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Effective HRM Practices as a source of Competitive Advantage( Vikrant Baghi)

Table Of Contents

Introduction……………………………………………………………………………..2 Literature Review……………………………………………………………………….3 Theoretical Framework………………………………………………………………...15 Conclusion………………………………………………………………………………16 References……………………………………………………………………………….16

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Effective HRM Practices as a source of Competitive Advantage

Abstract-The research reveals what is Human Resource Management what are its practices that provide an organization Competitive Advantage.

Research methodology-The research methodology used is the qualitative methodology. Information is used from articles and journals.

Keyword - HRM, EHRM, TQM, SHRM and Competitive Advantage etc.

Paper type - Research paper.

Introduction

In today’s world, organization must be constantly alert to new way of gaining upper hand over the rivals. Human resource management is a such an area which help thr organization to perform well and to become better then rivals. HRM department working good in organization not only increase the productivity of the company but also creates an Enviourment of love for work in an organization.

HRM

Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. Human Resource Management is the organizational function that deals with issues related to people such as compensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training. The goal of human resource management is to help an organization to meet strategic goals by attracting, and maintaining employees and also to manage them effectively.

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The key word here perhaps is "fit", i.e. a HRM approach seeks to ensure a fit between the management of an organization’s employees, and the overall strategic direction of the company (Miller, 1989).

HRM is very important part in an Organization. Organization can be defined as Social unit of people, systematically arranged and managed to meet a need or to pursue collective goals on a continuing basis. All organizations have a management structure that determines relationships between functions and positions, and subdivides and delegates roles, responsibilities, and authority to carry out defined tasks. Organizations are open systems in that they affect and are affected by the environment beyond their boundaries.

Competitive advantage

In general Competitive advantage exist when firm is able to deliver the same benefits as its competitor but at lower cost or deliver benefits that exceeds those of competitive products. Thus a competitive advantage enables the firm to create superior value for its customers and prove for itself.

Condition which enables a company to operate in a more efficient or otherwise higher-quality manner than the companies it competes with, and which results in benefits accruing to that company.

Literature review

In the world of globalization and free market, organizations are facing increasing competition and therefore faced with issues on how to ensure survival and competitive advantage. In meeting the external pressures, measures such as mergers, acquisitions, strategic alliances, downsizing and restructuring are common responses. In a nutshell, the integral part of these responses is the method of using human resources (HR) more effectively. According to Lengnick-Hall and Lengnick-Hall (1990), the concept of achieving competitive advantage through HRM is based on the rationale that competitive advantage is the essence of competitive strategy. It encompasses HR capabilities, resource, relationship and decisions that permit an organization to capitalize on opportunities in the market place and to avoid threats to its desired positions. Attracting and retaining individuals with the skills related to the core competencies of the organization are key HR activities directly relevant to organizational capability. A strategic HRM approach normally contains two core elements, which often occur simultaneously in organizations (Beer et al.,1984; Brewster and Larsen, 1992; Budhwar, 2000). These elements are the strategic integration of HRM Facilitators of knowledge sharing with the organization’s business policy, and the devolution of responsibility for implementing HRM policies to line managers. Where an organisation’s business strategy emphasizes maximizing the contribution of people through the use of high performance HRM practices (Huselid, 1995; Boxall and Purcell, 2000), then the

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integration of HRM with strategic planning is likely to result in the employees demonstrating higher levels of competence, commitment and flexibility in the workplace (Guest, 1987; 1998).

All business professionals would admit that Human Resource Department is an important part of any business structure. You may have the best technologies, output capacities and equipment but you may be not getting proper profits because you personnel is poorly managed. When HR management works at its best you will immediately see positive results.According to Castanias & Helfat (1991), the variation in employees’ proficiency per skill would determine the outcomes of competitive advantage. A view supported by Peteraf & Barney (2003) that although proficiency is important, the firm whose employees have more proficient industry-specific skills has the advantage. According to Barney (1991), ‘competitive advantage’ is defined as ‘a function of a set of firm-specific resources and capabilities that are Valuable, Rare, and Imperfectly imitable and for which there are no commonly available Substitutes’ (VRIS). There are two kinds of competitive advantages: a) logistics-based competitive advantage (Porter, 1991) and b)resource-based competitive advantage (Barney, 1991).The performance of the global organizations depends on their ability to cope with heterogeneous culture, coordinating diverse resources, competitive environment and to leverage innovations across national boundaries (Bartlett and Ghosal, 1989; Carpenter and Gerrard Sanders, 1998; Hitt et al., 2001). Consequently, like many business corporations around the world, Among a firm’s intangible resources, HR is more likely to produce a competitive advantage because they often are truly rare and can be more difficult for competitors to imitate (quoted from Jackson et al., 2004). According to Lengnick-Hall and Lengnick-Hall (1990), the concept of achieving competitive advantage through HRM is based on the rationale that competitive advantage is the essence of competitive strategy. It encompasses HR capabilities, resource, relationship and decisions that permit an organization to capitalize on opportunities in the market place and to avoid threats to its desired positions.According to Micheal PorterThe two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus. The focus strategy has two variants, cost focus and differentiation focus.

