How the alignment of business strategy and HR strategy can impact performance: A practical insight for managers

Abstract

This paper explores how the alignment of HR strategy and business strategy relates to organisational performance. It addresses the core question, “Does the alignment of business strategy and HR strategy impact performance?”. Using Miles and Snow's theories of strategic typologies (defender, prospector and analyser) (Miles and Snow, 1978), strategic HR systems (Miles and Snow, 1984a) corresponding to these strategic types and dynamics of fit (tight fit, minimal fit and misfit) (Miles and Snow, 1994), the results of the current study found that organisational performance is best explained by the tight alignment and the minimal alignment of HR strategy and business strategy. One noteworthy result of the study is the viability of using a combination strategy where dimensions from two or more “pure” strategies in a typology can be combined and effectively implemented. Managers are recommended to develop a clear, internally consistent strategy for the firm, but at the same time, they should consider combining elements of different strategies to the extent that the firm's array of strategic resources permits them to do so.