Reinventing Human Resources Management: Challenges and New Directions

Reinventing Human Resources Management: Challenges and New Directions

Reinventing Human Resources Management: Challenges and New Directions

Reinventing Human Resources Management: Challenges and New Directions


The authors of this text review the most current thinking on HR initiatives associated with current organisational performance and investigate how the field will need to mobilise in new ways to meet the demands of the future.


Ronald J. Burke and Cary L. Cooper

The world of work and organization has become increasingly demanding and turbulent (Burke and Cooper, 2004). Ulrich (1997) lists eight major challenges currently facing organizations. These are: globalization, responsiveness to customers, increasing revenue and decreasing costs, building organizational capability, change and transformation, implementing technology, attracting and developing human capital, and ensuring fundamental and long-lasting change. Thus, levels of competition among organizations have increased. Most organizations today can copy technology, manufacturing processes, products, and strategy. However, human resource management (HRM) practices and organization are difficult to copy, thereby representing a unique competitive advantage (Pfeffer, 1994, 1998). To be successful in the future, organizations will have to build organizational capability. HR professionals and HRM practices will be required to create value by increasing organizational competitiveness (Ferris et al., 1999).

Traditional views on competitive advantage have emphasized such barriers to entry as economies of scale, patent protection, access to capital, and regulated competition. More recent views have highlighted a different source of competitive advantage, a firm's human resources and human capital (Huselid et al., 1997). New demands facing organizations as a result of heightened competition, globalization, and technological advances have put a premium on creativity and innovation, speed and flexibility, as well as efficiency. The critical firm assets do not appear on a balance sheet but reside, instead, in people and management systems (Ichniowski et al., 1996). The role of firm strategy, human resources, and HRM in firm performance is being rethought. Rather than seeing the HR function as a cost, an HRM system that supports a firm's strategy should be seen, instead, as an investment, a strategic lever for the organization in creating value.

The 1990s witnessed a growth in research interest in examining the link between HRM strategies and practices and a firm's financial performance (Becker and Gerhart, 1996). Studies have shown a strong positive relationship between the two, and this relationship has been observed in studies of one firm, one industry, and multiple industries (Becker and Huselid, 1998). Becker and Huselid have shown in three separate national surveys (over 2,400 firms) an economically and significant impact on several measures of firm performance. They observed a link between changes in the sophistication of a firm's HR architecture

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