Competitive Advantage And Human Resource Strategy - Essay Example

?Competitive advantage and human resource strategy Introduction Human resource management refers to the management of an entity’s workforce and covers all that pertains to the personnel. The scope of human resource management includes recruitment and selection of employees into an organization, orientation of the workers, managing their operations and behaviours, training, and developing them, reward and motivation as well as the task of retaining the employees. Human resource strategies are a set of practices and processes that are applied by the human resource management in coordination with other departmental managers in order to develop solutions to human resource related problems. Competitive advantage on the other hand refers to an organization’s potential to gain the benefits of its economic ventures in a competitive environment. It defines an organizations capacity to withstand and overcome competition in its market. This paper seeks to discuss the concept of environmental factors affecting human resource and performance, and concepts of competitive advantage and human resource strategy. The paper will explore the elements and develop a relationship between them. Human resource management competencies towards competitive advantage Competency refers to the ability to undertake a task satisfactorily. Its scope defines success and efficiency in processes and activities. Human resource management competency therefore relates to initiatives taken in the process of human resource management to ensure that the objectives of the management are efficiently achieved. Grobler and Warner defines competency as a set of “behaviour, knowledge, skill, or capability” that forecast an outcome of a process (Grobler and Warner, 2005, p. 482). Establishment of such elements of competency in an organization is a benchmark for desired success. Human resource competency can therefore be understood as a set of knowledge possessed by the human resource management personnel or personal traits of a manager and can be applied either at individual level or at organizational level (Grobler and Warner, 2005). The definition and scope of human resource competency has identified its essence towards improved performance through human resource management. Some of the benefits that relates to human resource competency includes good communication skills and effective training techniques towards higher performance as well as measurement, monitoring and evaluation of human resource performance for comparison with set targets. Human resource competency is therefore based on an ultimate target of an efficient performance of human resource and associated processes (Storey, 2008). Rogers defines competitive advantage as an organization’s potential to embrace and endure competition in its environment. Some of the elements that defines competitive advantage includes development of products that are “unique, superior to competition, sustainable, applicable to multiple businesses or situations and is hard to copy” (Rogers, 2009). These features establish an organization above others and maintains the organization’s distinction. Khosrowpour also defines competitive advantage as the state at which an organization is able to “operate in a more efficient or higher quality manner” (Khosrowpour, 2007). The scope of human resource competency and competitive advantage therefore establishes a strong relationship between the two elements of an organization’s human resources management with enhanced performance as an underlying factor (Rogers, 2009). One of the competencies that human resource managers need in order to make a strategic contribution to competitive advantage is sufficient knowledge and ideas in business. Business knowledge refers to a comprehensive understanding of the business environment. A manager with sufficient business knowledge is for instance informed of the components of the organization’s environment, both internal and extern, the organization’s objectives, how the goals are to be attained as well as the relationship between the organization and its environment such as suppliers and customers (York, 2009). Guinta, based on a research, reports that business knowledge is identified as one of the most essential human resource management competencies that affect organizations’ performance, including revenue generation. The author further explains that business knowledge is not only limited to the task of a manger but also diversifies to relationship among line managers to internal environmental factors of an organization. The relationship between business knowledge and competitive advantage can therefore be easily understood from the impacts of proper management of environmental factors towards competitive advantage (Guinta, 2006). Internal environment consists of factors that an organization has the potential to manage. One of the internal factors that affect an organization’s human resource is its strategy. A strategy refers to a plan that is laid down to guide operations and activities. An organization’s strategy therefore provides for schedules and activities that are expected of the employees and as a result affects the human resource. Organization’s strategy then defines tasks to be delegated to employees. The nature and scope of tasks also