Hr strategies Key concepts and terms

Table 3.1 Achieving vertical fi t between HR and business strategies
HR strategy
Competitive strategy
Achieve competitive
advantage through
innovation
Achieve competitive
advantage through
quality
Achieve competitive
advantage through
cost-leadership
Resourcing
Recruit and retain 
high quality people 
with innovative skills 
and a good track 
record in innovation
Use sophisticated 
selection procedures to 
recruit people who are 
likely to deliver quality 
and high levels of 
customer service
Develop core/
periphery employment 
structures; recruit 
people who are likely 
to add value; if 
unavoidable, plan and 
manage downsizing 
humanely

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HR Strategies 57
HR strategy
Competitive strategy
Achieve competitive
advantage through
innovation
Achieve competitive
advantage through
quality
Achieve competitive
advantage through
cost-leadership
Learning and 
development
Develop strategic 
capability and provide 
encouragement and 
facilities for enhancing 
innovative skills and 
enhancing the intellec-
tual capital of the 
organization
Encourage the 
development of a 
learning organization, 
develop and 
implement knowledge 
management processes, 
support total quality 
and customer care 
initiatives with focused 
training
Provide training 
designed to improve 
productivity;
inaugurate just-in-time
training which is 
closely linked to 
immediate 
business needs and can 
generate measurable 
improvements in cost-
effectiveness
Reward
Provide fi nancial 
incentives and rewards 
and recognition for 
successful innovations
Link rewards to quality 
performance and the 
achievement of high 
standards of customer 
service
Review all reward 
practices to ensure that 
they provide value for 
money and do not lead 
to unnecessary 
expenditure
The factors that can make the achievement of good vertical fi t diffi cult are:
The business strategy may not be clearly defi ned – it could be in an emergent or evolu-
•
tionary state, which would mean that there would be little or nothing with which to fi t 
the HR strategy.
Even if the business strategy is clear, it may be diffi cult to determine precisely how HR 
•
strategies could help in specifi c ways to support the achievement of particular business 
objectives – a good business case can only be made if it can be demonstrated that there 
will be a measurable link between the HR strategy and business performance in the 
area concerned.
Even if there is a link, HR specialists do not always have the strategic capability to make 
•
the connection – they need to be able to see the big picture, understand the business 
drivers and appreciate how HR policies and practices can impact on them.