Critically Discuss the Various Existing Models Linking Organizational/ Business Strategy with Hrm Strategy

2007 Words9 Pages
In today’s rapidly changing globalised business environment, human capital has become one of the keys to competitive advantage. Consequently, any good business strategy must fully utilise the inimitable assets of people through their knowledge, skills and abilities. This highlights the need for strategic human resource management (SHRM). The key assumption of SHRM is that organisational performance is affected by employees through a set of human resource (HR) practices (Pan et al 2006).
A review of the literature linking HR practices to business strategy shows two conflicting perspectives in SHRM. The universalistic perspective suggests that there is a universal set of best practices that any business can adopt to improve organisational
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Widely acknowledged illegal practices and certain generic practices aside, it is the unique context of each business that matters when developing a HR strategy. In addition, the intentions of best practice should benefit both shareholders and workers. But as with most models of best practice, there is little reference to the role of unions or the differing needs and objectives each group has in the workforce. For example, Marchington and Grugulis (2000) suggest that Pfeffer takes a unitarist view and doesn’t take into account the complexities of managing a diverse and differentiated workforce.
The best practice approaches are also not culturally sensitive. Models that tend to reflect the individualist values of the USA will not be suitable for more collectivist cultures such as Germany or Japan. National context and the differing labour laws of each country play a fundamental role in SHRM. This severely implicates the usefulness of a best practice model.
Contingency perspective
For the contingency perspective otherwise known as best fit HRM, there are no universal prescriptions of HR policies and practices. It is all contingent on the organisation’s context and culture and its business strategy. To gain a full picture of this perspective, one must examine both forms of best fit – internal and external fit.
Internal fit has already been shown to influence universalistic models. This notion of fit advocates bundles of
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