Contingency, fit and flexibility of HRM in nonprofit organizations

Abstract

Purpose The change in the environment of nonprofit organizations (NPOs) has accentuated the need for managers to understand the relationship between strategy, HRM and organizational effectiveness. The purpose of this paper is to examine contingencies that underlie strategy, HRM and the dimensions of fit and flexibility in the actual HRM practices implemented by two study organizations that have deployed HRM in strategic change. Design/methodology/approach The research used two case studies of NPOs who reported that they adopted HR practices as an integral component of their adaptive strategy to achieve a fit. Thus, the research adopted purposive sampling to determine the cases that are appropriate to examine the research questions. Findings The findings provide evidence of horizontal and vertical fit and flexibility‐focused HRM practices designed to provide strategic alternatives. The research raises questions about how well NPOs’ managers understand contingency drivers of strategy, HRM practices and the direction of HRM in NPOs. A number of factors contributed to promote fit, flexibility and HR practices. First, the emphasis on HRM as a critical priority in strategy by senior management. Second, factor that may have contributed to fit and flexibility dimension is the use of professional managers in the NPOs. The case organizations involved either internal or external consultants with HRM expertise in strategic planning process. Finally, organisational structure that facilitated communication channels within both organizations. Both organizations emphasized internal communications as a way of engaging employees. Research limitations/implications The findings set the groundwork for major research which could extend findings from previous empirical research, that strategy of NPOs is aligned with the level of HR practices in some functions such as training and not aligned in others practices such as recruitment. Practice implications For nonprofit managers, this research reinforced the importance of senior management commitment and HR expertise to develop and implement HR practices that are aligned with current strategy and the need to develop employees’ skills to facilitate flexibility to adapt to change in the environment. It is imperative for the HR practices of NPOs not only to achieve horizontal and vertical fit, but also to build in flexibility the organization requires to develop, deploy and sustain employee skills and behaviour needed to cope with the competitive environment and to help with the achievement of organisational goals. Originality/value The important point of this research is that it extends our understanding of fit and flexibility in NPOs. It provides an example of how two NPOs adopted and emphasized SHRM as a critical component of their strategy.

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