HRM Strategy: Performance Management and Expectancy Theory

Lionel Grealou Operations Talents 2 minutes

Running a successful and growing business depends on the ability of the organization to react and be proactive in developing its assets including its employees. Human Resource Management (HRM) is essential for achieving organisational objectives. It involves recruitment, selection, development of staff, performance management, as well as policy formulation and communication systems as stated by Guest (1987). HRM strategy typically regroups 4 components:

  1. Talent acquisition: attracting the best human talent from external sources.
  2. Effective resource allocation: maximizing the use of existing human resources by always having the right person in the right place at the right time.
  3. Talent improvement (or development): maximizing the talents of existing employees by continuously training them and guiding them in their job and career.
  4. Cost reduction: reducing personnel cost to the lowest possible level.

These components are grouped differently from one organization to another. To be successful an organization must have a coherent human resource system that controls and integrates ‘employee influence’ toward greater engagement and better results:

  • Commitment and motivation, linking to performance and outcomes, as explained by the ‘expectancy theory‘ which maintains that employees behave in ways they expect will produce positive outcomes (Vroom, 1964)
  • Goal congruence
  • Building human capital
  • Cost-effectiveness
  • Ethical standards

Within organizations, every role is basically a set of behavioural expectations. These expectations are often implicit – they are not defined in the employment contract. Therefore employees do not necessarily know what to expect.

Performance management has a range of meanings with resource management.

The link between organisational objectives and individual goals is important and must be recognised / shared across the different hierarchical levels. 

HRM typically contributes to an organisation’s performance and its success from 2 perspectives:

  1. The ‘contingency’ perspective emphasises the fit between business strategy and HRM policies and strategies, implying that business strategies are followed by HRM policies in determining business performance.
  2. The ‘configurational’ perspective posits a simultaneous internal and external fit between an organization’s external environment, business strategy and HR strategy, implying that business strategies and HRM policies interact, according to organizational context in determining business performance.

HRM strategy is at the heart of the human performance management and resource development. It is the responsibility of managers and leaders (anyone who achieves results through other people) of an organisation to insure HRM is addressing the organisation needs.

What are your thoughts?


  • Guest DE (1987) Human Resource Management and Industrial Relations. Journal of Management Studies, 24: 503–521.
  • Vroom V (1964) Work and Motivation, Wiley, New York.

This post was originally published on LinkedIn on 20 September 2015.

About the Author

Lionel Grealou


Lionel Grealou, a.k.a. Lio, helps original equipment manufacturers transform, develop, and implement their digital transformation strategies—driving organizational change, data continuity and process improvement, managing the lifecycle of things across enterprise platforms, from PDM to PLM, ERP, MES, PIM, CRM, or BIM. Beyond consulting roles, Lio held leadership positions across industries, with both established OEMs and start-ups, covering the extended innovation lifecycle scope, from research and development, to engineering, discrete and process manufacturing, procurement, finance, supply chain, operations, program management, quality, compliance, marketing, etc.

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