shape the human resource in the form of employee’s reaction to their assigned tasks. Askwathappa explains that an employee’s task defines his or her level of “motivation and satisfaction” (Aswathappa, 2005, p. 38). This therefore defines a task’s immediate influence on the human resource. Proper assignment of tasks based on qualifications and capacity therefore motivates human resource to higher capacity while inappropriate allocation of tasks may discourage human resource to poor results. Leadership in an organization also plays a significant role in influencing human resource. The type of leadership structure together with the leadership style as adopted by an organization determines the level of influence that a leader and his leadership has on human resource. An ineffective leadership will for example fail to mobilize human resource into performing required tasks due to poor control of employees. Dictatorial leadership styles may also lead to revolt among employees. Leadership therefore influences human resource management’s reactions to the management’s needs towards competitiveness (Aswathappa, 2005, p. 38). Organizational culture is another internal factor that influences human resource. Organizational culture is the set of behavior that has been adopted by an organization. It therefore defines how processes are to be conducted and the relationship between members of the organization. As a result, the adopted culture directly affects the relationship among members of the workforce, the relationship between the workforce and the management as well as employees’ behavior and attitudes towards their jobs. Identification of a productive culture will therefore help an organization to human resource effectiveness based on the employees’ response to the culture. Different organizations employ different cultures that define their level of success with respect to human resource management. A culture that does not conflict with the employees interest is most likely to yield a positive attitude from the human resource resulting in efficiencies and positive productivity while a culture that is in constant conflict with employees’ interest is most likely to develop tension between human resource and the management. This may lead to demonization of employees, especially if the conflicts are not properly managed (Bogardus, 2004). Snell and Bohlander also describe internal organizational factors in terms of benefits towards employees. In consistency with motivation concept, the authors highlights “compensation strategy of organization, worth of job, employee’s relative worth and employer’s ability to pay” as some of the internal factors that influence human resource (2012, p. 403). All these factors relates to human resource motivation. Employer’s ability to pay and recognition of an employee’s worth for example translates to job security that motivates employees to focus on output instead of worrying about job security. Proper compensation strategies, especially if coupled with productivity based output, motivates hard work among human resource (Snell and Bohlander, 2012; Jain, Trehan and Trehan, n.d.). “The size of the organization” which determines its capacity to offer favorable and motivational conditions, “pay package and rate of growth of an organization” also determine the nature and behavior of human resource (Prakashan, 2008, p. 5- 4). Similarly, environmental factors influence performance towards competitive advantage. The management and managers are one of the internal environmental factors that influence performance of an organization. This is because the managers assume the responsibility of shaping activities and operations of the organization. The management and leadership styles as adopted by a manger also influence employees’ potential and willingness to deliver to the organization. While good management will encourage and motivate employees to greater efforts in an organization, poor management approaches will negatively affect employees’ and hence the organization’s performance. An organization’s mission statement that offers direction to its activities is another internal factor that influences performance. This is because the mission statement relates to the objectives of the organization and forms the basis for policy and ‘decision-making’. Organizational culture that defines desirable “values, beliefs and assumptions” in an organization also influences corporation between the employees and the management for higher productivity (Lussier, 2011). Horton, also argues that an organization’s internal environment can either facilitate utility of external factors to boost performance or to the contrary hinder application of external factors and results in poor performance. He identifies factors such as “performance related incentives and rewards, the institutional climate in general, history and tradition of the organization, leadership and management style” as internal influences on an organization’s performance (2003, p. 23). When factors such as rewards and organizational climate are focused towards employee motivation then higher performance are expected (Horton, 2003). Factors that include “administrative and legal system that governs the organization, political environment and social and cultural context” around an organization also have direct impacts on its performance