Hr Strategy & Competitive Advantage

Strategic Human Resource Management

“HR strategy, policy and practice can assist organisations to achieve competitive advantage. Critically analyse this statement using one or more theoretical perspectives that explain the link between strategic HRM and performance outcomes.”

Abstract

The focus of this paper is on the relationship between Strategic Human Resource Management (SHRM) and organisational performance outcomes, specifically sustained competitive advantage. Using the resource-based view (RBV) of the firm as an underpinning theoretical framework, this paper examines several components of Strategic HRM including human capital (i.e. employees) capability and behaviour, human resource systems (policies and practices) and strategic fit (horizontal and vertical). Within the context of the RBV framework, an attempt was made to explain the complexity and implications of developing human resources to meet the criteria for sustained competitive advantage in that they are valuable, rare, inimitable and non-substitutable. Because of the broad nature of this discussion, a key model of SHRM is also presented and the relevant concepts of fit and flexibility, as they relate to strategic HRM, are explored and discussed.

Introduction:

Over the past two decades there has been an increasing focus on “strategic management” within organizations across the globe. This focus on strategic management has resulted in various organizational functions becoming more aware of their role in the strategic management process. Accordingly, there has been a dramatic shift in the field of human resource (HR) management as technological, economic, and social changes are causing organizations to depend more and more on human resources to accomplish their objectives (Tichy, Fombrun, & DeVanna, 1982). In recent years human resource management has been integrated as the process of strategic management, through the development of a new discipline denominated strategic HRM (Wright

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