Relevance of Fit Between Hr Strategy and Business Strategy

1426 WordsMar 3, 20116 Pages
INTRODUCTION The aim of this paper is to discuss the relevance of fit between HR strategy and Business strategy. Concept of ‘fit’ in strategic HRM Nadler and Tushman (1980) defined congruence or fit as "the degree to which the needs demands, goals, objectives and/or structure of one component are consistent with the needs, demands, goals, objectives, and/or structure of another component” (as cited in Boon, 2008). Fit between HR Strategy and business strategy According to U.S. Office of Personnel Management (1999), fit between HR strategy and business strategy means to integrate decisions about people with decisions about the results an organization is trying to obtain. To be able to achieve fit between HR strategy and business…show more content…
The behavioural perspective infers that firm’s business strategy must be matched with the specific HR policies and practices, which will elicit particular sets of employee attitudes and behaviours to foster success (Wang & Shyu, 2007). Baron and Kreps (1999) also argue that besides the fit between the individual practices, the HR system should fit with the broader context of what the firm is trying to do, such as the external environment, the workforce, organization’s culture, organizational strategy, technology of production and organization of work. According to Boxall (1992), “HRM cannot be conceptualized as a stand-alone corporate issue. Strategically speaking it must flow from and be dependent upon the organization’s (market oriented) corporate strategy”. Importance of fit between an organisation’s business strategy and its HR strategy Evidence have shown that to achieve superior organisation performance, there must be a distinct link between human resource strategies and organisations business strategies (ABE, 2010) An excellent example of a company that has matched its business strategy to its human resource strategy is the Lincoln Electric Company in USA. A producer of electrodes and welding machinery, Lincoln is also a cost leader. Lincoln focuses on hiring individually motivated, high
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