1. Cost Leadership

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In cost leadership, a firm sets out to become the low cost producer in its industry. The sources of cost advantage are varied and depend on the structure of the industry. They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors. A low cost producer must find and exploit all sources of cost advantage. if a firm can achieve and sustain overall cost leadership, then it will be an above average performer in its industry, provided it can command prices at or near the industry average.

2. Differentiation

In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a premium price.

3. Focus

The generic strategy of focus rests on the choice of a narrow competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others.

The focus strategy has two variants.

(a) In cost focus a firm seeks a cost advantage in its target segment

(b) Differentiation focus a firm seeks differentiation in its target segment. Both variants of the focus strategy rest on differences between a focuser's target segment and other segments in the industry. The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of other industry segments. Cost focus exploits differences in cost behavior in some segments, while differentiation focus exploits the special needs of buyers in certain segments.

According to Hamel and Prahalad (1990), human capital and organizational capacity have a great deal to with the organization’s “core competencies”, i.e. what the organization does best and how it differentiates itself from the competitors. The resource-based approach emphasizes the ability of the organization for managing the “appropriability” of employees’ skills and knowledge. Appropriability refers to the different capacity of the organizations to benefit from the utilization of their resources and capabilities. It includes attracting and retaining relevant personnel; building and developing their expertise through development and learning systems and relationship; rewarding and sharing expertise; and learning (Mabey et al., 1998; Richard and Johnson, 2001). Bernardin and Russell (1998) maintain that an organizational ability to sustain competitive advantage depends on its ability to attract and retain those individuals with skills needed to give the organizations the competitive edge. Attracting and retaining individuals with the skills related to the core competencies of the organization are key HR activities directly relevant to organizational capability. Gratton (2000) in her study places the people at the centre of activities with a view for the future. This shift from the short-term to long-term is predicted on

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three organizational and managerial capabilities: capability to built compelling and engaging visions; to develop capabilities to sense the future; and to create a strategic approach to management of people which is capable of bridging from the realities of the present to the aspiration of the future.

Firms can use technical hrm activities to select high capability employees whose talent is rare by definition (wright &McMahan 1992) and to train employees so they have the unique skills needed. The primary organization systems that affect employees are a business's HRM practices i.e. the set of organizational activities that directly affect how employees perceive their jobs. These are:

Organizational Design Staffing Employee & Organizational Development Performance Management Reward systems, Benefits and Compliance Communications and Public Relations

Organizational Design The extent to which the organization should formalize how work is to be accomplished

through a set of standardized operating procedures, formal chains of command, extensive rules and regulations, and detailed job descriptions.

The extent to which different organizational units maintain their independence and responsiveness to their unique market niches while integrating their work with other organizational units through liaison teams, matrix organizations, etc.

The design of jobs so that individuals within the organization work o tasks which are rewarding and self-reinforcing.

The processes used to shape the organizational structure (e.g. how decisions are made, how widely accountability is distributed, how clearly roles and responsibilities are defined).

Staffing The type of criteria to set for bringing in new employees (e.g. short-term vs. long-term,

full-time vs. part-time, contract vs. leased employees, job-focused vs. career-focused, customer perspective).

Procedures for recruiting and socializing new employees into the organization (e.g. orientation, socialization, and mentoring programs).

Design of career paths and ladders in the organization (e.g. within one function vs. across different functions).

Processes for succession planning (e.g. formalized systems, involvement of senior managers, integration with strategic planning, link to developmental programs, emphasis on internal vs. external candidates).

Types of programs for terminated employees (e.g. during layoffs, downsizing, early retirements).

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Employee and Organizational Development Desired outcomes of development (e.g. conceptual understanding, skill building, attitude

change, team building, problem solving). Types of participants in developmental programs (e.g. new employees, first-line

supervisors, middle-level managers, top executives). The nature of the content built into developmental programs, and how programs are

integrated with the strategic direction of firms. Delivery of training programs (e.g. internal vs. external faculty and facilities, use of line

managers). Evaluation of programs to assess changes in employee or organizational performance. Alternatives to development used to create organizational competencies (e.g. cross-

functional career moves, special assignments).

