Why Is It Important to Have a Very Close Relationship Between Business Strategy and an Organisation’s Human Resource (hr) Strategy?

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3.0 Difficulties in determining the impact of HR strategy on organisational performance

In recent years, more efforts have been made to determine the tangible link between HRM and organisational performance as firms seek to reap on the potential benefit of harnessing its HR capabilities (Lee, 2000). However, studies have shown that making a distinct connection between the two both quantitively and qualitatively often proves difficult and inconclusive due to several underlying factors.

3.1

Firstly, a typical HR department has many functions and practices which makes it difficult to ascertain which ones contributes more to the performance (Kunisch, Gunter, Campbell, 2014). Some functions are mandatory based on rules and regulations whereas some are more dynamic, in the sense that its primary role is in fact to boost organisational performance. Bearing in mind that not all HRM practices are measurable in the quantitative sense, making an accurate analysis on its impact would prove to be a challenge because the benchmark of the study may end up shifting more towards a perspective sense instead of pure numbers, which may differ across individuals.

3.2

Secondly, the collection of data for the purpose of assessing the impact of HR strategy may at times be flawed and inaccurate (Missildine, 2013). Given the fact that HRM has various functions and practices, the assessment of each may be conducted at different times and the issue of time lag would then pose a serious challenge in the study. In addition, the dynamic nature of HRM makes it susceptible to time changes and therefore the study must be conducted within the same time frame for it to be conclusive.

3.3

Thirdly, it is difficult to ascertain to the true influence and impact of HR strategy on organisational performance because it greatly depends on the size of an organisation (Barnett, 2017). An organisation’s business strategy varies in accordance to its size, with smaller firms focusing more on the technical aspect of its business entity to boost productivity and sales to break-even and make further progress. On the other hand, larger firms have more potential to further strengthen its HR strategy due to its strong financial capability and operational stability. As such, given the varying level of focus that firms of different size give to its HRM, it is not surprising that HR strategy tends to have more implications on the performance of larger firms as compared to that of smaller ones.

3.4

Lastly, a good HR strategy will not always lead to good performance due to factors that are not within our control (Miller, 2016). For example, the motivation level of an employee may not always hinge on work factors and instead, it may be affected by domestic factors. Attractive career prospects within the firm may not be a sufficient reason for employees to stay loyal if they choose to make career changes mid-way or seek new challenges elsewhere. These are factors that depend on the individual and there is only so much a firm can do to maintain its employees’ performance.

4.0 Conclusion

In conclusion, there is no doubt that HR strategy plays a pivotal role in the success of an organisation today, regardless of its origin, portfolio, and size. As we constantly progress into a new era where technology forms the bedrock of most business entity, it is important to realise that it still does not have the potential capability to replace humans. The wisest thing to do will be to embrace the arrival of new technology and work with it, not to completely rely on it. As organisations progress, there is no doubt that HR strategy will remain a core topic in its business agenda. Although it has been proven that assessing its impact on organisational performance remains a challenge for the unforeseeable future, there is no question that its pros outweigh its cons and there is no reason for any firms to abandon its initiative to achieve a sound HR strategy. Every organisation should therefore strive to harness the benefits of investing in its HR. (Word count: 1690)

5.0 Bibliography

Babcock, P. (2012). Chasing Talent Across the Globe. [online] Available at: https://blog.shrm.org/workforce/chasing-talent-across-the-globe [Accessed 15 May 2017].

Barnett, T. (2017). Human Resource Management - organization, levels, system, manager, school, company, workplace, business, system. [online] Referenceforbusiness.com. Available at: http://www.referenceforbusiness.com/management/Gr-Int/Human-Resource-Management.html [Accessed 15 May 2017].

Burma, Z. (2014). Human Resource Management and Its Importance for Today’s Organizations. [online] Available at: http://www.ijessnet.com/wp-content/uploads/2014/09/9.pdf [Accessed 15 May 2017].

Kunisch, Gunter and Campbell (2014). Challenges for human resource management and global business strategy - Future HR Trends. [online] Future HR Trends. Available at: http://futurehrtrends.eiu.com/report-2014/challenges-human-resource-management/#aligning [Accessed 15 May 2017].

Lee, C. (2013). Strategic human resources is key to organizational success. [online] Halogen Software Talent Management Blog. Available at: http://www.halogensoftware.com/blog/strategic-human-resources-is-key-to-organizational-success [Accessed 15 May 2017].

Lee, F. (2000). Human Resource Strategy to Improve Organisational Performance: A Route for British Firms?. [online] Available at: http://www.leeds.ac.uk/esrcfutureofwork/downloads/workingpaperdownloads/paper9.pdf [Accessed 15 May 2017].

Matuson, R. (2010). 10 Worst HR Practices. [online] HR People. Available at: http://hrpeople.monster.com/benefits/articles/3704-10-worst-hr-practices [Accessed 15 May 2017].

McDonald's®. (2015). McDonald’s Singapore emerges as the “Best of the Best” in Aon Hewitt Best Employers Singapore 2015 - McDonald's®. [online] Available at: https://www.mcdonalds.com.sg/news-room/mcdonalds-singapore-emerges-as-the-best-of-the-best-in-aon-hewitt-best-employers-singapore-2015-2/ [Accessed 15 May 2017].

Miller, B. (2016). 7 Reasons Your Workforce Is Not Motivated - HR Daily Advisor. [online] HR Daily Advisor. Available at: http://hrdailyadvisor.blr.com/2016/11/29/7-reasons-workforce-not-motivated/ [Accessed 15 May 2017].

Missildine, C. (2013). Are you using HR analytics and metrics effectively?. [online] Halogen Software Talent Management Blog. Available at: http://www.halogensoftware.com/blog/are-you-using-hr-analytics-and-metrics-effectively

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