For over 15 years, there has been an ongoing research on HR strategies and competencies
differentiating the business performance. Besides this, HR practitioners have focussed their
attention on other important questions as well. Bratton and Gold (2007), for example, tries
to question what policies and practices make up HR strategies. Is it possible to identify
cluster of bundle of HR practices with different strategic competitive models? What is
relationship between different clusters of HR practices and organizational performance?
For companies looking for ways to gain a competitive advantage, the implication of HR
strategic choices for company performance is certainly the key factor. Recently business
strategy researchers turned their attention to internal attributes of top firms looking at
growth and utilization of human resources. This essay will aim to demonstrate how
Strategic Human Resource Management (SHRM) practices are getting implemented in
world airline industry. It will establish a clear link between industry trends and strategic
response.
According to Baney and Hesterly (2006), SHRM theories are based on a set of
assumptions, and hypothesis about the way competition in any industry is likely to evolve;
and how that evolution can be exploited to earn a profit. The greater the extent to which
these assumptions and hypothesis accurately reflect, more likely is that an organisation
will gain a competitive advantage from implementing those strategies. On contrary, if
these assumptions and hypothesis turn to fail, then organisational strategies are not likely
to be source of competitive advantage. Huang (1999) agrees stating that there is a close
link between business strategy and HRM methods. He moreover assumes that companies
that closely coordinate their business strategy and HRM activities achieve better
performance than companies that do not. The international airline industry is currently
following similar trends.
Practice of SHRM has outpaced academic work on human capital management. Yet data
on how firms actually manage people to provide a source of competitive advantage are
scarce (Becker and Huselid, 1999). HRM system that develops and maintains a firm
strategic infrastructure must be considered an investment. HR system in high performance
airline industries like British Airways, Cathay Pacific, Air France, Delta, etc. are
characterised by employee security, selective hiring, decentralized decision making,
extensive development, reduced status differentiation and information sharing. Ulrich and
Brockbank (2005) have further classified the key HR practices into people; management,
information and organisation (see Appendix 1 for further information). The company
builds a line of sight from investors and customers to its management and employees
