The HR value chain is one of the best-known models in HR. It is based on the work of Paauwe and Richardson (1997) and creates a nuance in the models above regarding how HR operates.
The HR value chain is like the heartbeat of effective HR management, outlining the interconnected stages from HR strategy to employee performance. It’s not just about ticking boxes; it’s about creating a seamless, value-driven process that enhances organizational success.
According to the HR value chain, everything HR does and measures can be divided into two categories:
✅ HRM activities: Day-to-day activities, including recruitment, compensation, training, and succession planning. These activities are often measured using HR metrics. These are so-called efficiency metrics. The cheaper we hire and the faster we train, the better.
✅ HRM outcomes: The goals we try to achieve with the HRM activities. We recruit, we train, and we compensate to achieve certain goals or outcomes. These outcomes include employee satisfaction, motivation, retention, and presence.
Unlike traditional models, the HR value chain isn’t just about HR functioning in isolation. It’s about HR being a strategic partner, intricately woven into the fabric of organizational success.
As we navigate the dynamic landscape of HR, let’s pause and consider how this model can reshape our approach. How can we leverage the HR value chain to drive positive change in our organizations?
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