ing at people in economic terms as assets and liabilities which can be actively managed. Each element of HRM is integrated to fit into a pattern which ultimately meets business needs. HRM is seen to be holistic, focusing more on conceptual, higher-level concerns such as the structure and culture of the organization and the provision of necessary 9 competencies. HRM consistently uses organization’s reward systems, performance measures, promotion and learning opportunities to maximize the utilization of its human resources. In particular, they focus on the attitudes, beliefs and commitment of employees to achieve behavioral consistency and a culture of commitment that will lead firms to a higher level of productivity, profitability and competitiveness (Price, 1997:12-13).A review and research agenda put forth by Guest (1997) has endeavored to pull all those arguments together and this paper summarizes his points on the theory of HRM and its link with performance as follows.there are three types of theory about HRM, namely strategic, descriptive and normative.Strategic theories of HRM are primarily concerned with the relationship between a rangeof possible external contingencies and HRM policy and practice. They hypothesize thatthose firms that have a fit between business strategy, structure and HRM policy andpractice will have superior performance. Descriptive theories of HRM attempt to capture the broad field and to address some of the interrelationships between HRM policy and practice and key outcomes. The theories emphasise that the essential inputs of a fit of HRM policy and practice such as creating employee influence, enforcing HR flow, setting incentive rewards system and pleasant work systems will lead to four key HR outcomes (i.e. 4C commitment, competence, congruence and cost effectiveness as shown in Beer et 4 al (1984)’s model) that will produce low labour turnover, loyal and faithful team of employees who comm...
