In order for us to understand how this can be accomplished, let us look at the definitions of human resources management and of competitive advantage.
A competitive advantage is anything that a business does that can make it more productive than its competitors. Human resources management is the process of making sure that a company hires the best possible people, that it trains them as well as possible, and that it keeps them happy and solves problems as well as possible.
One way to gain a competitive advantage is to have a superior workforce. If a firm has better workers who are happier than those in other firms, it will be more productive and more profitable. This can be accomplished, in part, through human resources management. If a firm’s HR department is excellent, it can recruit and hire better workers. It can do a better job of training them. It can arrange compensation packages that satisfy the workers. It can create a work environment that the workers appreciate and in which they would like to keep working. If the HR department does all of these things better than the HR departments of other firms, the firm can gain a competitive advantage.