The Way That Companies Should Manage Their Human Resources As Their Most Important Asset: Empirical Investigation

Abstract

Although research reveals a direct relationship between a company’s success and its commitment to management practices that treat its people as assets, trends in management practice are moving away from these principles. This study provides a sound business case confirming that the way a company manages its people is a real and enduring source of competitive advantage. Drawing on their practical experience, the surveyed CEOs agree that the seven management practices (selective hiring, extensive training, employment security, self-management teams and decentralization, comparatively high compensation contingent on organizational performance, reduction of status differences, and sharing information) suggested in this study are the way that companies should manage their people as their most important asset. However, there are differences in the ranking order of management practices between CEOs and Pffer and Veiga (1999).