Theoretical Frameworks

Abstract

The goals or objectives of human resource management (HRM) are multifold. From a business perspective, the foremost are economic objectives, which lead organisations to follow cost-effectiveness, organisational flexibility, and sustained competitive HR advantage. Thus, a fundamental economic goal in HRM is for managers to try to stabilise an effective production system at a cost that is competitive in their industry. There are differences in what this means across different industries. Thus, capital-intensive (high-tech and knowledge-intensive) contexts and labour-intensive (manufacturing and low-skill) services will need different strategies. Similarly, when it comes to organisational flexibility, some element of flexibility is important in an organisation’s HRM if it is to cope with change. The five aspects of flexibility are numerical flexibility, financial flexibility, functional flexibility, short-term responsiveness, and long-term agility. Achieving business excellence requires recognising which flexibility is needed for the organisation, which in turn will help address particular areas. Lastly, when it comes to sustained competitive (HR) advantage, there is a need for a higher-order economic goal which involves achieving sustained, superior profitability despite the efforts of competitors. This is achieved through human capital advantage (HCA) and social capital advantage and more specifically through labour-cost advantage (LCA) and labour-differentiation advantage (LDA).