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Not only is Strategic Human Resource Management (SHRM) related to the business performance but a business strategy also involved in it. The main purpose that link between SHRM and business strategy is the success of a company or an organisation. It is certainly true that human resource is an important part of an organisation because it creates many benefits and advantages in the competitive business world. In addition, the relevance of the integration between SHRM and a business strategy is critically divided into five categories which are Separation, Fit, Dialogue, Holistic and HR driven (Torrington, Hall and Taylor, 2008). On this assessment, it will discuss and show the examples that prove and support the relevance of the fit between SHRM and business strategies.
To begin with, Martell, Gupta and Carroll s study (1996) illustrated various HR practices and organisational strategies have impacts on firm performance. According to their study, it is obviously true that if the objectives of organisation are uncomplicated and unquestionable, it will be more useful for an organisation to match its strategy with HRM.
A recent study undertaken by Zheng, Rolfe, Milia & Bretherton (2007), is found that HRM practices will be the benefit for improving and enhancing the effectiveness of employees businesses. Moreover, it will be the impact on executing business strategy and simplifying the organisational change by Becker et al. (as cited in Zheng, 2007). This is an example of the linkage between SHRM, a business strategies and business performance.
According to their finding, the coal industry is the main important business in Australia. It is said that there are many threats that will affect the development of this industry. For example, the lack of skill and complicated flexible-management exceptionally the new form of labour contract and shift worker, which changes dramatically. They suggested that the best practice, which is one of the HRM s strategies, would be the solution to enhance business performance of the coal industry. In addition, there were eight research proposals that would be the useful information so as to adopt and improve the coal industry.
The first proposal was if there were a better fit between SHRM and a business strategies, the companies would be more likely to accomplish the essential performance, productivity and profitability. The second and third proposals were discussed about SHRM, which has an indirect effect on business performance. However, some strategic HRM such as the responsibility of employees, efficient management, the quality of employers and cost effectiveness would be support the success of business performance. Furthermore, Bird and Beechler (1995) claimed that the fit between business strategies, dynamic environment and SHRM is a significant method in order that it may lead to be successful in business performance and results. The fourth and fifth proposals were the firm that its business performance and SHRM match with dynamic environment. As a result, the firm performance will be more efficient and effective than the others. The last three proposals were if a firm has business strategies including cost leadership, innovative and improved quality, it will be more beneficial for the response the needs of employees and employers. From this research, it can be summarised that the relevance of fit between business strategies and SHRM has a considerable impact on business performance.
Furthermore, Wright & McMahan (as cited in Wei, 2006) mentioned that the fit between HR practice and firm strategies is linked to Strategic HRM. This is the second example that will buttress the fit as mentioned above (Wei s research, 2006). It is illustrated that the fit, which is related to firm strategies and strategic human resource, could be divided into two categories including horizontal fit and vertical fit. Horizontal fit is about the well-fit between a variety of HR practices such as the HR alignment, firm policies stated by Baird & Meshoulam (as cited in Wei, 2006). All HR practices should be used in a balanced way so as to avoid the negative firm performance. While, Schuler & Jackson (as cited in Wei, 2006) said that vertical fit is related to the arrangement of HRM practice with the strategic management in the organisation in order to reach the objectives of the organisation. For instance, HR policy, HR systems and the position of managers are generally devised by referring to business strategies. Apparently, if the correlation between the factors and different levels is fitting, it will lead to a better understanding process and results. (Wei, 2006)
To give an example, in accordance with Stavrou and Brewster (2005), it is possible that SHRM Bundles can be affected EU business performance which were observed the profitability, the productivity and the quality of service. They found that the six bundles including training, shared-options, profit sharing, financial communication, organisational communication and wider-jobs bundles were the positive actions. In contrast, RIFs bundle leads to a negative action through business performance because EU businesses reduced the need of employers such as voluntary laying-off staff, redeployment and outsourcing. As a result, the satisfaction of the employers decreased. From their study, it can be seen that the link between Strategic HRM and competitive advantages have an essential impact on business performance.
Besides, there is another supportive research, which was a two-way test including reciprocal and interdependent relationship, conducted by Golden and Ramanujam (as cited in Karami, Analoui and Cusworth, 2004). The aim of this research was the attitude of senior manager on HR effectiveness and the relevance between HR and business strategy. According to their study, it was founded that a majority of senior managers thought that HR was a significant and crucial key device of the British Manufacturing Industry. Moreover, they accepted that the level of linkage between SHRM and business strategies has a tremendous impact on the success of business performance in firms.
The last example is Arther s survey (as cited in Smith, 1995) studied about US steel minimills, he explained that strategic labour relations in minimills are defined by the selection of their business strategy. There are many kinds of policies which are about industrial relations and HR practices are intensely related to the selection of business strategies made by the other minimills.
On the contrary, there is a conflict thinking that against the information as mentioned above. The case study of Kelliher and Perrett (2001) showed that the different positions of staff were treated in different ways. For instance, most of staff did not have high wages and well-fit with the cost reduction model and they had to hire the head chefs so as to create the high quality and noticeable products. Thus, it is likely to have the negative business performance. It is certainly true that it will reach the satisfaction of customers in the short term with these products. However, their satisfaction will decrease later because of poor services given by the unwilling staff. Moreover, if they enhance their management system, the cost of products is liable to be more expensive. Additionally, they concluded that it was not obviously clear that the relationship between business strategies and strategic HRM lead to achieve the success of business. This study claimed that the best fit of HRM and business strategy is abstract.
As mentioned above, business will be successful in the globalisation becoming a strong competition at the present time. The organisation should have the proper business strategies so as to create the strong point of competitions such as using the leadership strategy, constructing the outstanding performance. Therefore, it is important that if the organisation has a fit strategic human resource management, it will create the efficiency and effectiveness of the organisation to enhance its inner-structure. As a result, the organisation will be able to compete with others. Hence, it can be concluded that the fit between business strategies and SHRM has a vital impact on not only the effectiveness of HRM but also business performance. (Wang D.S. and Shyu C.L., 2008)