In a rapidly and continuously changing work environment, organisations are becoming more volatile giving rise to renewed concerns for human resource management (HRM). To survive in an intense competitive environment and subsequently achieve their objectives, organisations require human resources (HR) and capabilities that are exceptional and create value in an inimitable way (Barney & Clark, 2007; Pfeffer, 1994). Boxall and Purcell (2003) reinforced that the unique talents among employees provide a critical ingredient in developing an organisation’s competitive position. But how employees are managed as vital HR to provide a competitive edge from an organisation’s perspective requires an understanding of the strategic role of HRM and its contribution to the achievement of organisational objectives. Despite the wide recognition of HRM as a significant source of strategic competitive advantage, Galford (1998) and McElwee and Warren (2000) researched that there is a prevailing assumption among organisations that HRM is only responsible for administrative functions and has no strategic accountability. There has been confusion about what HRM actually entails and what value it can deliver to an organisation. Therefore, this essay will specifically highlight and discuss the organisational role and context of HRM by offering new perspectives and their implications, thereby, developing a case of the relevance of HRM to organisation’s objectives. However, it is important to note that HRM is not an end in itself but a means to assist an organisation with its primary objectives.
Organisational Role and Context of HRM
According to Banfield and Kay (2012), HRM, which sees people as a key organisational resource that needs to be developed and utilised to support the organisation’s operational and strategic objectives, is a more recent approach to the management of employees. Wright, McMahan and McWilliams (1994) regarded this perspective as a resource-based view. HRM has two distinct functions, an administrative function and a strategic function. The HR administrative function focuses on managing employees as valued HR of an organisation so as to directly influence the achievement of an organisation’s objectives. It involves activities traditionally associated with HR, such as recruitment, selection, training and development, performance appraisal and compensation practices (Huselid, Jackson & Schuler, 1997; Inyang, 2010). In other words, employees are the most important assets to an organisation and their effective management provides the organisation with a sustained competitive advantage. Pfeffer (1994) and Barney (1991) stated that this is because traditional sources of competitive advantage, such as product technology, process innovation, economies of scale and access to sources of capital, have declined in value since they are easy to imitate.
Similarly, Chiavenato (2001) aptly noted that employees are purveyors of activities and knowledge whose most important contributions in the organisation are their intelligence and individual talents. Since knowledge capital which enables it to be different and innovative resides within its employees and employees are the driving force of all operations within an organisation, an organisation requires employees with the right knowledge-skills-abilities (KSAs) necessary to assist it to achieve its goals (Collins, Ericksen & Allen, 2005). There is a growing consensus that effective management of knowledge capital is central to an organisation’s success, increasing the importance of knowledge management function of HRM (Akhtar, Ding & Ge, 2008; Barney & Wright, 1998; Jackson, Hitt & DeNisi, 2003). For example, at Sears, validated selection tools have been developed to assess a potential employee’s employability in terms of their customer service aptitude and dependability. Sears’ HRM infrastructure also included employee education and development...