James Baron and
David Kreps note in their new textbook Strategic Human Resources: Frameworks for General Managers (John Wiley & Sons), the traditional view of the personnel office as a place to "send good, solid managers who fell off the fast track" deprived managers of U.S. companies of information about one of their most important
resources—their employees.
But the old view of human resource management has changed. American companies have begun to understand that people are indeed among their most important resources and that knowledge of HRM is key to anyone involved in determining the strategy of an organization. Stanford Business School has led the academic effort to accelerate that understanding, and Baron and Kreps have been at the forefront of Stanford's effort. In the early nineties they developed an MBA elective course on human resource management, which subsequently evolved into a core course, and last year they published the first textbook on HRM to be directed at general managers as well as human resource specialists. In the intervening years, under the aegis of the GSB's Human Resource Management Initiative, the School has built a strong human resource program.
A subject this inclusive demands a multidisciplinary approach. Under a single umbrella, HRM combines compensation, incentives, benefits, unions, labor markets, motivation, organization structure, training, and many more strategic considerations of the modern company. To see just how multidisciplinary Stanford's program is, one need only look at the faculty involved. In the first discussions of creating an initiative in the subject, Baron, a sociologist, and Kreps, a microeconomist, were joined by colleagues with backgrounds in economics, organizational behavior, accounting, and strategic management. Notable among them were
Robert
Flanagan, a labor economist with expertise in international labor;
Jeffrey Pfeffer from the organizational behavior group; and
Richard Lambert from accounting. Once the initiative was in place, the faculty was augmented by new senior-level hires representing various specialties. Among the latter,
Michael Hannan is a career sociologist specializing in the study of organizational design and change;
Edward Lazear is an economist and the founder of personnel economics, a branch of labor economics;
Charles O'Reilly is a psychologist with a long interest in industrial organizations; and
Margaret
Neale is an expert on negotiations and work groups. Hannan and Lazear currently codirect the initiative.
The intent of the Human Resource Management Initiative is to stimulate research in the area: Course development and publications are the natural products of research. The first course to be offered was the MBA core course on HRM. The diverse points of view of the people who taught it were a challenge in designing the course but ultimately proved to be a strength.
"The challenge is to give students a set of concepts or tools for thinking about HR concerns, while making sure they appreciate the diversity of views about human resources within both the academic and practitioner communities." says Baron. "For instance, Ed Lazear and Charles O'Reilly, who have quite different views about compensation and its role as a human resource lever, have sometimes visited one another's sections of the HR core course to deliver a lecture representing a different perspective. And nowadays even when each of us is teaching material close to his or her own area of specialization, we have a much richer understanding than before of how our colleagues in other disciplines think about the same topics."
The strategy—"to just acknowledge that there are different flavors and to allow the students to take advantage of that"—has worked. The human resources core ranks among the top courses for content and teaching in annual polls of MBA students, and the development of several electives was stimulated by student interest.
For all the different points of view of faculty, one thing remains true of the MBA courses: All are aimed at the putative general manager, not at the future human
resource specialist. "It clearly didn't make any sense for our MBA Program to try to become a premier provider of information to human resource practitioners," says Baron. "That is not the main constituency that we serve. For a school that purports to be a school of general management, it really isn't an appropriate focus. And particularly with the strong interest among our students these days in entrepreneurship, we are witnessing increasing demand for broad-gauge courses addressing HR concerns, as students have come to understand that 'people issues' are likely to be critical to the success of their nascent companies."
However, there is room at the executive education level for specialized programs, and that's what the School, chiefly in the person of O'Reilly, decided on. "I remember having conversations early on with Charles about what the program should be," says Baron. "Charles thought that we ought to be focusing on the HR community. He went out and talked to people who might be customers of the program and asked them what kind of program and what format would be most useful. He paid attention to their advice in developing the program."
The Human Resource Executive Program was oversubscribed in just a few years. And it is not the only executive offering to spring from the HR area. Neale introduced and directs three executive
offerings—two in negotiation
and one in managing teams.
The human resource initiative also helped spawn another research initiative, which it partially supports. From HRM, Baron and Hannan segued into the Stanford Project on Emerging
Companies—a long-term study of the
employment practices of more than 170 small and mid-size Silicon Valley firms that seeks to understand how the firms align HR practices with strategy, culture, and technology, and how this affects organizational performance.
As the cast of characters collaborating in HR research has grown, so has the output of material. Eleven GSB cases have been published so far under the human resource label, many of them by O'Reilly and Pfeffer, who are developing them into a book to be published this year. The two, who have not collaborated on a book before, have published four books between them since the early nineties, all of them dealing in one way or another with human resource issues. Lazear has published two books on personnel economics, one of them the first textbook on that subject, and Baron and Kreps first used their book in the core last spring.
Baron looks at Stanford's HRM achievements with satisfaction. "We are a small, multidisciplinary, research-based school, with unusually strong synergies between research and curriculum development," he says. "The fact that we've been able to accomplish so much in the HRM arena says some nice things about these advantages of the GSB over other schools."
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