Issues in Human Resource Strategies That Improve Organizational Performance

2267 Words Jul 11th, 2008 10 Pages
A rapidly changing economic environment, characterized by such phenomena as the globalization, and deregulation of markets, changing customer and investor demands, and ever increasing product market competition, has become the norm for most organization. To compete, they must continually improve their performance by reducing costs; innovating products and processes; improving quality, productivity, and speed to market; and more importantly by improving their individual performance within the organization. In order to do this, a set of distinctive human resource strategies, defined as internally consistent bundles of human resource practices (Dyer & Reeves, 1995), is clearly essential. Sparrow and Marchington (1998) suggested
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The impact of HR practices on firm performance is without a doubt an important topic in the fields of human resource management, industrial relations, and industrial and organizational psychology (Huselid, 1995; Jones & Wright, 1992).This literature, although largely conceptual, concludes that HR practices can help to create a source of sustained competitive advantage, especially when they are aligned with a firm’s competitive strategy (Jackson & Schuler, 1995; Wright & McMahan, 1992, both as cited in Huselid, 1995). Specifically, a large majority of published studies found an association between HR practices and firm performance, regardless of whether they are cross-sectional or longitudinal, whether conducted at establishment or company level, whether based on strong performance data or subjective estimates, whatever sector they are based on, whatever operational definition of HRM is used, and wherever they are conducted (Guest et al., 2003). Nevertheless, despite the positive thrust of most empirical findings, Wood and de Menezes (1998, as cited in Guest et al., 2003) failed to find consistent associations between HRM and performance. Furthermore, Wood (1999) has also argued that the relationship between HRM and performance is relatively weak. One possible explanation lies in the various contingency factors, other than HR activities, that might contribute to organizational performance such as organizational culture (Kotter & Heskett, 1992; Van

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