Strategic HRM and competitive edge in the context of resource-based view (RBV)Human Resource management has developed in its range to the point where it has become an industry rather than just a simple profession. Even though there may be significant argument regarding the actual functions human resource should carry out and how it should be done, human resource established a place at the senior management table by the early 1990s through their capacity to unravel and solve practical problems in areas such as staffing, employee relations, training among others (Peter, 2003).
Jackson and Schuller (1995) explain that the practice of Human Resource Management revolves around all aspects of how people are employed and managed in institutions. Therefore, human resource management can be explained as a strategic, integrated and articulate approach to the employment, development and well-being of the people working in firms. It has a robust conceptual basis drawn from the behavioral sciences as well as from human capital, strategic management and industrial relations theories. Whether in the public or private sector, all organizations, aspire to attain strategic objectives.
Private sector organizations have particularly been on the forefront compared to public institutions. Therefore, private sector firms have taken advantage of SHRM of RBV approach in realizing competitive advantage. This calls for a clear understanding and connection between these strategic objectives and the key competences required for their realization. To realize sustainable competitive advantage firms need two kinds of capabilities; non-contingent and differentiating capabilities (Hoopes et al. , 2003). Non-contingent capabilities are those competences which every firms needs, in varying extent, for instance effective financial management. These capabilities are the basics that will enable an institution to be “just as good” as its competitors.
Differentiating capabilities are competencies that distinguish one institution from another and are the basis of real competitive advantage (Petra and Juan, 2002). Many human resources activities aim at developing non-contingent capabilities. However, these can only meet the fundamental requirements for future strategy and most of the times are not related to the strategy. As a consequence, very few human resource plans tackle the real need to realize competitive advantage through differentiating capabilities. In effect, most organizations model their human resource plans with an aim to develop employees who are proficient in the same areas as their competitors; this cannot facilitate realization of competitive advantage.
This behavior by most organizations could be the major reason why human resource functions have generally been unsuccessful in creating a clear link between activities towards the accomplishment of business strategy (Cleland et al. , 2000). Certainly, people and the management of people are progressively seen as principal elements for attaining competitive edge (Makadok, 2001). Today, organizations are seeking to understand how one of the last really competitive resources (their human resources) can be managed to attain competitive edge over peers.
This move has been propelled by the rising competition, ever changing technological, globalization and other factors. As Rugman and Verbeke (2002) argues the unique feature of human resource management is its inference that better performance is attained through the people in the organization. Therefore, if proper human resource policies and processes are adopted, it can also be inferred that human resource management will make a significant influence on institutional performance. It’s noteworthy that human resource practices lead to improved performance and lead to competitive advantages of firms only when they are integrated with firms’ strategy.
Furthermore, human resources can play a strategic role in attaining organizational higher performance which necessitated formation of strategic human resource management (SHRM) field.