Performance Management Types of standards set for employees or units (e.g. behavior-focused vs. outcome-

focused, short-term vs. long-term, explicit vs. implicit, linked to individual vs. strategic performance and plans).

Types of performance review feedback sessions offered (e.g. frequency, nature of feedback, monitoring of feedback sessions, forms used, formal reporting systems in existence, managerial accountability).

Processes used to ensure that feedback occurs continually (e.g. quarterly reviews). Sources of data for measurement and criterion development (e.g. clients, customers,

peers, subordinates).

Reward Systems, Benefits & Compliance Types of financial incentives existing (e.g. short-term vs. long-term, base vs. incentive

pay, pay for performance vs. seniority). The extents to which reward systems are linked to strategic plans and encourage

employees to work toward accomplishing business needs and meeting customer requirements.

The extent to which rewards are based on individual vs. group or corporate performance. Structure of non-financial rewards (e.g. recognition programs, titles, informal status

symbols).

Communications and Public Relations Types of information presented to employees, manner of presentation (e.g. confidential

vs. public) Types of communication channels; dissemination of information inside and outside the

organization; opinion of surveys; open door policies. Design of communication programs (e.g. public meetings, management forums for

discussion, videos, written communications, bulletins).

Various methods by which companies can achieve competitive advantage by HRM :

1.EHRM

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Human resource management (HRM) departments using information and communication technologies (ICTs) is becoming an increasingly important phenomenon commonly referred to as e-HRM. Automating HR tasks and practices is transforming the traditional paper-and-pencil, labor-intensive HR tasks, into efficient, fast-response activities that enable companies to anticipate and profit from environmental shifts to create a much needed competitive advantage (Marler, 2006; Watson Wyatt, 2002). The terms e-HR[2] or e-HRM were first used in the late 1990s when “e-commerce” was sweeping the business world. Equivalent terms in the literature include B2E (business-to-employee) and “Virtual HR.” A Watson Wyatt (2002) survey of 649 US companies adopted the definition of B2E as: . . . the application of any technology enabling managers and employees to have direct access to HR and other workplace services for communication, performance, reporting, team management, knowledge management, and learning in addition to administrative applications. Numerous sources, of both practitioner and scholarly origin (Cedar, 2004; Cober et al., 2004; Jones, 1998; Kettley and Reilly, 2003; Lengnick-Hall and Moritz, 2003; Mercer HR Consulting, 2002; Strohmeier, 2007; Watson Wyatt, 2002; Wright and Dyer, 2000) argue that technology developments have a potential to generate a more strategic role rather than an administrative one for the HR department. e-HRM also provides the HR function with the opportunity to create new avenues for contributing to organizational effectiveness through such means as knowledge management and the creation of intellectual and social capital (Lengnick-Hall and Moritz, 2003).

2.Supply chain management (SCM)

Research has examined the relationship between human resource management (HRM) and SCM performance. Evidence indicates that the evolution of SCM resulted from the integration of manufacturing and marketing processes. Such an integration has focused performance measurement of SCM practices primarily on operational issues, such as resource efficiency and cost reduction, and marketing issues, such as customer service. The aspect of the development of internal human resources as a means to enhance SCM practices has yet to be studied in any formal way. However, past research into the best practices of leading-edge firms has indicated that such effort may, in fact, improve the likelihood of a firm maximizing its SCM performance.

The emphasis on human resource development for firms regarded as “bestin- class” in terms of SCM performance was reiterated by another study performed by Michigan State University (Bowersox et al., 1989). This research studied a large number of organizations in an attempt to determine the specific competencies that tend to result in superior logistics performance. This study supported the proposition that human resource development directly impacts the success of SCM practices. These competencies identified in this research included the ability of employees to have premium flexibility in roles and skill sets, great adaptability to re-organization and boundary-spanning responsibilities, and innovative abilities to enhance productivity.

