Impact of Human Resource Management on Organizational Performance

Abstract

In a rapidly changing competitive environment, human resources are one important source of competitive advantage. Human resource systems can contribute to sustained competitive advantage through facilitating the development of competencies that are firm specific. Strategic human resource management concerns with the creation of a linkage between the overall strategic aims of business and the human resource strategy and implementation. The published research generally reports positive statistical relationships between the greater adoption of HR practices and business performance. The causal linkage between HR and organizational performance will enable the HR managers to design programmes that will bring forth better operational results to attain higher organizational performance. In this paper, after emphasizing that the human resources are an important source of competitive advantage, strategic human resource management is defined. Through spesific examples from academic research regarding the impact of strategic human resource management practices on organizational performance, the conclusion is that the way an organization manages its human resources has a significant relationship with the organization’s performance.