Human Resources Strategy

The Best Practices Model

One framework for understanding strategic human resources management has been labeled the best practices model. This approach argues that there are sets of best practices in the field of HR management, and the use of these practices has a positive influence on organizational performance or profitability. Some empirical research conducted in a variety of countries, such as the United States, Japan, Israel, and Korea, supports this prediction. For example, research has indicated that the use of high-performance work practices—including job analysis, training, employment testing, quality of work life programs, and incentive compensation—is positively related to firm performance and profitability. Similarly, research comparing production lines in the United States and Japan found that Japanese production lines were more productive than U.S. lines. However, the productivity rates of U.S. lines were equal to the Japanese lines when Japanese management systems were used. Although most research has found that highperformance work practices are positively related to an organization's profitability, results of one recent study found that these work practices increase productivity but also increase labor costs.

The Alignment Model

Another framework for understanding HR strategy has been characterized as the alignment model. This approach suggests the effectiveness of organizations can be increased if HR practices are aligned with the competitive strategies used by organizations to differentiate themselves in the marketplace. For example, firms that differentiate themselves based on cost or speed use different HR practices than those that seek to gain a competitive advantage based on quality or innovation. Some empirical research has shown that organizations following different business strategies use different HR practices, and studies have shown that manufacturing and financial performance is enhanced when firms align their HR practices with the firm's business strategy.

The Resource-Based Model

Still a third model of strategic human resources management has been designated as the resource-based model. This model emphasizes that human resources can be a source of competitive advantage for organizations, but the value of people is not always readily apparent. In addition, the resource-based model contends that human resources may be a key advantage in organizations because they provide organizations with a unique pool of talent that is not easily imitated or [Page 332]substitutable. Furthermore, this model suggests that a combination of HR practices may be more difficult to imitate, and therefore, more valuable to the organization than a single practice—such as use of valid selection techniques. A number of empirical studies have provided support for this prediction and found that bundles of HR practices are more effective than individual practices. In addition, research suggests that HR practices need to be synergistic or complement one another if they are to have an impact on organizational performance. Similarly, research has revealed that firms often have higher levels of performance when they use different HR practices for different employee groups rather than use a uniform HR system with all employees. Similarly, research has indicated there are often sets of critical employees in organizations who are responsible for the organization's core competencies, and retention of these individuals is a key determinant of the success of organizations.

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