3.Strategic human resource management SHRM

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In research on healthcare quality management, strategic HRM commands paramount importance for program results and sustainable competitive advantage (Zairi, 1998). Strategic HRM can be implemented as high employee commitment practices leading to quality program effectiveness (Bou and Beltran, 2005). Successful implementation of employee empowerment and team-building is essential for healthcare quality programs (Adinolfi, 2003). Furthermore, strategic HRM in healthcare has proven to be imperative for a sustainable competitive advantage (Kanji and Sa, 2003). Strategic HRM has been conceptualized by the high commitment work practices (HCWP), configurational fit, and contingency fit approaches (Takeuchi et al., 2003). The HCWP perspective emphasizes employee empowerment and progressive practices in selection, training, rewards, recognition, information sharing, team-building, and socialization (Geisler, 2005; Sullivan, 2004). Arthur’s (1992, 1994) studies of HRM systems in steel minimills concluded that a commitment-based HRM system results in higher productivity, lower scrap rate, and lower employee turnover. To achieve a competitive advantage, HCWP are highly correlated to customers’ ratings of service quality (Schneider and Bowen, 1993). In studies of HCWP, such as progressive employee selection, training, skill development, and motivation, there were positive associations with perceived firm performance (Delaney and Huselid, 1996) and corporate financial performance (Huselid, 1995). Likewise, employee empowerment and communication practices enhanced employee trust (Tzafrir et al., 2004). In turn, progressive selection and training practices improved perceived organizational and market performance (Harel and Tzafrir, 1999). Studies focusing on total quality management (TQM) programs have demonstrated such critical success factors as employee involvement and effective leadership (Fisher et al., 2005; Vora, 2004; Warwood and Roberts, 2004). Soltani et al. (2004) reported critical dimensions of performance appraisal for a TQM context include employee participation, responsibility, feedback, and individualized training. Also for TQM programs, employee involvement, training, communication, and learning are critical to improve firm performance and customer satisfaction (Claver et al., 2003). However, there may be moderators, such as international competition, for the success of HCWP and quality programs (Das et al., 2000). Likewise, Boxall (1998, 2003) demonstrated how HCWP implemented as a “high performance work system” proved to be more effective for manufacturing firms than for service organizations. Finally, higher performing manufacturing companies relied more on commitment-based HRM systems than just traditional TQM practices (Challis et al., 2005).

4.Sustainable competitive advantage

The effective implementation of quality management systems and practices could result in sustainable competitive advantage for organizations. Research demonstrates that several core quality practices result in sustaining competitive advantage for certain dimensions of quality (Flynn et al., 1995). Sustainable competitive advantage can be conceptualized as the degree that corporate resources are characterized by four factors: value, rareness, imitation cost, and non substitutability (Barney, 2002; Hitt et al., 2003). Value refers to the degree that the firm’s resources enable the organization to respond to external threats and opportunities. For example,

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Wal-Mart’s superior supply chain management system allows the discounter to achieve “every day low pricing” in spite of changes in its environment. Rareness concerns the degree that competing firms do not possess the organization’s particular valuable resources, such as a pharmaceutical firm’s patented products. Imitation cost focuses on the cost disadvantage faced by other firms that do not possess a certain resource. An example would be the exorbitantly high cost for a rival to duplicate Microsoft’s products. Non substitutability captures the degree that a resource has no strategic equivalent, such as a unique CEO like Jeff Immelt at General Electric. Ideally, a firm would want to command the highest level of all four factors. But, practically, a firm will only capture just some measure of each factor. Also, resources can be tangible, such as program financial investment and physical facilities; intangible, such as program technology, reputation, and corporate culture; and human, such as training for specialized skills and knowledge, communication, interpersonal abilities, and employee work motivation; all of which could become competitive advantages if exploited successfully (Grant, 2002).

5.Quality management

An analysis of the various approaches to TQM reveals that a fundamental assumption of the quality approach is that system factors matter the most when it comes to performance (see, for example, Deming, 1986; Waldman, 1994; Cardy, 1998; Wilkinson et al., 1998). System factors refer to anything outside of individual workers. A number of researchers associated with the TQM movement have been highly critical of Western performance management practices (Crosby, 1979, 1984; Deming, 1986, 1993; Juran, 1964, 1989). Among these, perhaps the one most strident in his claims has been Deming. Deming (1986) summarised his management philosophy with 14 management principles that he offered as requirements to remain competitive in providing products and services. The first theme is that the central problem of management is an incorrect understanding of variation in performance phenomena, including the work performance of employees. Waldman who also attempted to design performance management system for TQM implementation argues, following Deming’s (1986) original argument, that “Deming’s lamentation focuses on the confusion between common and special causes of variation”. Special causes are sporadic in nature, and with regard to work performance, can include factors unique to the individual worker. 6. Good Training and Development of the EmployeesThe principal objective of training and development division is to make sure the availability of a skilled and willing workforce to an organization. In addition to that, there are four other objectives: Individual, Organizational, Functional, and Societal.

