HRM is of special importance during episodes of strategic or organizational change (Galpin1996). New strategic directions may require competencies that have to be developed, and restructuring activities usually provoke resistance to change that must be overcome (Kotter1995). We focus on episodes of growth and downsizing, which have received considerable attention in existing literature (see, e.g., Datta et al. 2010; Phelps et al. 2007). When a company’s body of employees increases or decreases rapidly (in terms of the number of employees), a high percentage of employees must be hired, displaced, trained, or laid off. Further, reward systems and career ladders (e.g., those for middle managers) must be revised and HR development activities or recruitment strategies adapted (Finegold and Frenkel 2006). One of our interviewees formulated it as follows: “Finding the right people is the basis for any growth strategy and thus determines our growth targets—before we decide about market penetration, market expansion, or diversification strategies, I have to evaluate how to provide the required employees.” Another CHRO stated, “Of course I play a key role in every decision that changes our employees’ situation; if we decide to reduce our workforce, I am responsible for finding adequate measures and carrying on negotiations with employee representatives.” These are strategic HR tasks that must be aligned to each other and to corporate strategy and, therefore, must be addressed at the very top of the firm (Brewster 1994). Previous research has concluded that when a firm’s number of employees changes rapidly, integrating HR strategy and corporate strategy is even more necessary (Bennett et al. 1998) and has a greater effect on performance (Welbourne and Andrews 1996). Furthermore, HR departments are required to act as agents of change, help individual employees and departments deal with change, and shape cultures that improve organizations’ capacity for change (Caldwell 2003). To meet these challenges, the integration of senior HR specialists within TMTs is essential (Brewster 1994).
Given these considerations, we formulate the following hypothesis: