Hr Strategy & Competitive Advantage

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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.”


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
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To achieve this, human resource professionals undertake eight key activities including planning, sourcing and development, performance management, reward and recognition, employee engagement, communications, industrial relations and organisational development. To simplify the definition of human resource activities, it can be viewed as including formal policies, practices and systems for managing people and influencing employee behavior, attitudes and performance (De Cieri, 2005).

Theoretical Framework: The Resource-Based View

Growing acceptance of internal resources as sources of competitive advantage brought legitimacy to HR’s assertion that people are strategically important to organisational success. HRM should ideally work to enhance the firm’s competitive position by creating superior human capital skills, experience and knowledge that contribute to firm economic value (Snell and Dean, 1992). Employing the resource-based view, HR effectiveness relates directly to firm-level outcomes, particularly when considering firm context (Wernerfelt, 1984). In the RBV, bundles of resources, rather than the product market combinations chosen for their deployment, lie at the heart of an organisation’s competitive advantage. Under this approach, an organisation is seen, not through its activities in the product market, but as a
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