Traditional sources of competitiveness, such as production capacities, financial resources, raw materials, distribution channels etc., are considered necessary, but no longer sufficient for organizational success. Human resources, their knowledge, skills and competencies as well as synergy among them, become the most valuable asset, the new source of wealth, and the key ingredient of competitive advantage. Consequently, the human resources function, which deals with recruiting, developing, and keeping the best people, now has the opportunity to move out of the background into the mainstream of organizational strategy and management. In other words, in a world in which all work is knowledge work and intellectual capital is crucial for economic success, it is logical that the ability to attract, retain, and use the talents of people provides a competitive edge. The aim of this paper was to evaluate the quality of HRM in Croatia, as excellent HR policies, programs and activities enable enterprises to be competitive through people. Therefore, the empirical research was conducted. The population were Croatian enterprises with more than 200 employees, out of which 80 form the final sample (response rate of 14.3%). In order to assess the value of HRM, the audit approach based on HR indicators was used. 55 HR indicators (26 quantitative and 29 qualitative ones) were analyzed, using 10 Croatian enterprises as benchmarks. The list of benchmark enterprises was generated using expert method. Precisely, enterprises from the sample that have the best HR practice were identified by the best Croatian HRM theoreticians. Results indicate that Croatian enterprises on average have insufficient HR activities. Precisely, independent samples t-test showed that 61.82% of analyzed HR indicators were significantly better for enterprises that were used as benchmarks, as well as that those enterprises have better absolute values for all of analyzed indicators. Consequently, HRM in Croatia could not be considered a solid ground for achieving competitiveness through people.
