Expanding the concept of fit in strategic human resource management: An examination of the relationship between human resource practices and charismatic leadership on organizational outcomes

We investigate the relationship between high‐commitment human resources (HCHR) practices and chief executive officer (CEO) charismatic leadership on voluntary employee turnover and relative performance to peers in a sample of 281 small firms. In this study, we expand upon prior conceptualizations of fit within the literature on strategic human resources (HR) to include the fit of HCHR with other aspects of the people management system. Specifically, we hypothesize a variety of relationships that may occur (e.g., positive synergistic, deadly combination, or substitution) and find that when a firm uses a system of HCHR practices and has a charismatic leader, performance is highest and turnover lowest. Conversely, when a firm does not invest in either, performance is lowest and turnover highest. We also found some support for a substitution effect as our data showed that when there is a mismatch between a firm's HR system and the leadership characteristics of the CEO, turnover is higher and performance lower than the high‐investment people management system (high HCHR and high‐charismatic leadership), but turnover is lower and performance higher than the low‐investment (low HCHR and low‐charismatic leadership) people management system.