For more than ten years, a great deal has been written about the key role that human resources can play in acquiring a competitive advantage. HRM activities would become strategic if the organization's philosophy, policies, programs, practices, HRM processes and strategic needs were systematically linked (Schuler 1998). Two types of integration have been proposed in the literature: first, vertical integration, which requires that HRM Systems be vertically linked with strategic management; and second, horizontal integration, which implies that HRM Systems (staffing, compensation, etc.) be co-ordinated and coherent with each other while supporting the strategy. Full vertical integration must be achieved at the operational level (the micro level), that is, in actions that are directly under the supervisons control. We hypothesize that the lack of integration of the strategy's basic elements (vision, values, key factors of success, strategic objectives) into the micro level (strategic, vertical and operational integration), that is, into dally management practices, would explain the limited impact of structural alignment on organizational performance, which has been emphasized in empirical studies. Thus, the aim of our study is to verify to what extent organizational performance can be predicted by the integration of strategic elements (strategic, vertical and operational integration) into the dally practices of performance management (Hl). Moreover, with regard to horizontal integration, some researchers maintain that organizations that succeed in linking the HRM Systems, making them complementary, will be in a better competitive position and will surpass their competitors' organizational performance. This study thus examines whether the alignment of HRM Systems with performance management is linked to better organizational performance (H2). The questions used to measure the concepts were developed on the basis of the literature and their content was validated by ten managers. The items to measure organizational performance come from a previous study. The internai reliability of the scales varies from .77 to .90. The data were derived from questionnaires completed by 177 Canadian firms that have implemented a performance management System. To sum up, the results show that the more the strategic elements are integrated into the performance management System, the greater the increase in competitiveness, competitive position and the survival of the organization. Moreover, the results show that the increase in the coherence of HRM Systems with the performance management system is linked to an increase in the organization's competitive position. The results are discussed in the light of current research and the limitations of the research are presented
