For each of the HR strategies proposed, Figure 7.2 identifies examples of specific HR practices consistent with different HR functions. For example, corresponding to the agency/transactions cost perspective, training and development functional goals can be achieved by lecture-based training and job grade-based training. For the compensation function, practices such a mix of high base pay and low group-based incentives would be consistent. The agency/transactions cost perspective might also suggest a no union policy (labor relations function), clear individual objectives and periodic feedback on performance (performance management), and performance-based promotion and succession planning (staffing).

Based on the IO economics perspective, training and development functional goals can be achieved by, for example, minimal internal training. Similarly, compensation based on incentives tied to organizational performance, labor relations characterized by industry-based collective bargaining, individual objectives linked to organizational objectives (performance management), and promotion and succession planning based on seniority (staffing) would all be consistent with the perspective.

Consistent with the strategic group process perspective, one might expect to observe competency-based training (training and development), high base pay based on individual competency (compensation), the avoidance of collective bargaining (labor relations), flexible individual objectives (performance management), and job rotation (staffing). Finally, the dynamic capabilities perspective would be consistent with creative training, incentives that are balanced between organizational and individual performance, a cooperative management-labor relationship, informal performance management, and highly specialized labor selection. By aligning HR practices with functional HR strategies in the context of a given strategic management perspective, TMTs are now equipped with a consistent set of HR and business strategies.


Although we have proposed that TMTs should align HR practices with functional HR strategies derived from the HR and business strategy, we also believe that action plans should reflect the imagination and judgments of the TMT that considers their idiosyncratic conditions. In this sense, TMT capabilities are important in facilitating SHRM and subsequent company performance. For this reason, we offer some HR practices that are accepted as being effective across firms. It is the mix of aligned HR practices and universal practices that will drive the success of SHRM.

Internal career opportunities refer to the use of internal labor markets. In other words, organizations can choose to hire predominantly from within or from outside. Bundling training refers to the amount of formal and customized training given to employees. Profit-sharing plans that tie pay to organizational performance have been seen as an integral part of a strategic HR system. The degree to which employees are given employment security has many strategic implications. Although it is apparent in today's economy that even the most senior employees are not free from layoffs, particular groups of employees in organizations undoubtedly have a greater sense of security in their jobs than others, either because of a formal or an informal policy of employment security. Participative decision making (as well as formal grievance systems) have also emerged as key factors. Finally, open communication is positively related to corporate financial performance. These six practices are consistently supported by HR researchers as being an integral part of high-performance work systems. We therefore encourage TMTs to use them in combination, when possible, with the aligned practices from our framework.

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