‘Bundling’ or ‘configuration’ is the development and implementation of several HR practices together so that they are interrelated and mutually supportive and therefore complement and reinforce each other. This is the process of horizontal integration or internal fit, which is also referred to as the use of ‘complementarities’. Richardson and Thompson (1999) believe that a strategy’s success turns on combining vertical or external fit and horizontal or internal fit. They concluded that a firm with bundles of associated HR practices should have a higher level of performance, providing it also achieves high levels of fit with its competitive strategy.
MacDuffie (1995: 204) explained the concept of bundling as follows: ‘Implicit in the notion of a “bundle” is the idea that practices within bundles are interrelated and internally consistent, and that “more is better” with respect to the impact on performance, because of the overlapping and mutually reinforcing effect of multiple practices’. His research in US automotive assembly plants established that ‘innovative HR practices affect performance not individually but as interrelated elements in an internally consistent HR bundle’ (ibid: 197).
activities are more important in enhancing labour productivity than any single activity… The logic in favour of bundling is straightforward… Since employee performance is a function of both ability and motivation, it makes sense to have practices aimed at enhancing both.’ They explained that there are several ways in which employees can acquire needed skills (such as careful selection and training) and multiple incentives to enhance motivation (different forms of financial and non-financial rewards). Their study of
various models listing HR practices that create a link between HRM and business performance found that the activities appearing in most of the models were involvement, careful selection, extensive training and contingent compensation. Following research in 43 automobile processing plants in the United States, Pil and MacDuffie (1996) established that when a high-involvement work practice is introduced in the presence of complementary HR practices, not only does the new work practice produce an incremental improvement in performance, but so do the complementary practices.
The aim of bundling is to achieve coherence, which is one of the four ‘meanings’ of strategic HRM defined by Hendry and Pettigrew (1986). Coherence exists when a mutually reinforcing set of HR policies and practices has been developed, which jointly contribute to the attainment of the organization’s strategies for matching resources to organizational needs, improving performance and quality and, in commercial enterprises, achieving competitive advantage. David Guest (1989: 42) includes in his set of propositions about HRM the point that strategic integration is about, inter alia, the ability of the organization ‘to ensure that the various aspects of HRM cohere’.
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The process of bundling HR strategies is an important aspect of the concept of strategic HRM. In a sense, strategic HRM is holistic; it is
concerned with the organization as a total entity and addresses what needs to be done across the organization as a whole. It is not interested in isolated programmes and techniques, or in the ad hoc development of HR practices. In their discussion of the four policy areas of HRM (employee influence, human resource management flow, reward systems, and work systems), Beer et al (1984: 10) suggested that this framework can stimulate managers to plan how to accomplish the major HRM tasks ‘in a unified, coherent manner rather than in a disjointed approach based on some combination of past practice, accident and ad hoc response to outside pressures’.
One way of looking at the concept of bundling is to say that some measure of coherence will be achieved if there is an overriding strategic
imperative or driving force such as performance, customer service, quality, increasing levels of engagement, talent management, or the need to develop skills and competences that initiates various processes and policies designed to link together and operate in concert to deliver results. The development of high-performance, high-commitment or high-involvement systems is in effect bundling because it groups a number of HR practices together to produce synergy and thus make a greater impact.
Bundling can take place in a number of other ways. For example, competency frameworks can be devised that are used in assessment and development centres and to specify recruitment standards, identify learning and development needs, indicate the standards of behaviour or performance required, and serve as the basis for human resource planning. They could also be incorporated into performance management processes in which the aims are primarily developmental and competencies are used as criteria for reviewing behaviour and assessing learning and development needs. Job evaluation could be based on levels of competency, and competency-based pay systems could be introduced. Grade structures could define career ladders in terms of competency requirements (career family structures) and thus provide the basis for learning and development programmes. They can serve the dual purpose of defining career paths and pay progression opportunities. A high performance work system bundles a number of HR practices together, as does talent management.
The problem with the bundling approach is that of deciding which is the best way to relate different practices together. There is no evidence that one bundle is generally better than another.