ABSTRACT
Competitive forces in the international business environment are pushing companies to constantly develop their sources of sustainable competitive advantage. Employees’ competencies and the speed at which these competencies can be transformed into high performance are crucial for long-term company success. Hence many companies focus on enhancing the relationship between people and company performance through human resource management (HRM) systems and practices. The aim of this chapter is to investigate this link between HRM and company performance. The chapter explores how companies can make this relationship stronger and thereby contribute to long-term competitiveness and success. The discussion starts with why and how people can be an important source of sustainable competitive advantage. The main HRM approaches used by companies to transform HR potential into high performance are explained. Hr best practices and strategic HRM as a means to build competitive advantage through people are elaborated. Some new issues in the HRM–company performance relationship are discussed and the chapter ends with some concluding remarks.
