Understanding the imperative linkage between Business Strategies and HRM Practices

Understanding Strategic Human Resource Management practices in emerging economies is fast emerging as an area of special importance among academicians, researchers, HR professionals and others. Current research in this area tries to examine the nature of linkage between business strategies and human resource management. Existing literature also highlights the need for the formulation of an integrated and a mutually consistent set of HR practices in consonance with the business strategy of an organization, all aimed towards achievement of organizational objectives.

Central to this area of research study is an analysis of the issue of “fit” or integration between business strategy and HRM practices of an organization. This concept of “fit” has been analyzed from different perspectives. However, studies carried out in this area in emerging economies like India are almost negligible and inadequate.

Hence it is important to investigate the nature of linkage between business strategies and human resource management practices of organizations in various Industries in an emerging economy like India with a special thrust to IT/ITeS sector. The vast contribution made by this sector in development of the Indian economy by providing employment to a large number of unemployed youth, developing infrastructural facilities, improving competitiveness etc. has made it an interesting subject for academicians, researchers and others. NASSCOM has predicted that India is going to experience a talent shortage of 500,000 by 2010 (Business Today, 2007). With the unprecedented rate of growth of the IT/ITeS sector and the turbulent business environment, the HR professionals in this sector have to grapple with several challenges of the industry and the business. As the firms in the IT/ITeS sector are confronting lots of challenges, it is high time for the HR professionals to make a paradigm shift from the conventional HR practices to contemporary HR practices to cope up with the ever changing demands of the vivacious industry. This calls for more emphasis on strategically aligned HR issues and need for a proactive role on the part of the HR professionals in the IT/ITeS Industry.

This understanding gets further validated in the recent IMA India’s Annual Human Resource (HR) Survey 2008-09 (IMA India is an Asia-focused business intelligence firm that provides enterprises with strategic research, business intelligence and market insights together with sound independent advice on various aspects of the operating environment) which came up with some startling strategic HR issues which indicates significant change in HR Paradigm -


“The role of the human resource function is defined by the environment in which businesses operate. As the global environment changes, the foremost concerns in HR in India have done a dramatic turnaround. Attrition is no longer as much of a concern as the management of talent. Managing compensation is now less of an issue than employee motivation and productivity, necessitating that corporations increase their focus on the human resource issue as one of extreme strategic importance.

Over the course of the past decade, HR and the management of talent has been identified as the greatest challenge facing businesses in the country. Going forward, the texture of this debate – as indeed, the challenges in HR – are set to change as the paradigm of operation shifts from rapid growth to sustenance mode where productivity and high motivation will be key to success. Retention strategies, the creation of leadership skills, and compensation structures linked to performance remain amongst the most important issues of focus.”

Contributed By:
Ranjan Sarkar
(Vice President - HR & Corporate Communication)
Acclaris Limited