The Relationship Between Human Resource Practices And Business Strategy In A Business Organization

The relationship between human resource practices and a company’s business strategy are aligned in many ways. The ultimate goal of the alignment is to use human capital as instrument to maximize the organization assets for the benefit of the stakeholders. Below are some of the relationship between human resource practices and business strategy.


Human resource practices create the process for the development of employees’ knowledge and the skill-set across the organization to promote its core competencies that support and maintain its competitive advantage in the industry. The term “strategic HRM” is the new template in the management of modern organization that is anchored on the concept that the most valuable asset an organization provides itself is HR, since it is the tool that is responsible for the coordination and implementation of other factors of production that spurs corporate performance journals

The business strategy adopts by an organization is meant to showcase how it intend to succeed by using the factors of production at its disposal to build a competitive advantage, strategy-business. Business strategy helps to identify the direction that the organization wishes to go in relation to its environment. Human resource strategies manage human resource so that the goals set by the organization can be achieved. The focus is directed on what the business intentions are as they relate to human resource policies and practices. Therefore, how human resource is spread across the organization’s units and departments, motivated, managed and retained will affect the performance outcome after the business strategy has been implemented. The relationship between business strategy and human resource practices also would determine the organization competitive and performance outcome.

A glimpse into Oya Erdil & Ayse Gunsel’s ‘BUSINESS STRATEGY AND HUMAN RESOURCE STRATEGY- THE INTERACTION’ shows there is a relationship between human resource management practices and an organization business strategy, which also could be referred to as the business environment and organizational development. Another defining aspect of that relationship is the across the board acceptance that an organization’s human resource management practices have a link to the firm’s decision making process, in other words, the HR practices be closely aligned with the strategy of the whole business. While there is not much disagreement as pertaining to the relationship between HR practices and business strategy, there is a tendency not to acknowledge the deeper nature of the relationship. The theory of human resource management opined that should employees be considered and managed as a valued strategic asset, the organization in practice would be able to achieve a competitive advantage, and the outcome will be a superior performance. This again, means managing human resource in such a way that it will correspond to the business strategy, being that the goals and process of each of the strategy profiles are different.

According to Oya Erdil & Ayse Gunsel, this relationship is further entrenched when you look at how human resource practices are selected based on competitive strategy espoused by the organization. An organization that coordinates its business strategy and human resources policies and practices achieve a superior performance outcome than those that do not.


As explained by Rob Gray’s ‘Aligning performance management with business strategy,’ some employers could be missing the key factor that links performance management to strategy and culture. For it is an organization’s prevailing culture and practices that will determine the optimum use of its valuable asset (human beings) when its business strategy is aligned with its human resource practices. The right tools are needed if employers are to succeed in aligning their human resource management to its business strategy. The era of using performance review and appraisal as the only tools for performance, management solutions have since been replicated by a complete suite of competency measurement tools. These tools are able to assist employees to understand the means and learning resources through which they can effectively develop their skills and talent. Technology is one of the enablers but needs commitment from top down that is important for a high performance culture.


Edward E. Lawler lll’s, ‘What should HR Leaders Focus On In 2014’ gives a deep insight into how business entities could achieve a superior outcome for their shareholders. While technology is a valued enabler that spurs performance leading to superior outcome for an organization, another thing that should be a thing of focus for HR is the aspect of talent management that assesses the necessary skills every organization needs to implement its business strategy, the plan for recruitment and the management of critical talent. Even though, talent has long been determined to be important, it is of recent becoming more so given that many businesses are performing knowledge based work that is more complex, and with operations in the global markets. This has led to the situation of performance talent having a great impact on the organization’s bottom line. Google, Amazon, Apple, and other techs and service organizations have done a tremendous job of recruiting and managing people around the world that have the needed critical knowledge based skills. Their talented workforce have been able to perform well, differentiate their companies from competitors across industries which have translated to a pattern of communication that relays their type of employees and the jobs they offer.


Innovation is another standard of performance management,, that when effectively coordinated with an organization business objectives lead to a superior performance outcome. When an organization devote a substantial amount of time to innovation and business strategy, and both are valued equally, promoted across the board, and well communicated, a culture would exist naturally which will foster a relationship of the two. The fostered culture creates a top down business objectives that are communicated across the board in the organization, that enable all units to focus in addressing the organization’s short and long-term goals. From then, it becomes the innovators’ task to forge an alignment of their activities in support of the organization’s goals. The various ways to naturally coordinate both camps is the joint development of technology/product, and business road maps that encourage discussion and debate, forging links that guides actions. Successful performance outcome are highlighted through internal business and fairs, using the avenue to raise visibility for long term opportunities.


Diversity in an organization plays a significant role in forging a link between performance management and business strategy. There is a business case for diversity in the organization based on the evidence and arguments that both believe that when diversity is leveraged in an organization, it can contribute to the achievement of the company’s goals and priorities. To understand the relevance of diversity to the attainment of business objectives, the type of diversity under consideration has to be relevant to business performance and innovation

CFOs Need to Know the Fallacies Behind "Business as Usual" in relation to Human Resources Practices

What are your people worth?

