Strategic human resources: a new source for competitive advantage in the global arena

Abstract

As demands are made on organizations to expand their global markets, having an effective global human resources function becomes imperative. Based on interviews with global human resource executives in sixty of the largest US-based multinational organizations, this study first identifies ten factors, or guiding principles, that facilitate such effectiveness. Using data from surveys of these HR executives as well as of managers of non-HR areas and the CEOs/business unit executives of these companies, the paper then analyses how the members of these various groups rated the effectiveness of the global HR function. The survey findings demonstrate that the global HR executives and the CEO/business unit executives rated the global HR function relatively high, while the executives in the other functional areas rated its effectiveness somewhat low. The relationship between the effectiveness of the global HR function and firm performance was also examined and revealed that three of the ten factors identified by the HR executives were related to bottom-line organizational performance measures. These findings suggest that, in successful organizations, global HR is perceived to be making a contribution and actually is making a contribution to the overall financial performance of the organization.