external fit

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Is the process of ensuring that the human resource strategy conforms with the wider business strategy. The assumption is that a correct match between the two strategies will produce the optimum performance of employees in the organization. There are various matching models which prescribe how human resource strategy can be linked with business strategy. Whilst these models differ in terms of the policies they advocate, they are nearly all based on the assumption that HR strategy should be reactive to the overall business objectives and the stage of development of the organization—in others words, HR strategy can be devised by matching it to the existing business strategy. A variation of this approach comes from contingency theory which suggests that a range of factors must be taken into account when devising an HR strategy. In other words, it is not simply a case of matching HR to business strategy; other contextual variables must also be taken into account, in particular social, economic, political, legal, and technological issues.

Subjects: Human Resource Management.

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