Human Resource Management and Competitive Advantage

 Introduction

 Human resources are defined as firm's knowledge, experience, skill and commitment of the employees to the firm; their relations with each other and with others outside the firm. They are the most important firm asset, the ones that research, design, project and differentiate the firm from other firms

Wright & McMahan, (1992) thus, argue that human resources have the potential to be sources of sustained competitive advantage, though they also note that to do so, the employees must be both highly skilled and motivated—that is, a high-quality workforce.

Theoretical Insights

The founder of modern management, well-known Peter,( 1973) has strongly said that business firm or any other institution has only one real resource – people. “...human resources have always been critical to the success of an organization, their importance has been always grown and this fact is recognized from within and outside organizations.” (Kutllovci, 2004).

Strategic-level roles in HR for competitive advantage

To develop and carry out forward-thinking HR strategies that are connected with one another and matched to business objectives with their management colleagues. By doing this, they follow Wright et al. (2004)'s "outside-in" methodology, where the business—including its customers and competitors—is the starting point. and commercial problems it encounters. The HR strategy then immediately responds to these issues in order to provide meaningful answers and meaningful value.

To assist in the formulation of business plans. They accomplish this by offering guidance on how an organization may use its human resources most effectively to achieve its strategic goals and by emphasizing the unique contribution that the company's talented workforce can make.

                                                       Figure 1/Formulation of competitive advantage in HR

To carry out these roles, they need to:

Identify the organization's or the unit's strategic goals and the business imperatives and performance drivers in relation to these goals;

Comprehend how the organization's or unit's human capital can be used to gain a sustained competitive advantage and how HR practices may assist the organization achieve its strategic goals;

Assist the organization build a unique goal and a set of core values;

Make sure senior management is aware of how its business strategy affects human resources.

Understanding the wider context in which a business operates, including the competitive environment and the corporate, economic, social, and legal aspects that impact it;

Create Innovation workforce

                                                          Figure 2/Example of innovation workforce

HR professionals that take a proactive and strategic approach to HRM will be driven to innovate, bringing new policies and procedures that they feel would boost corporate performance. Analysis and diagnosis procedures that pinpoint business needs and problem areas should be used to determine whether innovation is necessary. It is possible to conduct "benchmarking" to find "best practices" that other firms have implemented. However, "best fit" is more significant than "best practice."

HR professionals have to fulfil the role of change agents in the strategy's execution by offering guidance and assistance on the introduction and administration of change.
HR change agents are categorized using four dimensions by Caldwell (2001).

Transformational transformation is a significant adjustment that profoundly impacts HR practices and policies throughout the whole company.
Incremental change refers to the progressive modification of HR policies and procedures that impact one or more functions.
The HR vision is a set of principles and ideals that uphold the authority of the HR department as a vital commercial partner.
HR competence is the set of abilities and knowledge that characterizes the special contribution an HR specialist can make to efficient people management.

Conclusion

Human resources are amongst the most important resources of the firm. Without a doubt, HR can create competitive advantage for the firms. High efficiency of human resources is strongly related to firms’ high performance. Firms that yesterday performed well and had competitive advantage, do not mean that today would perform the same. Therefore, for firms to have competitive advantage, they should focus on turning talents into a source of competitive advantage.

References

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Peter, D., 1973. The founder of modern Management. s.l.:s.n.

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