Sunday, March 10, 2019

Relevance of Fit Between HR Strategy and Business Strategy

Nadler and Tushman (1980) defined congruence or convulsion as the degree to which the deprivations demands, goals, objectives and/or structure of one component ar consistent with the needs, demands, goals, objectives, and/or structure of another component (as cited in Boon, 2008). turmoil amid HR Strategy and task dodgeAccording to U.S. section of Personnel Management (1999), see to it between HR system and blood dodging means to integrate decisions about people with decisions about the results an constitution is trying to obtain. To be able to achieve dress between HR dodge and business strategy, the HR Managers engender to identify the real goals of the business, the business way, how to reach the goals and the real needs of the business from Human Resources (Luke, 2010). Some precaution tend to put the needs of their employees first, but this is not what the business ordinarily asks for. Fit operates vertically and horizontally (Scribner et al, 2008). Vertical fit refers to the alignment of HR practices with the specific boldnessal context, and horizontal fit refers to the alignment of HR practices into a coherent system of practices that support one another (Delery, 1998).Relevance of fit between business strategy and SHRMThe central debate about fit between HR strategy and business strategy is one of the most(prenominal) important to emerge in recent years (Helen Newell and Harry Scarbrough, 2002). It hinges on two broad approaches the universalist and contingency (Natalie Turner, n.d).The universalistic perspective topper practice implores that some HR practices are universally effective regardless in which context they are implemented (Boom, 2008). These practices include items such as (Newell & Scarbrough, 2002), employment security, selective hiring, self-managed teams or team working, high pay contingent on orders performance, extensive training, reduction of status differences, and overlap information (Pfeffer & Veiga, 1999). Pfeffer & Veiga believe that if these policies are followed, they would always result in disposalal success. The universalistic theory is as well as based on the assumption that HR practices notice in high-performing firms can be transformed to other companies with the same results (Armstrong, 2009).In contrast with universalistic thinking, contingency scholars argued that HR strategy would be more(prenominal) effective only when appropriately integrated with a specific presidential termal and environmental context (Chang & Huang 2005). This approach infers that the woof of HR strategy depends on the firms business strategy (Newell & Scarbrough, 2002). The approach is more akin to the idea of strategic fit because it cl offers that the optimal HR strategy choice depends on the unique characteristics of the individual organisation (Natalie Turner n.d), or the organisations strategy (Newell & Scarbrough, 2002). For instance, a cost-reduction business strategy would require a d ifferent set of HRM policies than a strategy based on first appearance. An HRM strategy to fit with cost reduction might require deskilling, management witness and downward pressure on wages. In contrast, one aimed at innovation would be likely to foster employee skills, autonomy and competitive wages (Newell & Scarbrough, 200228). other models have also emphasised the relevant of fit between HR strategy and business strategy. These include the Matching model, liveness Cycle model, Harvard Model, and the behavioral perspective. The matching model argues that human resource strategies have a ridiculous fit to the overall strategies of the business (Association of Business Executives, ABE 2010). The basic premise of the action cycle model is that, as organisation grows and develops, human resource practices and procedures must(prenominal) change to meet it needs (Armstrong, 2009). Authors of Harvard model argue that any uncouth exclusiveness between internal human resource m anagement practices and competitive strategy is likely to lead to eccentric conflict and ambiguity that can substitute with individual performance and organisational effectiveness (ABE, 2010). The behavioural perspective infers that firms business strategy must be matched with the specific HR policies and practices, which leave alone 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, organizations culture, organizational strategy, technology of end product 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 organizations (market oriented) corporate strategy.Importance of fit between an organisations 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 galvanic Company in USA. A producer of electrodes and welding machinery, Lincoln is also a cost leader. Lincoln focuses on hiring individually motivated, high performers. These individuals have their compensation tightly linked to their output with laid-down stripped type levels. A substantial portion of the companys profits is also distributed to employees at the end of the year based on an individual merit military rank that is computed from output, ideas and cooperation, dependability and quality. Lincolns innovative HR strategy enabled it to gain, by 1995, a market share of 36% in the otherwise illogical US market for weldin g equipment and supplies. (Source Krishnan, 2005).Also, organisations are now using HR strategy to further strategic aims. For example, At Conventry Building Society, the strategic aim was to keep the business as it was one of the few remaining mutual but to reduce provide turnover. The society aligned its employee relations with its node value, enshrined in the slogan TLC not plc. It switched from a traditional proceeds structure to a team-based pay and a benefits package called TLC for staff (Source ABE, 2010).Factors that determine fit between HR strategy and business strategyFit between HR strategy and business strategy is influenced by both external and internal factors. Some of these factors are discussed briefly below. scientific changes Technological advances alter jobs, create new skills, make occupations obsolete, and revise what employees need to lean and be trained to do (Ozutku & Ozturkler 2009).Legislation/regulations For example, the National minimum wage introdu ced by labour party in England had a crucial effect on costs which has led to changes in employment practices in some industries and changes to personnel policies (ABE, 2010).Employee knowledge and skills Employees knowledge and skills directly affect the quality and performance of the HR system (Wright & Snell 1998). Arguably, more knowledgeable and skilful employees forget have competencies to understand and enact a variety of HR practices, such as those designed for a firms specific strategy (Wei, 2006).Culture Several evidences have shown that culture plays a critical role in determining the right HR strategy to adopt. For example, when Lincoln electric Company applied its HR strategy in ventures acquired outside the get together States, it failed because of difference in culture both at societal and organisational levels (Krishnan, 2005).Life cycle stages Organizations go through evolutionary life cycles, and the stage in which an organization finds itself in an industry af fects the HR strategies it should adopt (Armstrong, 2009).Industry/ field characteristics In analysing HR practices, classification of organisations as manufacturing and service firms is considered. This is because different production processes necessitate different HR practices (Ozutku & Ozturkler 2009).

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