Strategic Human Resource Management and Performance Management in Professional Service Firms

Abstract

This chapter draws on previous research to consider how HRM practices are used to manage human and social capital to generate superior performance in professional service firms. Previous research indicates that PSFs rely on both human capital (knowledge and skills) and social capital (relationships inside and outside the PSF) to manage their performance outputs. In this context the authors review the existing research on strategic HRM practices in PSFs which is predominantly categorized into expertise- and efficiency-orientated HRM systems. They draw on their own research to outline two models of HRM practices which are used to manage human and social capital and discuss the link to innovation. The first of these emphasizes the protection of human capital and therefore has centripetal properties, whereas the second is more client-focused and therefore displays centrifugal properties. Finally, they consider the managerial challenges that these models present and point to avenues for future research.