Relevance of Fit Between Hr Strategy and Business Strategy

Human resource departments today have a more distinct, calculated position within organizations, and human resource strategy influences the bottom line. “One of the challenges for HR leaders is convincing executive leadership teams that human capital is one of the most important resources in which the company can invest” (Mayhew, 2014, p.). Subsequently, “this return on investment is an essential part of the argument for including HR as part of an overall business strategy” (Mayhew, 2014, p.). Human resource departments utilize the information given to them from company executives and leaders, coupled with their respective expertise on all things personnel, and they plan and implement staffing concerns for the betterment of the organization. From preparing job analysis, to comparing inventory and forecasting, it is the responsibility of human resources to consider the objectives of an organization and fulfill those goals while operating the specific planning relative to HR.

In an era of organizational flux due to competition and globalization, companies and employees are faced with constant change. Leaders must be able to adapt to change as the environment shifts. HR has been known as the organizational change agent, administrative expert, and employee advocate. More recently they have been regarded as business strategic partners for many organizations. In order to be successful and remain competitive in today’s market, Human Resources (HR) must be considered a strategic partner if an organization wants to flourish. Top executives today commit significant resources to ensure that their company’s functions are capable of rapid change and achieving their

Human Resource (HR) strategic plan’s outline short term goals that have been aligned with their organization’s strategic plans. With the HR’s goals being aligned it also helps the representative know how much man power is needed from the budgeting process done through HR. The HR function of an organization is responsible for ensuring top talent is recruited and retained, which means ensuring success of an organization’s strategic plan.

The ‘‘best fit’’ approach promotes the concept that strategic HR should be inextricably linked to the formulation and implementation of strategic corporate and business objectives (Wilton, 2011). This means that the HR strategy is concerned with matching the employee’s role behaviour with the company‘s mission, values and goals. Wilton (2011) explains this by giving an example whereby if a company‘s business strategy is based on delivering a high quality service, then the HR strategies and policies need to focus on the quality of its employees. This would be achieved by rewarding attitudes and behaviour that match this approach. Boxall and Purcell (2008) support this idea by highlighting that companies may fail if they do not adapt to their environment. The best fit approach therefore aims to improve organisational performance by integrating all activities in such a

Alignment between HRM practices and organizational strategy establishes a coherent system for organizations. There has to be a "fit" between the human resource planning and organizational strategy, Internal fit aligns HR practices with strategic organizational objectives while external fit aligns HR practices with the external environment. The external fit exhibits a more precise fit between quality policy and assertive performance HRM practices (Youndt,

In order to develop a human resource strategy; there must be a linkage of the entire human resource function with the firm’s business strategy in order to improve business strategy execution. The first recommendation

‘HR strategy, a ‘people plan’, that will help you ensure you have the right people in your business, at the right time with the right skills to ensure you achieve your business goals’.

The practise of Human Resources is moving from the traditional forms of managing people to a more strategic form whereby the Human Resources function is closely linked with organisational performance and success. This strategic form of human resources has increased the need for the Human Resource professional to understand the linkages between Corporate Strategy, Human Resource Strategy and Employee Integration.

An effective human resources (HR) strategy is the complete design, or strategic plan, that directs the engagement of specific HR functional areas. Subsequently, HR strategies will guide decisions about company personnel to make sure they are best suited for the company. For this to be successful, all of the functional areas of HR strategies must be directly compatible with the entire business strategy of the company (Wright, Snell, & Jacobsen, 2003). One such company that has been very successful in developing an HR strategy to support the overall business strategy, is the United Services Automobile Association, or more commonly known as USAA.

The "best fit" approach to managing workers assumes that the managers and workers share a commonality; to work together for a common goal, which is the survival and prosperity of the organisation. For this strategy to work the employees must be able to convey the behaviours and ideas of the management in charge. The best fit approach understands that to manage employees effectively each organisation must be seen as a separate entity and managed accordingly, each business is to be understood as different and is to be managed in a different way. With the best fit model of HRM in place, the strategies of managing the firm's workforce should reflect that of the organisation's mission and corporate objectives, which reflects the classical approach to strategic planning, an approach which became popular during the industrial revolution and was used to tell workers how to do their job in a way that resulted in the most productivity and efficiency. The classical approach to strategy saw that employees were trained only in working their jobs in the most efficient way possible. The view of workers as machines rather than human beings is flawed as it leads to the de-motivation of employees who feel little self worth within the organisation due to having little responsibility and being asked to perform

In the past it was noted by Snell, Youngy and Wright (1996:62) that organisations would purposely 'take human resource out of the strategic equation'. Today it is widely accepted that linking HR to strategy because of a shift in ideas concerning competition and firm advantage (Snell, Shauder and Wright (2001:3)). This shift was identified by Quin (1992:241) "with rare exceptions, the economic and producing power of the firm lies more in its intellectual and service capabilities than in its hard assets"

The "best-fit" approach questions the universality assumption of the best-practice perspective. It emphasizes contingency fit between HR activities and the organization's stage of development, an organization's internal structures and its external environment like clients, suppliers, competition and labour markets (Redman and Wilkinson 2009). HR policy should be minted by the appropriate context of individual employees and therefore support the overall competitive strategy. Aligning HRM practices to strategies can enable companies to create potential competitive advantages (Schuler and Jackson 1987 in Redman and Wilkinson 2009).

Strategic HR responsibilities surpass transactional duties. These responsibilities have to do with an ongoing support of the organizational long-term goals. This is where “strategy meets the market place” so that when “the economy moves from recession to recovery” the company is prepared to move with it (Cascio, 2005). The Strategic HR process looks ahead using organizational strategy as the guideline to building organizational readiness.

More firms’ business strategy can be better realized using the integrative model of HRM. Both employees and firms’ aspirations can be met if the right strategy is used. . HR professionals must be well trained to implement this strategy.

Hard HRM, on the other hand, stresses 'the quantitative, calculative and business-strategic aspects of managing the "headcount resource" in as "rational" a way as for any other factor of production', as associated with a utilitarian-instrumentalist approach (Storey 1992: 29; see also Legge 1995 b). Hard HRM focuses on the importance of 'strategic fit', where human resource policies and practices are closely linked to the strategic objectives of the organization (external fit), and are coherent among