Different aspects of business strategy always influence strategies of human resource management. One of the most important aspects that effects from the smallest organization to the largest multinational is its human capital retention. Increased integration between human resource management and business strategy is one of the most imperative demands that are placed in front of modern strategic human resource management. In both the management and the academic literature, it is in general acknowledged that the strategic operation and management of personnel can put in to the success and continuity of the firm.
Furthermore it is stated by some that a firm’s human resources form the foundations of the firm’s competitive and spirited advantage. Keeping this in view, the human resources are the most important assets of any organization. At the same time, in addition to the importance of the human resources as such, it is assumed to be important that the management of the human resources should be in ideal fit with the management of the organization as a whole and its strategic plans. In general, employee retention aspect business strategy has great influence on SHRM. This aspect of business strategy based on the general assumption that competitive advantage can only be realized when a firm possesses particular resources and exclusively resource heterogeneity that are relatively motionless at the same time resource immobility, which means that it is not easy for competitors to buy or imitate these resources.
In contrast with more conventional views on strategic management, the resource-based view of the firm emphasizes the relations between internal factors and the business strategy. In order for these human resources to provide sustainable competitive advantage, the resources need to: 1) add positive worth to the firm, 2) is unique or atypical among existing and prospective competitors, 3) are imperfectly imitable, and 4) cannot be replaced with other resources by competing firms.
A knowledge-intensive firm, which includes especially consultancy firms or software houses, often meets these criteria, that is, when they accomplish something in retaining and developing their human capital. In contrast, other firms which are firm-specific skills and knowledge dependent can also realize competitive advantage on the basis of the development of the human resources.
Nevertheless, it remains to be seen whether the firm’s resources are the only ways and means to expand competitive advantage, as a few industries and sectors may not have met the above criteria and, hence, competitive advantage could be realized on other grounds. It has been presented in a clear way the ‘resource-based theory of competitive advantage’. In this approach, the firm’s resources, shared into capabilities, form the basis for competitive advantage and, therefore, for the selection of a strategy “which best exploits the firm’s resources and capabilities relative to external opportunities”.
The business strategy in other words is devised in essence on the ground of the presence of certain resources. A few observers states and possess the view that the resources would be the most important aspect at which strategy-driven actions would be directed. Though, to consider the resources as the major focus for concrete action is in our belief a relatively constrained point of view with respect to the consequences of certain strategies. Above all, the joining of the available resources into organizational capabilities is at least as important as the resources themselves are.
According to Grant, a capability is “the capacity for a team of resources to perform some task or activity”. It is also indicated by Grant that “While resources are the source of a firm’s capabilities, capabilities are the main source of its competitive advantage”. Most of the opportunities used to effectively organize and optimally use the resources are based in the joining of the various resources. In other words it can be said that resources themselves are not sufficient enough, the amalgamation and deployment of the resources is much more essential and important.
In my point of view, it is in this area that the most important challenges for human resource management can be found. As is discussed before above, the relation between business strategy and human resource management in the pure form of the resource-based theories is the reverse of this relation in the behavioral theories: the business strategy is to a large extent determined by the possibilities offered by the human resources.