capacity. While legal frameworks may restrict an organizations output capacity, political and economic stability provides confidence into higher performance capacity that facilitate free exploitation of resources. Innovative environment that could be external or internal also facilitates performance. An organization’s performance is therefore significantly affected by both internal and external factors. Business knowledge, as an element of human resource management competency therefore allows a manager to make informed decisions towards competitive advantage (Horton, 2003; Deshpande et al., 1997). Change management is another human resource management competency that contributes to competitive advantage. A consequence of environmental factors requires an organization to adjust to changes in order to maintain competitiveness. Change management is a tool to competitive advantage that keeps an organization at a level where it can sustain competition. Heisler, for example, attributes change management to the dynamic environment in which a business operates. He argues that the constantly transforming environment requires that an organization also constantly adjust to environmental changes. The scope of change management involves instilling a positive attitude, among managers, towards identified and initiated changes. The human resource competency therefore requires skills such as “problem solving, innovation, process improvement, influence, consultation, communication, and leadership” (Heisler, n.d., p. 1). Application of these skills in processes has direct implication on an organization’s competitive advantage. Problem solving for instance facilitates processes with certainty and accuracy leading to quality productions and change processes that could otherwise not be achieved. Innovation into generation of new brand of products based on consumers taste and needs as well as innovation into efficient operation processes facilitate change into a more competitive position of an organization in terms of brand production and attained quality from efficient processes. Similarly, influence and leadership plays a critical role in facilitating change from one operational or organizational culture to another. Possession of change management competence will therefore facilitate positive application of these skills towards a competitive advantage through management of transitions into efficient processes and generation of new brands of products for customer utility (Heisler, n.d.). Chapman also identifies the impacts of change management on competitive advantage by the fact that an organization cannot optimally operate in all conditions. As a result, change must be initiated in order to conform to the needs as established by changed conditions around an organization. A successful change management is particularly identified with elements such as “organizational effectiveness, information gathering, objectives, translation of objectives, speed of change, change champion and change plan” among other elements of a successful change program (Chapman, 2011, p. 595). The impacts of these elements are supported by Mishra’s opinion that change in an organization aims to transform an organization from its state to a better position at which higher level of success can be achieved, an equivalent definition of attaining competitive advantage. Collection of information as an element of change management, for instance, plays an important role in identification of the necessary changes that an organization may need in order to remain relevant to consumers’ needs. Similarly, a change champion and a change plan facilitate implementation of the identified change programs. As a result, change management, as an element of human resource management competency, realigns an organization according to its changing environment and keeps the organization together with its products relevant and competitive towards a competitive advantage (Mishra, 2010). HR delivery is another human resource management competency that is essential towards a manager’s contribution to competitive advantage. Human resource delivery, according to Storey, is the set of human resource activities that relates to the scope of human resource management. They are viewed as the instrument to functionality of human resource management and include “staffing, training and development, organization design, performance management, legal compliance, and HR measurement” (Storey, 2008). Though human resource deliveries have not directly been associated with significant difference in competitive advantage, there is a proven perception that it contributes to performance. With elements such as “reward systems, performance management” among other human resource roles, HR delivery tools have direct impacts on human resource performance (Heisler, n.d.). Human resource delivery was particularly credited as one of the major reasons for IBM’s recovery in the 1990s through modification of “products, services operations, and functions” (Rothwell and Prescott, 2010, p. 12). Obstacles that human resource might face Human resource management strategies towards competitive advantage are however faced with challenges. These challenges can be explored from two perspectives, institutional obstacles, and professional obstacles. The institutional factors include business ‘short