The Relationship between HR Strategies and Organization Performance
Strategy, human resource management and performance: Sharpening line of sight�
Success in an organization is dependent on many factors. Some of the core factors that
brings success in an organization included; efficiency in operations as a result of individual,
group and organization performance, customer satisfaction and sustained competitive advantage
over other competitors in the market. Human resource is considered as a source of competitive
advantage (Buller, & McEvoy, 2012). This is because each and every activity in an organization
is done people working in the organization. Therefore, human resource strategies and practices
such as recruitment, selection and development of employees influence organization
Previous research shows that effective implementation of strategy by Human resource
in the organization is important. Its importance is exhibited as a support activity, and when
integrated with other value chain activities in the organization. Companies utilize human
resource strategies to achieve sustainable competitive advantage. The relationship between
organization’s human resource strategies and performance outcome can be understood in light
of the following different views. That is Resource-based view, human capital development and
social capital development.
Resource-based view: The performance of organization is linked with the amount of
resources a firm possesses. Resources such as capital, machinery, intellectual property and
human resource are a source of competitive advantage. The resource-based view makes an
assumption that firms are not identical in nature, but rather unique depending on the resource
they own (Guest, 2011). Therefore, a firm will attain sustainable competitive advantages when
it possesses resources that are rare, valuable, non-transferable, non-imitable, non-substitutable,
and possess the ability to utilize such resources. Therefore, Human Resource Management
practices help to develop valuable, rare, and difficult to imitate or to substitute workforce for
the organization. The HR department is responsible for developing organization capabilities to
achieve the firm’s strategic goals.
Human capital development: The HR strategies assist in developing human capital that
directly impacts on the organization’s performance. Human capital is defined by the
knowledge, skills and abilities that individual employee possess or as a team (Buller &
McEvoy, 2012). Human Resource practices, for instance, recruitment, selection and
development of employees through training, motivation, and support help to improve the
organization performance. Therefore, by developing a unique team of workers, the human
resource strategies influence the performance of the company.
Social capital development: The Human Resource enhances employee and organization
performance through the development of social capital. Social capital refers to the nation of
relationships that is, social processes and structures established between people within the
organization and outside with the different stakeholders of the organization. Firms with high
level of social capital are perceived to have a competitive edge over its competitors and thus
perform better (Alfes et al., 2012). The human resource management handles social
development of employees through encouragement of active participation at work, working
together as a team, motivation of employees with the objective of improving organization
performance and thus organization sustainability.
In conclusion, HR practices and strategies in developing a valuable team of employees
help to give an organization competitive advantage in the business environment. The HR helps
in developing a potentially valuable human capital through HR practices such as selection,
recruitment and training to improve their performance (Bratton & Gold, 2012). As such,
influence performance in the light that more positive resources are developed resulting in better
Buller, P. F., & McEvoy, G. M. (2012). Strategy, human resource management and
performance: Sharpening line of sight. Human resource management review, 22(1), 43-
Alfes, K., Shantz, A., & Truss, C. (2012). The link between perceived HRM practices,
performance and well‐being: The moderating effect of trust in the employer. Human
Resource Management Journal, 22(4), 409-427.
Buciuniene, I., & Kazlauskaite, R. (2012). The linkage between HRM, CSR and performance
outcomes. Baltic Journal of Management, 7(1), 5-24.
Guest, D. E. (2011). Human resource management and performance: still searching for some
answers. Human Resource Management Journal, 21(1), 3-13.
Bratton, J., & Gold, J. (2012). Human resource management: theory and practice. Palgrave