The Role of Human Resources Management in Achieving Sustainable Competitive Advantage: A Case of Selected Banks Operating in Nairobi, Kenya

Abstract

Human Resources Management is a term increasingly used to refer to the philosophy, policies, procedures and practices related to the management of an organization’s employees. It is particularly concerned with all the activities that contribute to successfully attracting, developing, motivating and maintaining a high-performing workforce that results in organizational success. HRM is about making organizations successful. Indeed, into the twenty-first century, it has become increasingly clear that effective management of an organization’s Human Resources (people) is a major source of competitive advantage and may even be the single most important determinant of an organization’s performance long-term. The purpose of this study was to investigate the extent to which HRM practices added value at a strategic level among banks and its critical role in giving these organizations sustainable competitive advantage. The study also sought to establish the challenges faced by the HRM practitioners in the banking sector in their endeavor to realize their full potential of becoming successful strategic business partners. The research design used in the study was descriptive and the population for the study was 43 banks operating in Nairobi, Kenya. The researcher targeted 15 out of the 43 banks with a sample size of 75 senior managers (being 5 senior managers from each bank) out of an estimated 516 senior managers in the 43 banks. Descriptive statistics for all quantitative findings, namely mean, standard deviation, percentage proportions and five-point Likert scale were used to analyze the data. From the data analysis, it was established that there was a strong linear relationship between Human Resource Management (HRM) and competitive advantage. This relationship was exemplified by the contribution of HRM practice in terms of recruitment and selection, learning and development, performance management, talent management, and reward and benefits to specific bank performance outcomes namely: innovation, efficiency, customer responsiveness and superior quality of service. In this regard therefore, there was need for the banks to incorporate HRM as a key part of the strategic components of the business in order to enjoy maximum contribution to the banks’ sustainable competitive advantage.