Internal fit is when the organizational systems, structure and technology are aligned with the Human Resource systems of the organization. In internal fit all the internal elements of the organization complement and reinforce each other.
When the performance of the organization is positively affected by the alignment between the organizational contingencies and the environmental contingencies it is said that fit exists. Fit can be of two types internal fit and external fit.
Fig: The above figure highlights internal fit in an organization
The performance of the organization increases with better balance between the organizational and human resource systems. The five main internal organizational components between which there should be a fit are task, structure, decision making and information processes, rewards and recognition system and people. A misfit between these components results in wastage of money, time and energy.
For example if an advanced system is developed by an organization to improve the efficiency of its operations but if there are no people who are skilled enough to use the advanced system then the system remains unimplemented resulting in the loss of money. Hence an internal fit result in competitive advantage for an organization.