Competitive Advantage through Human Resource Management Practices
Human Resource Management Practices
Competitive Advantage through Human Resource Management Practices
HUMAN RESOURCE Management
Human Resource Management involves all those activities which are related to the management of workforce or employees of an organization. It is also one of the core functions which managers perform at the workplace. Human Resource Management entails activities like recruitment and selection, training and development, performance assessment, compensation, leadership, and motivation at large (Chadwick & Dabu 2009). Basically, Human Resource Management focuses on recruitment, management, guidance, and motivation of employees in an organization. In the past, HRM was just restricted to two core functions: employee management and motivation. Now, it has emerged as one of the biggest strategic issues in the business world (Kandula 2007).
With the passage of time, the scope and functions of Human Resource Management have also increased. Now, it also involves employee safety, benefits and wellness programs, communication needs, cultural diversity management, and various other functions (Dowling & Welch 2008). HRM is also considered as a strong tool which can help an organization in strengthening its competitive standing in the marketplace. Industrial relations, organizational development, talent management, brainstorming, succession planning, and cultural diversity management are the major practices which can give an organization a competitive advantage in its industry.
This paper presents a comprehensive discussion on how organizations can realize a competitive advantage in their industry through human resource management practices. The opening section describes how the human capital can become a competitive strength for an organization followed by an extensive literature review and discussion on the contribution of different human resource management practices towards organizational competitiveness and sustainability. The paper concludes by highlighting the major outcomes of the discussion.
COMPETITIVE ADVANTAGE THROUGH HUMAN RESOURCE
Every organization has a Human Resource department which is responsible for effective management and development of its workforce. It not only supervises the activities of all organizational members, but also takes part in various strategic decisions of the company. An effective Human Resource Management enables the organization's employees to work more productively and contribute towards the organization's success and competitiveness (Lengnick-Hall, Lengnick-Hall, Andrade, & Drake 2009). There has been a great debate on the importance of Human Resource Management for an organization. Researchers are now more ardent towards knowing the significance and contributions of HRM practices towards providing a competitive advantage to organizations. It is widely believed that the success of organizations in each of their functional areas and business affairs is largely dependent on the performance of their workforce. The knowledge, skills, and competencies which organizational members possess ultimately benefit the organization in serving its customers in a more effective and efficient way and building strong relationships with its stakeholders (Armstrong 2007).
How Human Resource can become a Competitive Advantage for an Organization?
Researchers believe that the biggest and the most precious asset which an organization possesses is its manpower or human resource. This asset can make a real difference if the organization truly shows a deep concern towards its efficiency and development. An organization may possess highly advanced technology, strong financial position, or large customer base. But these are the strengths which can also be possessed by many other organizations in the same industry. The real and long-term source of competitive advantage is the human resource of the organization. Human resource can give all types of competitive strengths to an organization. For example, it can give creative ideas, bring innovation, improve the organization's sales and financial performance, and make it stand among the most successful organizations in the industry (Seymen 2006). Human Resource is the only asset of an organization which can benefit the organization in all its activities and business affairs. Moreover, it can help the company in building and maintaining strong relationships with its customers, supply chain members, regulatory bodies, and other key stakeholders.
Although every activity and practice in the Human Resource Management is aimed towards improving the organization's performance in one way or another; there are certain practices which can truly provide a competitive advantage to the organization and contribute towards its success, prosperity, and sustainability in its industry (Klett 2010). These HRM practices are now discussed below in detail:
1. Recruitment and Selection:
Recruitment and selection of employees is one of the core functions of Human Resource Department. The basic purpose of this exercise is to find out the right person for a particular job. Recruitment and selection of employees is also among the major costs for HR Department. However, an organization can reap numerous benefits from this exercise if it is carried out in an effective fashion. When an organization finds the right person for a job, it trains him well and makes him work productively so that its strategic goals can be accomplished. An effective recruitment and selection process can also give a competitive advantage to the company by providing it the right team player to perform specific job duties and responsibilities (Wright & McMahan 2011).
One thing which remains common in every type of recruitment process is the organization's quest for the right person. That is, the organization looks for an employee whose educational qualification, professional experience, technical expertise, skills, and competencies best suit the job description. In other words, when an organization recruits an employee who is capable of performing a particular type of job duties in an effective and efficient manner, the organization can see significant improvements in its productivity and overall performance over time (Birdi, Clegg, Patterson, Robinson, Stride, Wall, & Wood 2008).
a. Consequences of Poor Recruitment:
In certain cases, organizations are unable to find the right person for a job. The job vacancies in these cases are either filled with under-qualified or totally inexperienced candidates. This type of recruitment can bring negative impacts to the company's performance and productivity. For instance, poor recruitment can lead to greater employee turnover, increased human resource management expenses, and decreased morale of the exiting employees. Converse to the effective recruitment process, wrong selection of employees can significantly hamper the company's image and performance when these employees fail to perform their duties according to the expectations of their managers (Seymen 2006).
b. The Role of HR Manager in Competitiveness of the Organization:
The biggest role in the recruitment and selection process of new employees is performed by the HR Manager. He is the person who is responsible to assess the human resource needs in the organization through coordination with the other departments. In order to make the organizational members contribute towards competitiveness and success of the organization, the HR Manager has to carefully assess whether he should hire new employees or train the existing employees. Thus, how this recruitment and selection provides a competitive advantage to the company largely depends upon the efforts of the HR Manager. That is, if he succeeds in finding the right talent for a job, he can get the work done from him in an effective and efficient manner. He can confidently assign him any type of work that falls under his job duties and responsibilities.
c. Successful Achievement of Organizational Goals:
Having a team of well-qualified or skillful people in the department, the HR Manager can successfully accomplish the targets which are assigned to him by the higher Management from time to time. This successful accomplishment of targets leads to greater organizational productivity and improved performance (Birdi, Clegg, Patterson, Robinson, Stride, Wall, & Wood 2008). If these employees continue to deliver the same high level of performance over time, the organization can reach a strong position in its industry. For example, the new employees who join the company in its production or operations department can give creative ideas to perform the regular operational tasks in a more efficient and cost-effective manner. Similarly, the employees who directly deal with the customers can provide superior customer services and contribute towards building strong customer relationships and brand image (Wright & McMahan 2011).
2. Training and Development:
Once the organization finds the right employee for a job, it can train him so that he gets well equipped with the advanced knowledge and skills required for that particular job. Effective recruitment and selection is not enough to get a competitive advantage through Strategic Human Resource Management; employers also need to train these newly recruited employees to learn the skills that are required to perform their job duties effectively. Researchers believe that well-trained employees contribute more towards the organizational competitiveness and success as compared to ill-trained or non-skillful employees.
a. Advanced Knowledge and Skills:
Training and skills development bring a number of benefits to the organizations which ultimately improve their performance and market standing. First of all, training given to employees on regular basis enables them to keep themselves updated with the advanced knowledge and skills relevant to their job duties. With this experience and knowledge in hand, these employees can perform their duties in a more efficient and well-organized way. With this training, they get to know how to deal with the customers and…