Harrison (2005) argues that there is much evidence of links between HR practices and organisational performance; particularly where there is ‘bundling’ of sets practices. Findings suggested that where people are performing beyond minimal requirements, three conditions are necessary (CIPD 2001b). This is described as the AMO model and the requirements are:

• • (A) They have the ability to do so because they have the necessary knowledge and skills, including team working.
  • (M) They are motivated to do so.
  • (O)They are given the opportunity to use their skills both in their jobs and in contributing to organisational success.

To turn AMO into action requires policies and practices to support the model, and key findings were that HR policies and practices that build commitment are crucial in turning skills into action. High levels of commitment and discretionary behaviour are needed to achieve above-average organisational performance. As an example Selfridges expresses it’s ‘Big Idea’ in three goals: to be the place where people want to shop, invest and work. Selfridges regularly reports on performance related to each and this scorecard approach enables an explicit link to be made between individuals’ goals and those of the organisation.

Best Practice

Businesses undergoing change or those in unpredictable markets have different HRM strategies and from them flow differing policies and procedures. Swart et al (2005) describe how the best-practice approach to HRM strategy, which holds that particular sets of best practices, will lead to performance improvements. A dominant theme is the best-practice approaches are that of horizontal alignment – i.e. establishing a fit between the various practices within the HR strategies, otherwise known as HR bundles. This model has been criticised as practitioners may find that what works best in one environment may not work as well in another. Relatively predictable environments which accommodate the strategy are more likely to succeed. Evolving strategy with relatively unpredictable environmental factors is more difficult as there is little knowledge of change or what triggers it in these circumstances. Best practice bundles can include employment security, selective hiring and sophisticated selection, extensive training and development, employee involvement, self-managed teams, reduction of status differences and high compensation tied to organisational performance.