The Link Between HRM Policy And Practice And Organisational Performance Case Study

Discuss the link between HRM policy and practice, and organisational performance.

In today’s fiercely competitive business environment, there is a growing emphasis on managers of firms to devise new and innovative ways of gaining a competitive advantage over their rivals in the marketplace. Of course, that is not to say that traditional methods such as economies of scale and new product development are no longer relevant as sources of competitive edge but as far as long-term sustainability is concerned, “an organisation’s human resources are more vital” (Caliskan, 2010: 102). One, often overlooked, way in which organisations can gain a competitive advantage is through an acknowledgement of the potential relationship between human resource management

It is important to acknowledge that there are alternative conceptualisations of what is meant by HRM and these have developed over time. For example, Storey (1995) defines HRM as “a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce using an array of cultural, structural and personnel techniques” (Storey, 1995 cited in Storey, 2007: 7). Contemporarily, Bratton and Gold (2017) adopt a slightly different stance, alluding to it as “a strategic approach to managing employment relations which emphasizes that leveraging people’s capabilities and commitment is critical to achieving sustainable competitive advantage or superior public services. This is accomplished through a distinctive set of integrated employment policies, programmes and practices, embedded in an organizational and societal context” (Bratton and Gold, 2017: 5). Therefore, although there is no such thing as a widely accepted set in stone definition of HRM, the competing definitions that do exist happen to share similar undertones from which we are able to deduce that HRM is, in essence, a broad, umbrella term used to describe the strategy adopted by a business to manage those who are at the heart of it – the

MacDuffie’s (1995) pioneering study on the automotive industry “found strong support for a positive relationship between commitment or high-performance HR practices and intermediate outcomes for individual workers (for example, turnover and sales) and the organisation’s financial outcomes (market value and profits)” (Bratton and Gold, 2017: 75).

On the one hand, there is a raft of evidence from empirical studies spanning the previous two decades that not only prove that there is, indeed, a link between HRM policy and practice, and organisational performance, but also that this link is positive, albeit to varying degrees. The following section will discuss in depth the evidence of a positive link between HRM policy and practice, and organisational