Importance of Human Resource Management

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An organization’s resources can be classified into three categories: physical resources, human capital resources and organizational capital resources. Physical capital refers to non-human assets such as, machinery, infrastructure and other raw materials that are used within an organization’s production process. Human capital resources include the skill sets, knowledge, work experience and insights of each individual employed in the business. Organizational capital resources consist of an organization’s formal reporting structure, the planning, controlling and coordinating of systems, and interpersonal relationships formed within the work community (Barney, 1991, p.102). As civilization progresses rapidly into the age of globalization, technology and competition, an inevitable shift in organizational paradigm is to be expected. In a fast-paced business environment, the fierce competition between businesses challenges products’ life cycles. As competition increases, a product’s life cycle shortens, and is faced with the threat of premature elimination. Today, much emphasis is placed on overall cost efficiency to maintain business sustainability and competitive edge. To achieve cost efficiency, a business must look at its resources and determine the correct strategy to deployment, which will help the business attain its business goals. One of the strategic moves to keeping a business cost effective is to implement a strategic approach to human resource management (Sondhi and Nirmal, 2013, p.4). While it is still important for businesses to develop external competitiveness through introduction of new services, products or innovations, the business must prioritize its development of internal human assets as it is through the employe... ... middle of paper ... ...pact of Investments in Human Resources Activities on the Effectiveness of Investment in Human Capital: The Case of Commercial Banks in Jordan. International Journal of Business and Social Science, 3 (18), p. 154. Barney, J. 1991. Firm Resources and Competitive Advantage. Journal of Management, 17 (1), p. 102. Omerzel, D. and Gulev, R. 2011. Knowledge resources and competitive advantage. Managing Global Transitions, 9 (4), pp. 336-357. Simon, S. 2013. The Essentials of Employee Engagement in Organizations. Journal of Contemporary Research in Management, 6 (1), pp. 64-65. Sondhi, V. and Nirmal, P. 2013. Strategic Human Resource Management: A Reality Check. Review of Management, 3 p. 4. Wright, P., Mcmahan, G. and Mcwilliams, A. 1993. Human Resources and Sustained Competitive Advantage: A Resource-Based Perspective. Center for Effective Organizations, p. 11.
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