Does the Practise of HRM Give Organizations a Competitive Edge - Essay Example

This study has been one of the earliest and most extensive works linking HRM to actual business performance. The findings have been strongly supportive of the view that HRM provides companies with a competitive edge because HR practices increased employees' trust, job satisfaction, and commitment while eliminating work intensification and reducing stress.

In the United Kingdom, a wide array of case studies have also been documented which strongly link HRM to organizational performance. In 1997, Patterson et al released the results of their survey utilizing 67 manufacturing industries. This has been published by the Institute of Personnel Development which is currently known as CIPD and highly quoted for its enlightening insights. The study has put forward the "importance of HRM as a driver of, and contributor to, improved performance" (Patterson et al 1997).

It is also interesting to note that this study asserts that "HRM had a greater impact on productivity and profits than of other factors including strategy, research and development, and quality" (Patterson et al 19997). Going further, Patterson et al uncover that while 8% in variations from profitability is explained by R&D, 17% is explained by HRM practices. This is highly significant compared to the 2% and 1% garnered by the strategy and quality, respectively. The study of Guest et al in 2000 also stresses the importance of human resource management practices in organizational performance.

This research links specific human resource practices like job security, recruitment and selection, and training and development with performance outcomes including financial performance, quality, and productivity. It has been uncovered that 70% of the chief executives interviewed for the study assert that their business strategy relied a lot on people as a source of competitive advantage (Guest et al 2000). On the other hand, less than half of them "felt that 'people issues' are more important than financial and marketing issues" (Guest et al 2000).