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Posted: October 31st, 2023
Strategic Human Resource Management: Examining the Relationship Between HR Strategy and Organizational Performance
Introduction
Strategic human resource management (SHRM) has emerged as a key area of research and practice in recent decades. A strategic approach to human resource management (HRM) implies linking HR policies and practices to an organization's strategic objectives (Bamberger & Meshoulam, 2000). However, conceptual clarity around SHRM remains debated, with questions around whether it refers more to a process or outcome (Bamberger & Meshoulam, 2000). This paper aims to explore the relationship between SHRM and organizational performance by examining relevant literature on the topic.
Determinants of SHRM Adoption and Formulation
Empirical studies have sought to understand what drives organizations to adopt SHRM and how HR strategy is formulated. Research indicates certain external and internal factors may positively associate with SHRM use, such as organizational characteristics (Gelade & Ivery, 2003). However, the complexity of implementing different HRM models attests to structural constraints moderating SHRM adoption and design (Gelade & Ivery, 2003).
Typologies of HR Strategies
Scholars also examine whether identifiable "bundles" of HR practices cluster with different competitive strategies (Gelade & Ivery, 2003; Jiang et al., 2012; Subramony, 2009). For example, firms pursuing product differentiation tend to emphasize training while cost-leaders stress internal labor markets (Gelade & Ivery, 2003). However, the degree HR strategies systematically vary between organizations remains debated (Bamberger & Meshoulam, 2000).
Relationship Between HR Strategy and Performance
Significantly, much research analyzes the relationship between HR practice bundles and organizational performance (Jiang et al., 2012; Subramony, 2009). While some studies link certain bundles to outcomes like profits and sales (Jiang et al., 2012), others find performance impacts depend on moderators like business strategy and environment (Gelade & Ivery, 2003; Subramony, 2009).
Conclusion
In summary, research suggests HR strategy matters for organizational performance but the nature of this relationship involves complex, contingent factors requiring nuanced examination (Gelade & Ivery, 2003; Jiang et al., 2012; Subramony, 2009). Continued empirical exploration can advance both SHRM conceptualization and its impacts on both theory and practice.
References
Gelade, G. A., & Ivery, M. (2003). The impact of human resource management and work climate on organizational performance. Personnel Psychology, 56(2), 383–404. https://doi.org/10.1111/j.1744-6570.2003.tb00155.x
Jiang, K., Lepak, D. P., Hu, J., & Baer, J. C. (2012). How does human resource management influence organizational outcomes? A meta-analytic investigation of mediating mechanisms. Academy of Management Journal, 55(6), 1264–1294. https://doi.org/10.5465/amj.2011.0088
Subramony, M. (2009). A meta-analytic investigation of the relationship between HRM bundles and firm performance. Human Resource Management, 48(5), 745–768. https://doi.org/10.1002/hrm.20304
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