The linkage of human resource management (HRM) to strategy formulation and strategy implementation is vital to the long‐term success of the firm — its strategic performance. Several means of linking HRM and strategy have been proposed. Theories and models that show the range of choices in different aspects of the performance systems are discussed. A case of a large telecommunications firm attempting to integrate its performance system and strategy is presented. For each element in the performance system the old and the new performance system characteristics are contrasted. While the assessment of performance systems is ongoing, the most striking observation is that the performance appraisal system is the least changed and most problematic element.
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