The objective of this study was to examine the effect of strategic human resource management on organization performance in case of Bahir dar textile factory. Quantitative research approach and explanatory research design was employed. In order to select sample from the entire population Stratified random sampling was adopted as a sampling method. The data has been analyzed using descriptive and inferential analysis techniques frequency, mean, correlation and multiple linear regression analysis supported with SPSS version 26. The study found that alignment of HR policies and practice with organization objective, integration of HR policies and practice with business strategy, focused on long-term goals and objectives and emphasis for employee development has positive and significant effect on organization performance. The model with these variables was found to predict 76.6% of the variability of organization performance leaving the remaining 23.4 % to variables not included in this study. It is suggested that there should be concrete focuses on long term goal rather than sort term goal by giving learning and development for factory employees and should aligned human resource activities with their objective that makes increase performance of the factory.