termism’, business strategy as well as path dependency. Business ‘short termism’ is particularly a challenge due to imposed uncertainties on the management. Factors such as change in management and ownership for example have induced impacts on the application of human resource competencies. Similarly, internal factors such as organizational culture define scopes of operations, limiting application of human resource competencies. Business strategies, especially if the strategies are not focused on human resource development and retention, but rather on costs leads to incompetence in human resource and undermines human resource competencies. Lack of capacity to spearhead safe transitions of an organization may also undermine application of human resource competencies due to high level of risks that can yield negative impacts in change initiatives (Mathis and Jackson, 2011). Similarly, professional factors undermine human resource efforts towards achieving competitive advantage. Lack of sufficient knowledge of the business and its environment, for example, indicates lack of sufficient competency towards competitive advantage. Similarly, difficulty in measuring and evaluating outcomes of human resource initiatives undermines change management objective of aligning processes to projections and planned results. Other factors such as poor attitudes of line managers and the entire human resource also challenges success of change management initiatives that relies on the ability of human resource management to influence managers and employees into effecting initiated changes. Organizational structures that does not give human resource management authority over line managers also undermines the competencies towards competitive advantage due to reduced impacts of the human resource management on the decisions and activities in the line management departments (Guest and King, 2004; Heisler, n.d.; Chapman, 2011). Conclusion Human resource management has developed to be an essential element in organizations’ success. Human resource competencies are for example important in facilitating efficiency in performance of organizations’ operations towards competitive advantage. Business knowledge and ideas, change management and human resource deliveries are examples of human resource competencies that contribute to organizations’ competitive advantage. Such initiatives are however undermined by institutional factors such as business ‘short termism’, cost centered strategies and path dependency as well as professional factors such as lack of business skills, inefficiency in measuring and evaluating success, attitude and organizational structure. Reference Aswathappa, K. (2005). Human Resource And Personnel Management. New Delhi, India: Tata McGraw-Hill Education Bogardus, A. (2004). Human Resources JumpStart. California, CA: John Wiley & Sons Chapman, R. (2011). Simple Tools and Techniques for Enterprise Risk Management. West Sussex, UK: John Wiley and Sons Deshpande, R., Farley, J. and Webster, F. (1997). Factors affecting organizational performance: a five country comparison. Retrieved from: http://www.msi.org/publications/publication.cfm?pub=456 Grobler, P. and Warner, S. (2005). Human Resource Management in South Africa. London, UK: Cengage Learning EMEA Guest, D. and King, Z. 2004. ‘Power, Innovation and Problem-Solving: The Personnel Managers’ Three Steps to Heaven?’ Journal of Management Studies, 41:3.401-23. Guinta, C. (2006). A Focus on Self-marketing and Value Creation: An Analysis of Human Resource Management Executives' Perception of Business Competencies. Ann Arbor, MI: ProQuest Heisler, W. (n.d.). Competency requirements for today’s HRM professional. Retrieved from: http://www.hra-nca.org/downloads/1334834661.15164900_d80262f010/heisler.pdf Horton, D. (2003). Evaluating Capacity Development: Experiences from Research and Development Organizations Around the World. Ottawa, Canada: IDRC Jain, T., Trehan, M. and Trehan, R. (n.d.). Business Environment (for BBA - 1). New Delhi, India: FK Publications Khosrowpour, M. (2007). Dictionary of Information Science and Technology. Philadelphia, PA: Idea Group Inc Lussier, R. (2011). Management Fundamentals: Concepts, Applications, Skill Development. Mason, OH: Cengage Learning Mathis, R. and Jackson, J. (2011). Human Resource Management: Essential Perspectives. Mason, OH: Cengage Learning Mishra, S. (2010). Kaizen culture: Enabling organizational change management for sustainable competitive advantage. Retrieved from: http://www.ejournal.co.in/gjeis/Index.php/GJEIS/article/viewFile/112/62 Prakashan, N. (2008). Elements of Human Resource Management. Pune, India: Nirali Prakashan Rogers, S. (2009). The Supply-Based Advantage: How to Link Suppliers to Your Organization's Corporate Strategy. New York, NY: AMACOM Div American Mgmt Assn Rothwell, W. and Prescott, P. (2010). Human Resource Transformation: Demonstrating Strategic Leadership in the Face of Future Trends. California, CA: Nicholas Brealey Publishing Snell, S. and Bohlander, G. (2012). Managing Human Resources. New York, NY: Cengage Learning Storey, J. (2008). The Routledge Companion to Strategic Human Resource Management. New York, NY: Taylor & Francis York, K. (2009). Applied Human Resource Management: Strategic Issues and Experiential Exercises. California, CA: SAGE Publications Inc Read More