Chapter 1 - human resource management: gaining a competitive advantage. Introduction: hrm plays a key role in determining the survival, effectiveness and competitiveness of north american businesses, competitiveness: a company"s ability to maintain and gain market share in its industry. Can be reefed to as people practices . Effective hrm has been shown to enhance company performance by contributing to employee and customer satisfaction, innovation, productivity, and a favourable reputation in the community. Analogical definition; ob is the hrm as physics is to engineering. Engineering is the application of the theories in physics to solve real world problems and address real world needs. Similarly, hrm is the application of theories developed in ob to help firms solve problems and address needs concerning people at work: why do organizations exist, what is the most costly investment in most organizations and is. Costs are investments (such as hr) and return is what firms receive from those costs, hoping that it is positive.