The objective of this paper is to provide a broad overview of current trends in HRM and leadership development, and to give participants an idea how some of the most successful companies manage their people and culture.

What we can observe today in the most successful companies is a clear trend away from HRM as a mere cost function to driver of firm performance and sustainable competitive advantage. This trend goes hand in hand with a belief in the efficiency of so called “high performance” work systems or HRM practices. There is strong research evidence to suggest that high-performing companies adopt HRM practices different from those adopted by low-performing firms (e.g., study of U.S. companies conducted by Mark Huselid and colleagues such as The Workforce Scorecard: Managing Human Capital to Execute Strategy [Harvard Business School Press, 2005]).

Based on this and related research, Jeff Pfeffer concluded that seven HRM practices are particularly effective in improving firm performance.

1. 1) Highly selective hiring: e.g., Southwest Airlines in 1993 received 98,000 applications, interviewed 16,000 people, and eventually hired 2,700. Infosys last year (in 2004), despite the increasing competition for software engineers in India, received over one million applications, they tested around 130,000 candidates, and hired 10,000 — the top 1%, based on their assessment results. Companies can only be highly selective in hiring when they have a large applicant pool. And, these companies need efficient and validated selection processes. Also, Pfeffer found that some of the most successful companies focus on attitudes and cultural fit, rather than job-related skills, in the selection process. Kelleher, the former CEO of SWA, puts it this way: “If you don'thave a good attitude, we don'twant you, no matter how skilled you are. We can change skill levels through training; we can'tchange attitudes”.

2. 2) Extensive training: Emphasis on training is a logical consequence of the fact that these companies focus on attitudes and cultural fit, rather than job-related skills, in the selection process.