A case for HR as a strategic asset


Once a firm clarifies its strategy, human resources professionals need to build a clear business case for why and how HR can support that strategy. In making this business case, you have the benefit of a decade of systematic research to support your recommendations. While a comprehensive review of this research is beyond the scope of this article, we can highlight the key results. First, evidence gathered from a few surveys and more than 2,800 firms strongly suggests that a high-performance work system has a distinct positive influence on a firm’s financial performance.

Research has revealed that on a scale of 1 to 100 the broad middle range of efforts in the HRM system of any firm say twentieth to sixtieth percentile firms are primarily responsible for delivering the results. Further improving the quality of a firm’s HRM system has little marginal impact on firm performance. This marks the consolidation of the transformation from personnel to a professional focus in human resources. This approach does no damage, but HRM is still not really a strategic partner.

Finally, firms above the sixtieth percentile not only have adopted the appropriate HRM practices and implemented them effectively throughout the firm but also have begun to integrate the HRM system into the strategic “fabric� of the firm. As a practical matter, above the sixtieth percentile, the marginal impact of HRM on firm performance is the same as it is for those firms below the twentieth percentile, but for different reasons. The very best firms in our sample enjoy the payoffs from combining the appropriate HRM policies and practices into an internally coherent system that is directly aligned with business priorities and operating initiatives most likely to create economic value. In essence, our findings point to the significant financial returns available to firms that dramatically increase the quality of their HRM system.

While these effects are financially significant, they do not perform any miracle that is simple changes in HR practice will not immediately send a firm’s price soaring. Changing the system by the magnitude require to enjoy these gains takes time, insight, and considerable effort. It is fair to say that it requires a transformation of the HR function and system. If it could be done overnight, Human Resource systems would be easily imitated and would quickly lose much of their strategic character.

The business case for a strategic HR rule must also incorporate HR key influence Strategy implementation, differentiate successful firms. Strategy content is very easy to choose than to implement. Successful strategy implementation depends upon employee’s strategic focus, HR strategic alignment, and balanced performance measurement system.

A focused workforce is the result of successful strategy implementation. The advantages are higher productivity, better quality, higher flexibility, ability to learn and implement new product line or methods and a sense of high accomplishment. The conclusion is that managers with high acumen and ability can plan the right strategy to give a direction to the work force to achieve and deliver the organizational goals in terms of Human Resources.