Individual Objectives – help employees in achieving their personal goals, which in turn, enhances the individual contribution to an organization.Organizational Objectives – assist the organization with its primary objective by bringing

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individual effectiveness.Functional Objectives – maintain the department’s contribution at a level suitable to the organization’s needs.Societal Objectives – ensure that an organization is ethically and socially responsible to the needs and challenges of the society.

AIMS/OBJECTIVES OF TRAINING & DEVELOPMENT The fundamental aim of training is to help the organization achieve its purpose by adding value to its key resource – the people it employs. Training means investing in the people to enable them to perform better and to empower them to make the best use of their natural abilities. The particular objectives of training are to: • Develop the competences of employees and improve their performance; • Help people to grow within the organization in order that, as far as possible, its future needs for human resource can be met from within; • Reduce the learning time for employees starting in new jobs on appointment, transfers or promotion, and ensure that they become fully competent as quickly and economically as possible.

TRADITIONAL AND MODERN APPROACH OF TRAINING AND DEVLOPMENTTraditional Approach – Most of the organizations before never used to believe in training. They were holding the traditional view that managers are born and not made. There were also some views that training is a very costly affair and not worth. Organizations used to believe more in executive pinching. But now the scenario seems to be changing.

The modern approach of training and development is that Indian Organizations have realized the importance of corporate training. Training is now considered as more of retention tool than a cost. The training system in Indian Industry has been changed to create a smarter workforce and yield the best results

How Training Benefits in achieving Competitive advantage• Leads to improved profitability and/or more positive attitudes towards profit orientation. Improves the job knowledge and skills at all levels of the organization • Improves the morale of the workforce • Helps people identify with organizational goals • Helps create a better corporate image • Fosters authenticity, openness and trust • Improves relationship between boss and subordinate • Aids in organizational development • learns from the trainee • Helps prepare guidelines for work • Aids in understanding and carrying out organizational policies.

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• Provides information for future needs in all areas of the organization • Organization gets more effective decision-making and problem-solving skills • Aids in development for promotion from within • Aids in developing leadership skills, motivation, loyalty, better attitudes, and other aspects that successful workers and managers usually display • Aids in increasing productivity and/or quality of work • Helps keep costs down in many areas, e.g. production, personnel, administration, etc. • Develops a sense of responsibility to the organization for being competent and knowledgeable • Improves Labour-management relations • Reduces outside consulting costs by utilizing competent internal consultation • Stimulates preventive management as opposed to putting out fires • Eliminates suboptimal behavior (such as hiding tools) • Creates an appropriate climate for growth, communication • Aids in improving organizational communication

7. Performance evaluation 

Performance evaluation is a strategic human resources management tool that organizations should be using on a regular basis to determine what types of skills, knowledge and characteristics are currently available in the organization. It is a method through which the organization can obtain information that will be needed when making decisions about employee advancement, retention and separation (Pynes, 1997).  In making such decisions it is vital that organizations review job performance in a way that benefits both the organization and the employee. Through performance evaluation, an organization can provide the feedback to employees that is necessary if employees are going to improve job performance, strengthen employee-supervisor relationships, and maintain organization-wide morale.  As Craig R. Stevens (1996) remarks, “How well your organization measures and monitors job performance is crucial not only to the competitiveness of the organization, but also to employee productivity” (p. 18).Executive directors of nonprofit organizations are usually evaluated by the board of directors or the personnel committee.  The purpose of evaluating the executive director should be to improve the way the organization is managed. To this end, executive directors should be told in advance what issues and areas the board will be looking at when it does the evaluation, and they should be given an opportunity to prepare a self-evaluation as well.  A performance evaluation of a management executive works strategically and benefits both the organization and the executive when it serves to help the executive become aware of his/her strengths and weaknesses and improve his/her job performance. The performance evaluation of a management executive can take on a hostile tone, full of recriminations and criticisms, especially if the evaluation takes place around the time of contract renewal. Rather than serving as an exercise that increases tension and hostility, the performance evaluation of an executive should be looked at as an opportunity for the board and the executive to strengthen the organization by resolving any

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differences they might have regarding their roles and responsibilities (Pynes, 1997)it should be separate from the system in which the individual operates. The sporadic nature of special causes is evident in Deming’s proposal that very little of the variance in work performance is due to such causes. Cardy and Dobbins (1996) report, refer to how the HRM function gets accomplished while content characteristics refer to what is focused on. In sum, in a highly detailed and descriptive way, Cardy (1998) suggests that conflict between the quality and traditional HRM approaches can be resolved adapting HRM to fit within a quality organisational environment. More specifically, Cardy states that “the quality HRM approach moulds the pure person and system approaches embodied in the traditional HRM and quality approaches, respectively, and recognizes the importance of both factors”.

