Linking Human Resource Management Practices and Organizational Strategy

Abstract

The purpose of this exploratory study is to examine country differences in human resource management (HRM) policies and practices and to attempt to determine whether, at a country level of analysis, there is a relationship between HRM practices and strategy. This study is based on survey data from over 4,000 firms in 57 nations. Two dimensions of HRM practices were found. The first dimension, “flexibility,” is related to companies' discretion in setting wages, working hours, hiring and firing practices, as well as levels of collective bargaining power. The second dimension, HR “investment,” includes issues related to the importance of skilled personnel at all levels; efforts to ensure such skill levels; a cooperative, participative approach to employee relations; and compensation based on merit. These two HRM dimensions were significantly related to different competitive Strategies.