CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

Organizations are increasingly looking at human resources as unique assets that can provide sustained competitive advantage. The changes in business environments with increasing globalization, changing demographics of the workforce, increased focus on profitability through growth, technological changes, intellectual capital and the never ending changes that organizations are undergoing have led to increased need for managing human resources (Devanna, Fombrum, and Tichy, 1998). A human resource (HR) department that is highly administrative and lacks strategic integration fails to provide the competitive advantage needed for survival, thus losing its relevance. Huselid and Becker (1997) found that there were noticeable financial returns for organizations whose human resource management (HRM) systems have achieved operational excellence and are aligned with strategic business goals.

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