8.Good use of balance scorecard

These days, many companies are using BSC metrics to evaluate performance of their HR

department by key performance factors. So, let’s analyze how BSC metrics can help HR

managers and HR departments. In order to perform an overall analysis we need to analyze KPIs,

i.e. those factors influencing performance of HR department.

Cost per Hire.

By evaluating this factor you will be able to see how expensive the recruiting process is. This

process starts from posting job offer to the moment when a new person is officially employed in

the company. Logically, the shorter this process is, the least expensive is cost per hire. This is a

very important value, especially if the company counts hundreds and thousands of employees.

This amount includes expenses related to advertising, agent’s fees, recruiter pay, relocation etc.

to lover the average cost, a new person must be employed as quickly as possible.

Turnover Cost.

These are the costs related to termination, new hire and learning. In other words, these are

expenses related to integrating a new person into the company.

Turnover Rate.

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This value represents the situation in your company related to leaving and hiring new

employees. Many people would agree that it is not good to change personnel too often. If the

turnover rate is very high, then maybe you are treating your personnel wrong? Or is it something

wrong with your business in general? Find out.

Time to Fill .

Basically, this is the time needed to fill a vacant position in the company. Of course, this time

depends on how well HR managers are working with recruiters, advertising and people in

general. The shorter is the time, the better performance of your HR department.

Length of Employment.

This indicator is very easy to understand. It is possible to calculate an average value. For

instance, in average an employee works 5 years for your company. Of course, everything

depends on the position. If you are changing couriers or secretaries, this is not a big problem. But

if chief managers work for your company less than a year, this is definitely not good.

Training and Development .

Even if you hire the best specialist you need to integrate him into your company and train. Of

course, you bear costs, related to training. If you manage to cut this cost without harming quality

of training, then your HR department is doing a great job.

Salaries, compensation and bonuses .

It is very important to know that you are not overpaying and allocating recourses wisely. This

also concerns HR department of any company. With Balanced Scorecard you will be able to see

how effectively company’s funds are being used in HR branch.

Cost Effectiveness.

It all comes to cost effectiveness after all. All above-mentioned factors influence performance of

HR department which has one goal – minimize costs and boost performance. If you HR

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department manages to cut costs and at the same time increase effectiveness, you can be proud of

your HR specialists who know how to keep pace with the modern business.

Balanced Scoreboard will help you evaluate performance of HR managers and find solutions to

problems. Once you enter all data, you will see graphs and values in percents which will indicate

how well HR department is performing. Sometimes, it is difficult to find what takes the

department down or what causes losses. With Balanced Scorecard you will be able to evaluate all

KPI to see what needs to be improved.

Theoretical Framework

Competitive Advantage

(DEPENDENT VARIABLE)

EHRM

(INDEPENDENT

VARIABLE)

SCM (Supply chain management) (INDEPENDENT VARIABLE)

SHRM (Strategic human resource management) (INDEPENDENT VARIABLE)

Sustainable competitive advantageINDEPENDNT VARIABLE)

Quality Management (INDEPENDET VARIABLE)

Training And Development of employees INDEPENDET VARIABLE)

Performance evaluation INDEPENDETVARIABLE)

Good use of balance scorecard INDEPENDETVARIABLE)

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Conclusion

In a nutshell we can conclude that HRM and Competitive advantage are strongly co-related. In today’s globalised world it is difficult for an organization to stay ahead and achieve a competitive advantage. The ability to attract the talent, select the best, developing and upgrading skills, motivating innovation and retaining the valued employees will be the key levers for firm success. Organization having good HRM managers and using good HRM strategies gets good competitive advantage. Companies Practicing good SHRM, EHRM, TQM, Performance evaluation, use good Balance score card etc. Further these strategies are broken down in many forms such as training and development, recruitment and selection etc. the impact on sustainable competitive advantage is greatest for strategic HRM, which includes employee teams, training, information sharing, rewards, recognition, and promotion opportunity. Companies using strategic HRM wisely will be able to do do good then the competitor because such companies come up with good recruitment process, selection processes .Everything indeed is somehow is connected to the HRM department companies not giving importance to do this department have faced failures by the competitors.

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