The Role of Human Resource Management in Creating Competitive Advantage

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HRM and Competitive Advantage

HRM has been designed to make organizations more competitive and to create a sustainable competitive advantage. The HRM strategy's main role is to deal with creating competitive advantage which is the capability of creating value for the organization's customers that competitors cannot copy easily hence allowing the business to differentiate its products and services from those of its competitors. The main organizational strategy for all businesses is to become competitive by gaining a competitive advantage over the rivals. Goods and services offered in most times serve similar purposes, however, having unique products makes a brand more attractive than its competitors. HRM helps the organization in creating this uniqueness by successfully using the human resource (Nankervis et al, 2013). A workforce that is more productive and more engaged than that of the competitor is able to attend work, become more productive, less likely to be absent, more creative and innovative and hence the organization is able to produce unique goods and services.

Role and Impact of Culture on Organizational and HRM Strategy

Organizational culture refers to shared beliefs and assumptions about the right behavior of members. Culture in therefore the behavior of employees and why they do it which is creating value, profits and ensuring customers are well served. Culture plays a major role in HRM strategies, for instance in recruitment policy and hiring employees depends on different cultural attributes such as ethnocentrism, polycentrism and geo-centrism (Bamberger et al., 2014). Selection processes, training and development, compensation policy and motivation are also determined by the culture of an organization as well as. Cultural attitudes such as that of ethnocentrism consider one's culture superior to that of others. When organization move to foreign countries, they tend to follow the same policies in the home country which makes employees have negative cultural attitudes. If employees find it difficult to adapt to the organizational culture, they do not effectively fit into the organization which makes them less productive hence negatively affecting the overall performance of the business. Culture, therefore, has a major impact on the strategies used by an organization.

Role of and Value of Management Tools

There are several management tools used in HRM. They include economic value added, return on investment, balanced score card and HR score cards. All these tools serve the same purpose which is to calculate the value creation of organization's shareholders. Economic value added for instance helps an organization calculate the profits that remain after the cost of capital is deducted from operating profits. The tool enables shareholders to have a better understanding of the overall performance of the business. The return on investment is a tool used to determine the financial return received after making an investment. The tool is used in processes such as training, diversity management and other areas to compare returns gained from the process. A balanced score card is a tool used to measure the success of an organization by considering the non-monetary measures such as learning and growth rate of HR. All these tools are of high value because they are used to determine if HRM and organization strategy is achieving their mission (Goetsch & Davis, 2014). The tools are also used to determine the HR deliverables by ascertaining if the department is offering services that deliver value to the organization.


Bamberger, P. A., Meshoulam, I., & Biron, M. (2014). Human resource strategy: Formulation,

            implementation, and impact. Routledge.

Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper

 Saddle River, NJ: pearson.

Nankervis, A. R., Baird, M., Coffey, J., & Shields, J. (2013). Human resource management:

 strategy and practice.

October 24, 2023


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