Linking Human Resource Management, Strategy and Performance

By: Erin Galloway

Overview

The theory created by Porters in 1985 is that organizations can gain a competitive advantage by internal activities, capabilities, and resources. Over time many studies have been conducted on what organizations should do to have efficient and successful processes. The study that I have decided to focus on is the expansion of the ideas brought forth by Boswell and Colleagues in 2007. Their theory was the Line of Sight (LOS) theory, which is when employees understand the firm’s strategic goals, as well as ways to achieve these goals. This theory only gave very limited insight on the relation between LOS and Individual work outcomes, for example job satisfaction and turnover. This expansion looks into the linkage between human resource management, strategy and performance.

Description of article/Connection to text

The article by Buller and McEvoy has used the Resource Based view (RBV), which states an organization is defined by the resources it controls. In other words all organizations are heterogeneous and they differ based on the resources they possess. Therefore, if an organization has control over a rare or valuable resource that others do not, it clearly gives them a competitive advantage. To Buller and McEvoy human resources and human resource management are strategically important; they can be seen as valuable because they are hard to imitate and are the core to creating the organizations ability to achieve strategic goals. Human resource’s decisions are very critical and can have an impact on all aspects of a business. Human resource practices are vital in producing a firm’s human capital and social capital which when linked to strategy can in turn enhance the organizations performance. Human capital is the employees of an organization and social capital is the relationships built between your firm and other firms or customers. However, it is hard for organizations to acquire human capital that is capable and motivated to carry out their specific strategic objectives. Therefore, this is the time when human resources should concentrate on their recruiting strategies to make certain they have the right human capital. For example, the text suggests many different types of recruiting options from structured interviews to social networking sites online. Picking the right recruiting strategy will allow an organization to recruit capable and motivated human capital to carry out tasks. Therefore, human resources will find candidates that have the LOS parallel to those of the organization, which is critical to finding the right person/organization fit. Finding the right fits between person/job and person/organization can be critical in determining the organizations structure and culture, which have great impact on the performance generated by the employees. The creation of a positive and flexible organizational culture will have positive effects on organizational, group and individual performance. Buller and McEvoy are trying to stress how valuable good human resource management is and how these practices can affect strategy implementation and overall performance

Take Away Points

There are many take away points that I found from the article by Buller and McEvoy. RBV explains that resources are the main thing that differentiates organizations from each other, and to be successful an organization needs to acquire that one thing that gives them that competitive advantage. Either this could be human resource practices or a tangible item that can be acquired at a lower price than other firms. HR employees and managers can use this information to try and improve their human resource practices and management to give them a competitive advantage. Also, HR employees should look into stressing the importance of sustaining human capital and social capital relationships because these aspects will keep costs low (i.e. employee turnover costs, and costs of finding new customers or vendors).

 Works Cited

 

Buller, P. F., & MCEvoy, G. M. (2012). Strategy, human resource management and performance: Sharpening line of sight. Human Resource Management Review, 22(1), 43-56.

Mathis, R. L., & Jackson, J. H. (2010). Human resource management. (13 ed.). Mason, OH: South-Western Cengage Learning.