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The purpose of this paper is to examine the impact of adopting a strategic approach to human resource management (HRM) in professional service firms (PSFs). It provides the empirical evidence by comparing and contrasting the adoption of a strategic approach to HRM in two Australian PSFs.

A qualitative case study approach is adopted. Data were collected from multiple sources. The secondary sources comprised annual reports, press releases and industry reports. In total, 40 semi‐structured interviews were conducted with senior partners, professional staff, HR managers and ex‐employees of the two firms.

The findings suggest that differences in the performance of PSFs could be explained by organizational control systems such as personnel and cultural controls. The qualitative data generated by the two PSF cases provided evidence to support the notion that strategic human resource management is an important factor in explaining firm performance. Our findings provide empirical support for the importance of strategic approaches to HRM.

One limitation of this study is the adoption of case study method, the findings of which cannot be generalized to a wider population. Thus, the study provides only a limited body of accumulated knowledge. Future studies could adopt a longitudinal research design to test the relationships between HRM systems, control systems and firm performance.

To be competitive, PSFs must restructure their HRM functions to allow the department to participate in strategic decision‐making. HR departments in firms should also incorporate cultural and personnel controls as a way to achieve higher levels of firm performance.

The paper provides empirical evidence of how PSFs use HRM as a component of success.