Profitable companies use human capital effectively $$ that is$,$ they get as much as they can out of their employees$$ knowledge, skills, and capabilities. In fact, CEOs say that human capital is the most important factor in competitive success, followed by customer relationships, and product and service innovation. Companies that have effective HR management practices, and which align those practices with their overall company strategy, are more likely to have higher employee productivity and better financial results than other companies.

HR strategy is based on three things:

$$ Managers have to be involved in managing human resources.

$$ Employees are viewed as assets by the organization.

$$ The purpose of HRM is to match the way the company manages human capital with the company$$s strategy and goals.

HR functions are associated with the following three goals: