MGMT90015 · Foundations Of Human Resource Management
Strategic HRM, Fit and the Three Models
Strategy is one of the most reliable wells in the open-book final, and the examinable core is small and definable. Strategic HRM (SHRM) means developing and implementing HR policies that enable the organisation to achieve its strategic objectives. Two ideas carry most of the marks. First, fit comes in two flavours: vertical (external) fit — HR strategy aligns to the business strategy — and horizontal (internal) fit — HR practices reinforce each other rather than pulling apart. Second, there are three competing logics for achieving performance through HR: best-fit (tailor HR to the context and strategy), best-practice (a universal 'bundle' of high-commitment practices works everywhere), and the resource-based view (RBV) (people are a source of sustained advantage when they are valuable, rare, inimitable and non-substitutable — VRIN). The chapter closes on the gap that decides whether any of this works in practice: intended → implemented → experienced HR, where line managers make or break the strategy on the ground.
What this chapter covers
- 01Strategic HRM (SHRM) — aligning HR to strategic objectives
- 02Vertical (external) fit — HR strategy aligned to business strategy
- 03Horizontal (internal) fit — HR practices reinforcing each other
- 04Best-fit — tailor HR to context and competitive strategy
- 05Best-practice — the universal high-commitment 'bundle'
- 06The resource-based view (RBV) and the VRIN test
- 07The three models compared — strengths and critiques
- 08Intended → implemented → experienced HR, and the line-manager gap
Best-fit vs best-practice for a cost-leader airline — argue it
- +1Define both models: best-practice says a universal bundle of high-commitment HR practices raises performance in any firm; best-fit says HR should be tailored to the firm's context and competitive strategy.
- +1Apply best-fit to the cost-leader: a low-cost strategy implies tight cost control, standardised roles and lower investment per head — so best-fit predicts lean, efficiency-focused HR.
- +1Apply best-practice as the counter: even a cost-leader needs reliable, motivated front-line staff, and the high-commitment bundle (selective hiring, training, voice) can lift service and retention — so 'low cost' need not mean 'low investment'.
- +1Bring in horizontal fit: whichever model, the practices must reinforce each other — cheap recruitment plus heavy training is internally inconsistent.
- +1Conclude with a position: e.g. a hybrid — best-fit sets the cost discipline, but a core of best-practice retention measures protects service quality. Take a side; don't sit on the fence.
Key terms
- Strategic HRM (SHRM)
- Developing and implementing HR policies and practices that enable an organisation to achieve its strategic objectives. Its examinable core is fit (vertical and horizontal) and the three competing models for achieving performance through HR.
- Vertical and horizontal fit
- Vertical (external) fit is the alignment of HR strategy to the business strategy; horizontal (internal) fit is the mutual reinforcement of HR practices so they pull the same way. A bundle with strong vertical but weak horizontal fit sends mixed signals to employees.
- Best-fit vs best-practice
- Two competing logics. Best-fit (contingency) tailors HR to the firm's context and competitive strategy. Best-practice (universalism) claims a single bundle of high-commitment practices raises performance everywhere. Best-practice is criticised for ignoring context; best-fit for being hard to specify and slow to change.
- Resource-based view (RBV) / VRIN
- The view that sustained competitive advantage comes from internal resources, including people, that are Valuable, Rare, Inimitable and Non-substitutable (VRIN). It reframes HR as a source of advantage rather than a cost, and underpins arguments for investing in distinctive human capital.
- Intended / implemented / experienced HR
- The distinction between HR as designed by the organisation (intended), as actually delivered by line managers (implemented), and as perceived by employees (experienced). The gaps between the three are where strategy is won or lost, and they put line managers at the centre of whether SHRM works.
Strategic HRM, Fit and the Three Models FAQ
What is the difference between vertical and horizontal fit?
Vertical (external) fit aligns HR strategy upward to the business strategy; horizontal (internal) fit aligns HR practices sideways to each other so they reinforce rather than contradict. Don't swap them in the exam — mixing the two is a common, avoidable error.
What are the three models of HR strategy?
Best-fit (tailor HR to the strategy and context), best-practice (a universal high-commitment bundle works everywhere), and the resource-based view (people are a source of sustained advantage when they pass the VRIN test). A strong answer names all three, applies one, and critiques it.
Why does the 'intended vs experienced HR' gap matter?
Because HR strategy on paper (intended) only creates value once line managers deliver it (implemented) and employees feel it (experienced). The gaps explain why a well-designed bundle can fail in practice, and they make line-management enactment the recurring critical point in strategy answers.
How likely is strategy to appear on the exam?
The teaching team flags strategy and fit as a reliable exam well, partly because the case and poster cover other topics. Be ready to define fit, name the three models, apply one to a scenario firm, and critique it — all while defining your key terms.
Exam move
Lock down the small examinable core: define vertical and horizontal fit precisely (and never swap them), and be able to name, define, apply and critique all three models — best-fit, best-practice and RBV/VRIN. Keep one worked argument ready (best-fit vs best-practice for a named firm) and always close on the intended → implemented → experienced gap, because the line-manager point earns the analysis marks in almost any strategy answer.