“PEOPLE ARE OUR MOST IMPORTANT ASSET.” How many times have you heard that? More important, how many times upon hearing it have you nodded politely and then changed the subject to something more, ah, important? Human resources receives far more lip service than respect, but economic factors factors are making HR the subject of some truly substantive executive discussions-and expenditures.Human resources as a lowly cost center

The Human resource department is traditionally inundated with excessive hard and soft costs. This single department is a necessary evil. HR is not part of any company’s core line of business, which creates these hard and soft costs. These costs revolve around management of documents for each employee. If the career of an employee is broken up into 3 phases, HR’s document lifecycle looks like the following:

  • Pre-employment: 15 to 20 documents including – job description, application, search agency contract, interview checklist
  • Employment: 14 to 18 one-time, and 3 to 5 annual documents including – nondisclosure, non-compete, handbook acceptance, performance reviews
  • Post-Employment: 3 to 6 documents including – termination, COBRA election, exit interview.

The above documents, and many others travel extensively throughout an organization during the career of a single employee. A simple example is the interview process. A manger generates a request to fill any open position on a preprinted form. That request is manually distributed to upper management for approval. Once approved, the request is manually distributed to the HR department. As applicants submit resumes, qualified prospects are manually distributed to managers for interviews. Manual notes are taken and then the interview checklist is manually distributed back to the HR department to repeat the same process for as many interviews as it takes to fill the position.This repetitive back and forth flow of HR documents is only interrupted by the monumental task of physically filling, tracking, and securing these documents. Most companies will have independent filing cabinets containing documents, such as resumes, letters of recommendation, performance reviews, and more, for each employee. Some organizations will have another set of filing cabinets dedicated to medical benefit documentation. Managing multiple sets of records requires clerical support and administrative overhead.

The Human Resources Department is outmanned. Studies indicate that there are 85 employees for every 1 Human Resources representative. Every year these numbers become even more lopsided by 3 to 5%. This coupled with the fact that every employee has a permanent file containing between 32 to 44 documents, proves that Human Resources is drowning in paper.
Throwing HR a Lifesaver

Human Resources can be saved. Document Management solutions were specifically designed to handle the overwhelming flow of paper. HR documents no longer have to originate in a paper format. They no longer have to be manually distributed back in forth through the organization. They are free of being stored insecurely in outdated filing cabinets.

Implementing a proven document management solution would positively affect the following areas of an HR document lifecycle:

  • Creation – Documents are created on web forms, not Paper.
  • Distribution – Documents are distributed electronically via rules based routing, not manually.
  • Storage – Documents are securely stored electronically, not on someone’s desk or filing cabinet.
  • Retrieval – Documents are retrieved from a desktop with the correct security clearance, not after a manual expedition to records room.
  • Security and Compliance – Multiple levels of passwords and rights restrictions secure documents, as well as automatic audits trails, and not inaccurate fallible manual efforts.

Benefits of Automating the HR Process
Improved Management – All HR related information is available on-line providing managers more information to base their employee management decisions.
Increased HR Manager Productivity – Human Resource’s self-service capabilities reduce inquiries to HR from employees and managers, freeing HR managers for other tasks.
Lower Administrative Costs – Document transportation costs are eliminated, as are the cost of physical storage space: office space, filing cabinets, offsite storage, microfiche equipment, etc. Clerical time is no longer spent looking for lost or misfiled documents.
Leverage Existing ERP Investments – HR managers, line managers and employees continue to use their existing ERP interface and tools, assuring rapid adoption of the optimized processes and reduced training time.
Improved Control and Compliance – With the system’s workflow enforcing accountability and all actions automatically recorded in an audit trail, compliance with corporate standards and legal regulations is improved.
Enhanced Security – Human Resources restricts access to personnel file information, enabling adherence to regulations such as HIPAA and EEOC.
Smoother Audits – With all HR related documentation available on-line from within the ERP system, internal and external audits are completed in less time with fewer people affected.
What Are You Waiting For?

As you can see, fallacies behind the phrase “business as usual” are not immediately apparent. When companies take the time to look for ways to improve business, these problems are discovered, especially when it comes to Human Resources.

Managing documents will make your business run more efficiently. Moving from a manual process to an electronic process leads to a better managed, more profitable business. What are you waiting for? Let us help you uncover your hidden document costs.
What Next?

Cornerstone Communications has helped over 800 CFOs streamline their document processes. We do not know your specific situation or if we can help you. Contact us today to explore how document management might affect your company’s Human Resource process.

Human Resources: Are You Still Shackled By Obsolete Practices?


Employee management is part of every manager’s responsibility. But it’s 2013: not 1913, 1953 or even 1983. We must discard the HR practices that served us well in the 20th Century. Today’s workplace demands that.

