Strategic performance options in professional service organisations

In the current debate on HRM and organisational performance (Mahoney and Pandian,1992; Storey, 1992; Paauwe, 1994; Wright et al, 1994; Flood et al, 1995; Becker and, 1996; Boxall, 1996; Mueller, 1996; Beatty and Schneider, 1997; Coff, 1997; Guest,1997; Paauwe and Richardson, 1997; Boxall and Steeneveld, 1999) HR theorists, who refer to `resource-based view of the ®rm’ (Penrose, 1959; Wernerfelt, 1984; Barney, 1991), argue HR is a major determinant of a ®rm’s competitive advantage. This argument is relevant in the case of professional service organisations, such as auditing and law ®rms and management consulting organisations (Maister, 1993; Grant, 1997; Nachum, 1998). A®rm’s ability to generate rents depends largely on its employees competencies (knowledge, and attitudes) in tracing work-related problems, diagnosing backgrounds and, implementing and evaluating successful solutions. In view of the currently scarcity in labour markets for professionals and the rapidly changing and product markets, HR policy nowadays is even more important to a professional organisation’s success. Adequate management of HR is a challenging task since knowledge, skills and are vital but elusive resources. Since competencies are based on former and innovative creativeness, they are valuable resources in dealing with and unfamiliar work-related problems. At the same time, knowledge, skills and are hard to control, since they are inextricably bound to their owners and to identify, measure, protect and destroy (Sadler and Milmer, 1993). Hence, HR practices, which successfully cope with the challenges of HR, are for professional service organisations in order to create and sustain advantage (Coff, 1997). first step in understanding HRM’s role in professional service organisations is to HR strategies in view of the organisation’ s output market strategy. Recent literature on strategic management in the professional service industry (Maister, 1993) points out that strategic options can effectively enhance organisational performance. Some service organisations successfully focus on offering tailor-made solutions for organisational problems (expertise orientation), while other organisations the effectiveness of more standardised procedures and methods for dealing with a’ s organisational problems (ef®ciency orientation). The purpose of this article is to the relationship between HR and strategic performance options ± or what Boxall and (1999) call, `®rm’s competitive strategy’ ± in professional service organisations presenting, in an `ideal typical way’ (Weber, 1968; Burger, 1976), two different HR which enhance organisational performance effectively in either expertise or ef®ciency-oriented output market strategies. Analysis is based on an exploration of HR and practices which are currently used in actual professional service organisations the management consulting industry.