Strategic HRM and Business Performance

Articles from CIPD:

Since the mid 1990s, CIPD and others have been generating evidence for the impact of people management practices on business performance. Much emphasis has been put on the importance of ‘fit’. In other words it is argued that HR strategies much fit both with each other and with other organisational strategies for maximum impact.

The main areas of practice which all the researchers agreed have an impact on performance are around job design and skills development.

However, CIPD work found that practices alone do not create business performance.

They can create ‘human capital’ or a set of individuals who are highly skilled, highly motivated and have the opportunity to participate in organisational life by being given jobs to do. However, this will only feed through into higher levels of business performance if these individuals have positive management relationships with their superiors in a supportive environment with strong values.

All these factors will promote ‘discretionary behaviour’, the willingness of the individual to perform above the minimum or give extra effort. It is this discretionary behaviour that makes the difference to organisational performance. The ‘people and performance model’ generated from CIPD-sponsored work at Bath University6 emphasised the importance of individual HR strategies which must fit with each other operating in a strategic framework which incorporates both people and business issues.