Business Strategy and HRM Strategy Essay

It is known that a company’s strategy is very important to their future success however we must evaluate wither there is a correlation between the alignment of the business and HRM strategy and the successful performance of the firm. The alignment of the two strategies was first theorized to have effect by Skinner 1969. Since then it has become the major subject of research pieces (Wright 1992|Huselide 1995|Wang 2006|Alleyne et al 2006).

The business strategies researched and recorded by(Porter 1985) cost leadership, differentiation and focus were merged with the HRM strategies, like those developed by (Jackson 1987). This resulted in what we know today as strategic human resource management. A combining of the two fields of management. This strategic form of HRM ensured that all decisions at the upper level were made with in unison with the HRM strategy thus providing a superiorly integrated business unit.

Through research two main arguments for such a fit or alignment of the strategies have been deduced; best fit and the best practice views. The best fit as it indicates nominally is a proponent of this idea this notion, alternatively internal fit focuses on the consistency of HRM throughout the organisation, how HRM policies are linked with other departmental polices to ensure the organisational goals are achieved. This is idea is ratified by (Wang, 2006) and can be easily appreciated, as many pieces of literature focusing on SHRM do show support for the horizontal fit.

However on the matter at hand of external fit there has been some dispute over the effectiveness of this, as is seen by (Alleyne et al, 2006) who concluded in their research that such a fit was found to be. This fit of the HRM strategy seems to have negligible effect regardless of the type of business strategy employed; this has been a nagging critique of the external fit notion, this could be due to the fact that research of this kind seeks to match one dominant variable to the performance of an entire firm.

This can prove difficult when trying to extract quantitative data. This external fit also disregards for factors other than strategy to be the guiding light for HRM strategy, () shows that many firms although allowing for the influence of business strategy will be guided more likely by cultural norms and legal framework. As is shown in the Beer et al 1985 model, a mixture of nternal and external fit is used giving a fused feed of influence from the firm’s business strategy; the management and stakeholders, coupled with the other factors from the macro environment; economic factors, unions, social values, these feed and act as a catalyst to performance factors or as the research puts it the HRM outcomes, these outcomes are different measures of performance; commitment, motivation, productivity and effectiveness within the firm and through the use of culture another one of the influences on the entire process the outcomes come out by more than just chance it is the result of a culture within the firm, this is another trait of the Beer et al model. So it can be concluded that performance can be linked to both internal and external link but to find causation of performance on the basis of either notion in a quantitive manner in previous literature is hard to pinpoint due to its vague nature, however there was found to be no negative effect to the union.