This paper aims to examine how functional and numerical flexibility can be successfully combined without workforce segmentation or flexible employment contracts, by implementing a highly integrated human resource management (HRM) system.
Six case studies were conducted between January 2002 and June 2003 in Portuguese affiliates of multinational management consulting firms using a grounded theory approach.
Evidence from the case studies showed that some of these companies were able to explore both functional and numerical flexibility in a combined and interdependent way, by operating a tightly run and highly coordinated set of HRM practices geared towards the development of internal labour markets.
The study uses a sample of large multinational companies in a single sector, which limits the scope of these findings.
It is suggested that a strategy combining numerical and functional flexibility through an integrated set of HRM policies and practices will be more effective than segmenting the workforce or choosing between those two sources of flexibility.
The paper presents a new breadth for the role of HRM in achieving flexibility. Theoretically, it challenges the established notion that commitment‐based HRM serves only functional flexibility and that numerical flexibility can only be achieved through precarious employment.
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