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Human resource management (HRM) can be defined as a management of organisational human capital in achieving the integration (fit) between business and its strategy (Armstrong, 2003). In other words, the aim of HRM is to assist an organisation to achieve its objectives through the utilisation of human capital. Human capital is the pool of employee talent and all its potentialities that brings economic value to an organisation. This pool plays an important role in the achievement of organisational high performance levels. Therefore, HRM includes all activities that relate to the management of people and work for achieving organisational economic and socio-political goals (Boxall & Purcell, 2011). These activities incorporate all employment policies and practices employed to manage and organise them, including selection, recruitment, training and development, appraising, deploying, motivating and employee retention.

Specifically, the goals of HRM are: i) achieving high performance through people; ii) enhancing motivation, commitment, and job engagement; iii) developing human capital advantage; iv) valuing employees; and, v) improving employee relations (Armstrong, 2003). Organisations can achieve high performance levels through the integration of HRM and business strategies. Improving employees’ performance, through enhancing their motivation, commitment, and job engagement, may reduce turnover and absenteeism. In realising the goal of achieving human capital advantage, organisations should have a systematic approach to knowledge management, resourcing and HR development. Boxall and Purcell (2011)

14 | P a g e suggest that organisations obtain a human resource advantage when they have the capability to be superior to their competitors through the quality of human resources they have employed (human capital advantage). This advantage can be improved if the organisation also develops a social capital advantage by encouraging collaboration amongst their talented employees. Thus, an organisation with a pool of competitive, knowledgeable and skilled employees that develops their capabilities, while reinforcing a culture of sharing knowledge among its employees, will achieve competitive advantage. The basic premise in HRM is that humans are not machines; their achievements should be valued and rewarded. In achieving this goal, it

is HRM’s responsibility to enhance employees’ motivation and commitment

through the introduction of systematic policies and procedures that recognise and value their achievement (Armstrong, 2003). HRM is also responsible for maintaining harmonious workplace relationships through partnerships between management and employees.

HRM is expected to add value to the utilisation of human capital and the management of work through a set of strategies that can be applied to the whole system within an organisation (Boxall & Purcell, 2011). These authors define strategy as a “set of strategic choices” (p. 62) that provides direction to the organisation in relation to its goals. It involves a process of defining organisational intentions and plans to achieve the best configuration to maintain competitive advantage, through appropriate distribution of both human and non-human assets (Armstrong, 2003). Thus, strategic management, as Boxall and Purcell (2011, p. 62) suggest, involves an organisation’s approach to developing “critical goals and resources”, and therefore HRM has an important role in improving its strategic management process. This process involves an approach to decision making on the choices of employment practices and policies, or what Boxall and Purcell (2011, p. 61) call a “cost-effective approach to HRM”. This strategic HRM (SHRM) links the organisational goals and decision making directly with the management of human capital and work through practices like recruitment, rewards, training and development.

15 | P a g e However, within SHRM theory, there is no one specific bridge between HRM and strategy. Instead, Boxall and Purcell (2011) suggest that the theoretical debate within these research streams are contested between the approach of the “best fit” and “best practice” or a universalism perspective. The latter approach is based on the belief that there is a set of best practices that can be applied in all organisational contexts, and that implementing them can improve organisational performance levels. However, it is possible that practices and policies that promote improvement in one organisation may not provide the same outcomes when they are applied in other organisational contexts. The problem of integration with organisational culture, strategy, leadership style, or, even working practices has created an important debate on this perspective. The “best fit” approach is related to the contingency perspective and suggests that HRM can improve organisational performance through the integration (fit) of the practices and policies with the organisational context. In other words, HRM can help organisations achieve competitive advantage by tailoring their practices and policies to their specific contexts (Boxall & Purcell, 2011). Nevertheless, reviewing the work of other scholars in this area, Armstrong (2003) agrees that differentiating these two approaches should not be a priority. Instead, concern with organisational change processes should be emphasised, to ensure decisions match human capital needs. This theoretical debate, confirms the importance of developing a good fit between the organisational/business strategy and its HRM policies and practices to optimise competitive advantage.

In the search for competitive advantage, the importance of knowledge management and organisational learning has been repeatedly emphasised (Armstrong, 2003). Although knowledge management has been strongly linked to its systems (i.e information technology), it is more about people and their sharing behaviors that are becoming an important aspect of HRM (Armstrong, 2003). HRM through its practices can contribute to the achievement of successful implementation of knowledge management because knowledge is shared between people. HRM’s responsibility is to ensure that an organisation has the available intellectual capital to achieve its

16 | P a g e goals and that it has structures that support and motivate employees to share their knowledge.