The field of human resource management has traversed a long path from its humble
beginning as personnel management where the job of personnel manager was
recruitment and keeping track of payrolls, promotions, retirement and other routine
issues. Gradually, over the years the personnel manager has assumed an increasingly
important role – not only within the HR section of the organisation, but also within
overall decision-making process of the organisation. HR heads have assumed added
importance in the wake of increased competition prompted, inter alia, by revolution in
the ICT, which has made information available with speed to consumers and rivals
organisations alike. Organisations can no longer afford to take their competitively
advantaged position for granted, and are accordingly forced to be constantly on the
vigil. It is argued in the literature that HR resources can effectively contribute to
organisation’s profitability by maintaining and/or enhancing its competitive
advantage. This claim seems very plausible since it is the human resources who
make the physical investment worthwhile and productive; however, this claim is more
difficult to measure since profitability and other performance measure are a function of
a complex number of internal and external factors. We provided a schematic view of
these factors and argue that it still is possible to arrive at conclusions about HRM
practices and their impacts on OP provided a sufficient number of internal and external
variables are captured comprehensively.