SHRM and context: why firms want to be as different as legitimately possible

The purpose of this paper is to raise awareness that despite many calls for attention to a firm’s context in considering consequences for human resource management (HRM) and performance, research progress to date has been limited at best, although promising signs of change are emerging. Moreover, what has been defined as “performance” is coming under increasing scrutiny, with a more holistic concept emerging that balances both a firm’s financial performance and employee well-being. The question remains whether this is a mutual gains or conflicting outcomes situation for the firm vis-á-vis the employee.

This paper presents a framework that facilitates a broader context-centric analysis of the HRM and performance relationship. In so doing, the authors posit that context should no longer merely be an obligatory control variable in a research design, but instead should be explicitly incorporated in both theory development and empirical model testing.

The Contextual SHRM Framework demonstrates how key organizational actors can balance competitive, heritage and institutional mechanisms to create an appropriate strategic HRM (SHRM) system capable of delivering organizational outcomes that balance financial and employee well-being outcomes, which in the long run impact societal well-being that, in turn, recreates the firm’s operating context. At the heart of the framework is an iterative process between context and the SHRM system, achieving an appropriate level of dynamic fit across the various components.

In addition to empirical research, the framework has to date been widely used in executive development training, serving as a force field analysis tool allowing simultaneous consideration of the external and internal elements of a firm’s context, key organizational actors and SHRM system outcomes. HR professionals applying the framework to their organization can add value by demonstrating the clear linkage between the business strategy, the HRM system and the firm’s operating context.

This paper is designed to encourage new directions in future research and practice. The Contextual SHRM Framework is presented as a novel tool to facilitate advancement of the HRM and performance field of study.