Human Resource Management "An Organization's Tool For Competitive Advantage"

In the world of globalisation and free market, organizations are facing increasing competition and therefore faced with issues on how to ensure survival and competitive advantage. In meeting the external pressures, measures such as mergers, acquisitions, strategic alliances, downsizing and restructuring are common responses. In a nutshell, the integral part of these responses is the method of using human resources (HR) more effectively.

Competitive advantage refers to the ability of an organization to formulate strategies to exploit profitable opportunities, thereby maximizing its return on investment. One of the main source for a company seeking competitive advantage will be its' organizational capability. Organizational capability represents the business's ability to manage the organizational systems and people in order to match customer and strategic needs.

The primary organization systems that affect employees are a business's HRM practices i.e. the set of organizational activities that directly affect how employees perceive their jobs. These are:

  • Organizational Design
  • Staffing
  • Employee & Organizational Development
  • Performance Management
  • Reward systems, Benefits and Compliance
  • Communications and Public Relations

Basically there are three specific ways that HRM activities can build organizational capability and sustain a business's competitive advantage:

Implementing a Strategy

Any business that wants to remain successful must continually assess and formulate new strategies to meet the needs of its customers in more effective ways. It is important that employees be informed about the organization's strategic mission. HRM practices should be the mechanisms used to focus people's attention on the major strategic issues in the organization i.e. altering the HRM practices to meet their strategic goals. As an example, a differentiation strategy calls for specialists in product design and development, higher budgets for research and development, rewards for innovative ideas related to quality, and customer-based performance appraisal.

Dealing with Change

In an increasingly competitive environment, organizations with a greater capacity for change are more likely to satisfy, retain, and attract customers. In organizations, the capacity to change may be increased by using HRM tools correctly. As an example, hiring people who are flexible and develop people that they will realize that change is an important part of growth. Moreover, performance standards should be set to encourage flexibility and diversity and should reward employees’ innovative.

Building Strategic Unity

Strategic unity represents the extent to which stakeholders inside (e.g. employees) and outside a business (e.g. customers) share a core set of values and assumptions about the business. As an example, if the stakeholders believe that customer service is of central importance to corporate performance, this core values can be developed and nurtured among employees, suppliers and customers of the business. The benefit of the internal quality is that it channels employees' attention toward an important organizational goal e.g. helps the company to provide a unique service to customers that cannot easily be copied by competitors.

Skills Required For HRM Competitiveness

Both General Managers and HRM professionals must have a set of skills or competencies (knowledge, skills, abilities, and activities) that build competitiveness i.e. they should know the business, keep aware of current HR developments, manage the process of change, and integrate all these roles in the context of the organization’s mission. Therefore they must be proficient in oral and written communication, decision-making, leadership, innovative thinking, planning and organizing, and objectivity about themselves.

In order to ensure HRM practices are taken into account in ensuring the organization’s competitiveness, HR practitioners must be accepted as a strategic business partner. Therefore as a strategic business partner, these HR competencies is critical:

  1. Business competencies
  2. HRM Design and Delivery competencies
  3. Management-of-Change competencies

In general, the view of HRM outlined above provides a foundation for integrating HRM activities into the organization’s mission and goals. HRM professionals should be actively involved in building more competitive organizations through the HRM practices mentioned above. One final competency beside the HR competencies mentioned above which is necessary for both line managers and HRM professionals is a knowledge of the legal implications of all HRM activities.

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