Hrm Strategy and Organisational Performance

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Guest (1997) presented a conceptual model on “linking HRM and Performance”. There are six boxes and in each box supporting items. HRM Strategy is the first box; the factors are (i) Differentiation – strategy has to be innovative, (ii) Focus – on quality, (iii) Cost – on cost reduction. The second box, on HRM practices like selection, training, appraisal, rewards, job design, involvement, status and security. The third box is on HRM outcomes, and the 3 factors are (i) Commitment – it refers to the want to belong to the organisation and the desire to do things for the organisation, (ii) Quality – it refers to the proficiency, knowledge and skills of employees, (iii) flexibility – it refers to the operative flexibility of employees. The fourth box is on behaviour outcomes, factors are (i) Effort/ motivation, (ii) cooperation, (iii) involvement and (iv) oragainsational citizenship. Fifth box is on Performance outcome where there is high productivity, quality innovation, low absence, labour turnover, and conflict and customer complaints. The last box is on financial outcome consisting of profits and Return of Investments (ROI).

HRM Activities on HRM Outcomes Affecting Organisation’s Performance The Guest (1997) model shows that the impact of HRM activities on HRM outcome will naturally affect organisation’s performance. Next will be the elaboration on points of HRM activities. Recruitment and selection, when a right candidate is chosen, it leads to higher productivity. Employees with the correct attitude and behavior will stay and therefore reduce turnover. Rewarding can help retain high-caliber employees in an organisation, as it helps to maintain the employees’ morale, also employees will be encouraged and perform better for the organisation, contributing to organisation’s success. Training will provide employee with better job security; when they have improved themselves, they do feel more secure about themselves and the organisation; it will also ensure that...
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