7 Core Practices

How many of these statements reflect your view of HR?

  • For every vacancy, seek a resume, written application or a completed application form
  • An annual formal performance appraisal is a valuable and necessary tool
  • The face to face interview is an essential part of staff selection
  • Training is the key factor in performance improvement
  • We must develop each individual to their potential
  • HR policy and procedure manuals are valuable tools for managers
  • References from previous managers are a valuable resources in the selection process.

There is another approach. How do you respond to these statements?

  • Resumes and written applications are a major source of error in staff selection
  • Formal annual performance appraisals are a bureaucratic HR construct they have little valve in improving on job performance
  • You simply cannot tell what people can do merely by talking to them
  • Of itself, training rarely improves on job performance
  • The basic human unit in the workplace is the team not the individual. Successful businesses are made up of successful teams
  • Performance systems and standards, not HR policy and procedures are the key to successful on job performance
  • References may be valuable reassurance. That’s all. Nothing else. Should you allow your selection decision to be influenced by a complete stranger talking about the past?

How many of these statements do you agree with? Do they seem heretical? They will if you’re locked into conventional HR practice.

Let’s look at each individually

  • Resumes and written applications are about the past. They’re what a candidate wants you to know. This may not coincide with what you really want to know. It’s estimated that 70% of all resumes are prepared by professional resume writers. They’ve become a sales tool.
  • Performance measurement is far too important to be left to a six or twelve monthly event. We now have the technology to enable employees to measure their own performance monthly, weekly or even daily
  • The face to face interview still has a place in selection. It should be used only towards the end of the process for clarification and to discuss issues relating to culture fit
  • Most employee performance problems occur because people “won’t do” rather than “can’t so”. You need well trained staff but you need lots more too.
  • We employee individuals. But we expect them to be effective team members for the benefit of the business. Workplace teams don’t need to be built. They exist. They’re normal in the workplace. Developing effective teams is more important than developing effective individuals.
  • Managers have one major obligation to employees. It ranks above all others. They must “put systems in place that ensure that it will be impossible for employees to fail”. A poor system will beat a good performer every time. Personnel policy and procedure must support performance systems and performance standards.
  • References are about the past. Selection’s about the future. And you usually don’t know anything about the person providing the reference, written or oral. If you must do reference checks ask only one question; “Would you give (name applicant) a job as a (name vacancy) in your company?” That’s the best way to get useful information.

The 21st Century Workplace

Today’s workplace is very different from the typical 20th Century workplace. The PC, iPad, iPhone and all their relatives have made a vast difference. Today’s pc is far more powerful and valuable than the huge main frames of only 20 years ago.

Every employee now has masses of data at their fingertips. They no longer need close supervision. They have “mountains” of feedback available to them instantly if necessary. Management needs only to establish the systems so that masses of data becomes valuable and useful performance information. As Tom Gilbert says, “Information is data you can use”.

Much of what employees are able to do today was regarded as “management work” 20 years ago or less. Now employees can run the business on a day to day basis. This means managers are free to devote most of their time to genuine management work.

20th Century HR Bureaucracy

There’s no longer a need for 20th Century HR bureaucracy. There’s no need for the form filling, the checking, the admin minutiae. Today’s HR professionals can provide a genuine service that helps managers achieve business goals. And they can help managers establish the performance systems and standards. HR must function as a collaborator with operations, sales and production staff. There’s no need for HR specialists as mediator between employees and management. After all, managers are responsible for employee management.

What To do Instead

To replace bureaucratic practices, I suggest

  • Written applications: don’t ask for them. Instead, ask applicants to phone – remember the telephone? – you direct. Conduct a brief screening interview. Reject all unsuitable applicants. Make up a short list based on your screening interviews. Proceed only with the shortlisted candidates. You’ll save hours and hours of unnecessary reading and evaluating.
  • Put systems in place to enable employees to measure their own performance on a daily, weekly and monthly basis. You’ll need specific measurable performance standards to do this. But the system will show “how each employee’s going”.
  • Place the face to face interview last in your selection process. Interview after you’ve conducted tests where applicants demonstrate that they have the skills you seek. Use the interview primarily to assess “culture fit”.
  • Continue to train well: but recognize that performance problems usually occur because of poor systems not poor training. Even the best training can be derailed by a poor system.
  • Focus on team not individual performance: ensure that individual staff members are effective team contributors. Team effectiveness depends on role and goal clarity, not on interpersonal relations.
  • Effective performance systems and clear performance standards are the absolute essentials for effective employee performance. Take the time and trouble to create effective systems.
  • Don’t ask for references. Ignore those presented by applicants. Use a probation period to ensure the new hire can do your job for you.


20th Century HR practices have served us well for a century. But they’re past their use by date. Modern technology provides far more effective techniques for today’s managers. Use them. Otherwise you’ll be overrun by managers who do.