Nowadays, organizations are facing more and more unprecedented competition in the market. Therefore, many organizations today have increasingly become aware of the importance of HR strategies to response to those pressures. However, there has been a non-stop debate whether HR strategies hold the key to organizational performance over the past several years. In order to explain the relationship between HR Strategy and firm performance, this report firstly provides a deep vision on the definition and importance of Human Resource Strategy, explaining the positive consequences of implement effective practices of Human Resource Strategy in organizations and explains the relationship between HR strategy and organizational performance. After that, the report focuses on two models of Human Resource Strategy which is best-fit and best practice model. The evaluation of whether HR strategies hold the key to organizational performance will be given at the end of the report.
The importance of HR Strategy and how it contributes to organizational performance.
First of all, we must have a clear idea of what is Human Resource Strategy. From what we have learnt from this subject, we know that Human Resource strategy is a plan of action designed to develop skill, attitudes and behaviours of employees and help organization to achieve business goals and outcomes and make a significant contribution to organizational success.
“Effective HRM strategy systematically organizes all individual HRM measures to directly influence employee attitude and behaviour in a way that leads business to achieve its competitive strategy” (Huang, 2001). “The practices of Human Resource Strategies such as resourcing, training and development, employee retentions and reward management are concerned with how people are employed and managed in organizations so as to achieve