HRM Achitecture

Because of their unique contributions, different groups of employees require different sets of policies, tailored to these specific contributions (such as efficiency, creativity, and quality), together leading to competitive advantage.

Based on these ideas, Lepak and Snell (1999) developed the concept of the HRM architecture. This framework is ultimately grounded in the choice between “make-or-buy” (Miles and Snow, 1984), which forces organizations to think how they want to improve their human capital; either by developing current employees or by buying them on the job market. This is also called the duality of internalization and externalization.

An easy example is whether firms choose to promote employees from within and offer them the training and development opportunities to achieve the level of expertise that is needed, or whether they choose to hire people from outside the firm. This will be explained later into more detail.