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Every organisation keeps the intention for having an edge over its competitors in order to sustain and gain competitive advantage. Organisations, nowadays, are gradually moving fast bringing along several changes in their strategies and culture. To sustain in the market, management ponder upon different aspects like technology, finance, marketing or human resources (Kianto, Saenz, & Aramburu, 2017; Carlson, Carlson, Zivnuska, Harris, & Harris, 2017; Erina, Ozolina, & Gaile-Sarkane, 2015). Although organisations may pursue many paths, one that is frequently not recognized is investing in human resources. Human resources are the source of achieving competitive advantage because of its capability to convert the other resources (money, machine, methods and material) into output (product/service). The other things can be imitated by the competitors like technology and capital but the human resources are unique assets of an organisation.
Human resources should be used in an effective way in order to enhance organisational performance. Even though, some companies recognize the growing importance of human resources, but few conceptualize them in strategic terms. As a result, many companies forego the opportunity to seize competitive advantage through the initiative of strategic human resource management (SHRM) practices. SHRM practices refer to organisational activities aimed at managing the pool of human resources and ensuring that the resources are employed towards the fulfilment of organisational goals (Schuler & Jackson, 2005 and 1987; Schuler & MacMillan 1984; Wright & SnellS, 1991). Strategic Human resource management practices are those activities of management which are directed towards ensuring employee commitment and productivity to achieve sustainable competitive advantage for the firm (Shahnawaz & Juyal, 2006). Delery and Doty defined SHRM practices as a set of internally consistent policies and practices designed and implemented to ensure that a firm’s human capital contributes to the achievement of its business objectives (Delery & Doty, 1996). SHRM practices include recruitment and selection procedures, training and development activities, compensation and reward systems and performance appraisal processes. Traditional HRM emphasized only specific activity or task but modern HRM emphasizes (Stone, Deadrick, Lukaszewski, & Johnson, 2015) on their total contribution in the firm, concerning for overall effectiveness and synergy of these practices.
SHRM practices of an organisation have a significant influence in making employees committed to exhibit the kind of attitudes and behaviours that are needed to develop good image of the organisation. These practices together play an important role in the development of relations within or outside of the organisation and are based on high level of trust. The outcomes of effective HRM practices are generation and sustenance of a committed workforce towards the organisation, job and service behaviour. SHRM practices bring change of attitudes and behaviours of employees that lead to customer satisfaction especially in service organisations. These practices foster employees’ shared perceptions of a supportive organisational environment that motivates behaviours that contribute to the organisational performance. Thus, human resource practices would be capable of establishing service behaviour signaling that SHRM practices could stimulate positive reactions of the employees. No matter how well constructed are organisational plans, even then employee behaviour and attitudes can determine the success or failure of an organisation. SHRM practices play an important role in fostering service delivery and subsequently organisational performance. Thus, an effective HR management in organisations is a prerequisite for quality service.