By Matija Šerić

Since the mid-1980s, human resource management (HRM) has become widely accepted in both academic and commercial circles. It is a multidisciplinary organizational function that draws on theories and ideas from various fields, including management, psychology, sociology, and economics. Although there are different definitions, it can be stated that the purpose of human resource management is to ensure that employees are utilized in a way that allows employers to gain the maximum possible benefit from their abilities, while employees receive appropriate material and psychological rewards for their work. In other words, the goal is for the company to be competitive in the market while maintaining satisfied managers and workers.

A Strategic Approach

Human resource management is a distinctive approach that seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using a wide range of cultural, structural, and personal techniques. It is a strategic approach to managing employment relations that emphasizes the crucial role of human capabilities in achieving competitive advantage. Although there is no consensus on a single definition or set of characteristics of human resource management, it is evident from the above that it represents a combination of people-oriented management practices that view employees as assets rather than costs. The main objective of human resource management is to retain a skilled and committed workforce in order to secure competitive advantage.

Four Crucial Points

There are four main points that human resource managers must analyze in order to establish a healthy and effective strategic HR function:

1. The current state of the workforce – it is necessary to assess the current situation of a company’s workforce. Is the workforce doing what is required to achieve the set objectives?
2. Internal strengths and weaknesses – it is important to identify the core capabilities and sources of competitive advantage within the workforce. How can employees be trained, developed, and retained, and what are the limitations of the workforce?
3. External opportunities and threats – it is necessary to determine how the current business environment can be leveraged. One must establish what workforce plans exist in response to ongoing market changes.
4. The path forward – it is essential to define whether the organization is on the right path. This involves checking whether deadlines are being met and tasks completed on time.

A Broad Range of Problem-Solving Solutions

Having human resource management at a strategic level is important because it enables a wide range of solutions to complex problems generated by the changing nature of work, workforce diversity, evolving consumer needs, and globalization. Effective organizational strategies can only be developed if resources such as people, money, and technology are taken into account. Organizations need to understand the capabilities of their employees, as well as their financial and technological capacities, before determining future plans.

A Tool for Gaining Competitive Advantage

The strategic function of human resource management is linked to the idea known as the “resource-based view.” It can be argued that competitive advantage can only be achieved through the creation and development of core competencies that are superior to those of competitors. Organizations can gain competitive advantage by adapting more quickly to changes in their environment. This requires long-term planning for organizational flexibility and innovation, which comes from the people working within the organization—that is, from human resources.

The human resource management function should be guided in alignment with the overall strategy in order to achieve the best possible fit between the organization, employees, and the environment. Therefore, organizational goals and processes should be systematically aligned with the needs and capabilities of employees. This will provide employees with numerous opportunities to train, develop, and learn. This is crucial because, in return, organizations will gain competitive advantage, and there is a strong likelihood that overall organizational performance and the relationship between employees and the organization will improve.

Human Resources – One of the Most Important Elements of Every Organization

The profitability and success of any organization largely depend on human resources (employees). Human resources are one of the five resources (people, money, machines, methods, materials) that make up the production management process, but frankly speaking, of these five, only human resources are capable of mobilizing the others. People are the only living resource endowed with intelligence and emotions. Together with other resources, people help ensure the successful completion of every organizational activity. With the emergence of the concept of the “global village,” many new issues have arisen in human resource management, and more recently a new concept has developed that includes cross-border human relations within organizations.

Great Corporate Power

Globalization has enabled multinational and global corporations to expand their operations and financial power beyond national borders, thereby increasing the scope of human resource management. Of the 100 largest economies in the world, 51 are corporations and 49 are states. For example, the economy of Walmart is larger than the economies of Poland, Ukraine, Portugal, or Greece. However, “post-national changes in relations” blur the boundaries between the public and private sectors. Regulatory systems are no longer defined by the borders of nation-states but by global interaction among governments, civil society, and corporations themselves. As a result, human resource management is changing.

Cooperation Between the Public and Private Sectors

The concept of international human resource management is extremely popular in both the profit and non-profit sectors. The main difference between these two sectors lies in organizational objectives. The primary goal of the profit sector is to generate profit, while the main goal of non-profit organizations is to improve society. Experts argue that the line between the profit and non-profit sectors is shrinking—and they are right. The fact that organizations such as the United Nations Global Compact (UNGC) organize conferences for business companies to discuss corporate citizenship vividly illustrates how far organizations like the UN have progressed from their previously widespread skepticism toward multinational corporations. In line with this trend, an increasing number of profit organizations are forming alliances with non-profit organizations, and public awareness of this has never been greater.

Natural disasters such as the Asian tsunami, Hurricane Katrina, major fires, and earthquakes have given new impetus to the work of non-governmental organizations, aid agencies, and profit-oriented organizations involved in international crises. Modern problems and challenges require cooperation from all sides. Therefore, it is essential that the right people are in the right places.

Recruitment, Retention, and Employee Productivity

Human resource management improves employee recruitment, increases the retention rate of top talent, and enhances employee productivity. The practical application of human resource management represents expertise that is innovative, common-sense based, intuitive, and ambitious. Human resources can also play a major role in defining the values and standards of a business organization in order to create a corporate culture that firmly respects, promotes, and protects the human rights of all its stakeholders.

Creating the Ideal Company

Practices and programs of international human resource management create conditions for converting human resources, their strategies, and their ideas into action. The ultimate goal of human resource management is its ability to play a key role in aligning human rights with HR objectives and practices worldwide. In addition, human resource management must ensure the achievement of organizational goals through a skilled and motivated workforce. And of course, above all else, managing and leading human resources should create a kind of ideal company—one that is resilient and adaptable to all changes in modern markets.