How can high-performance HRM strategies and practices demonstrably contribute to organizational performance? Consider in some detail the evidence both for and against the view that high-performance HRM strategies and practice

Authors Avatar

Contexts, Concepts and Policy

Assignment

Question

How can high-performance HRM strategies and practices demonstrably contribute to organizational performance? Consider in some detail the evidence both ‘for’ and ‘against’ the view that high-performance HRM strategies and practices directly influence the overall performance of an organisation.

Answer

Introduction

The business industry of today is characterized by high pressure from the external environment in terms of changing economic trends, ever-increasing and altering customer and supplier demands and excessive saturation of companies in the markets leading to high competition (Pfeffer, 1994). This pressure is an outcome of globalization that has enveloped the business world. As a consequence, the organizations are urged to adopt strategies that have the capacity to make them meet and exceed demands of business and to improve their competitive stance in the market. Improvement in terms of bringing about innovative products, minimizing costs and enhancing the overall customer experience are now common means of meeting business demands and remain no more effective means of sustaining competitive advantage in the relevant industry. Therefore, in order to remain competitive the organizations need to utilize inimitable, rare and valuable resources that cannot easily be taken over by the competitors, for the sake of gaining efficiency and revenue gains. Researchers assert that the only inimitable, rare and valuable resource that can help companies to attain and sustain competitive advantage and assist in achieving overall performance improvement is human resource (Robbins and Coulter, 2004).

Human Resource and Performance

Human resource has been traditionally recognized as an administrative function which was meant to help in achieving efficiency gains. It is only recently, that the function is considered as a source of value creation for organizations or in words of Hamel and Prahald (1994) the ‘numerator management’. However over the last few years, significant development in the research regarding relationship between human resource and organizational performance has been made, where now the new interest in HRM is its role as the ‘strategic lever’ that ensures positive impact on bottom line of business through value creation (Becker and Gerhart, 1996). The relationship between HR and performance is explained in words of Armstrong who defines HRM as ‘the strategic and coherent approach to the management of an organization’s most valued assets - the people working there who individually and collectively contribute to the achievement of the objectives of the business (Armstrong, 2006).

Though the link between high performance HRM practices and organizational performance has been viewed as profound by most of the researchers, yet there is evidence for both ‘for’ and ‘against’ the perspective. Therefore, it is imperative that the relationship is looked into in detail and all aspects pertaining to relationship are studied meticulously. Below is the analysis of arguments presented by researchers belonging to both schools of thought; an effort is made to present the argument in a critical manner to reveal true insight into the link between high performance HR strategies and organizational performance (Appelbaum, Bailey, Berg and Kalleberg, 2000).  

High Performance HR Strategies and Organizational Performance: A ‘for’ perspective

Researchers have attempted to investigate the direct relationship between human resource practices and organizational performance via a basic perspective whereby it is assumed by assuming that the HRM practices and organizational performance are positively and directly linked with each other (Schuler and Jackson, 1999).

In relevance to the this perspective, three major models of relationship are developed by the researchers where the first is internal fit model which posits that a ‘best practice bundle of HR practices’ determines organizational performance as being independent from the business strategy meaning that these practices can fit any business model and reap positive results regardless of the particular business setting; this model is also known as universalistic (Pfeffer, 1994; Huselid, 1995).

Join now!

The other model is ‘external fit’ whereby the business strategies are developed under influence of HRM practices and both collaborate to bring about high business performance (Huselid, 1995). In this case, both the business strategy and HRM strategy play imperative role in determining high performance for the companies.

The third model is configurative where a fit between three main variables namely external environment of organization, the business strategy and HRM practices is ensured to determine organizational performance (Huselid and Becker, 1996).

Irrespective of the models followed, the majority of researchers agree that high performance HRM strategies influence the organizational ...

This is a preview of the whole essay