Organization Behavior Competitive Advantage Through Human Resource

Organization Behavior

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

Management PRACTICES

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 other stakeholders of the company in a more efficient way, how to bring improvement in the operational processes of the company, and how to deal with the problems and uncertainties in an effective way (Vaiman & Vance 2008).

b. Control Costs in the Long Run:

Although organizations have to expend a significant amount of budget on the training and skills development of their existing and newly recruited staff, these expenditures can eventually control the heavy costs which they have to incur in the long run. That is, if organizations continue to provide training to their employees on periodical basis, these employees are basically trained to fill the higher management positions in the future. In this way, organizations can save the money which is expended on the training of new employees at the Top Management positions by promoting their existing employees to those positions. The huge expenditures which organizations incur on the training of their higher level officials put heavy financial burden on their overall operational and administrative costs (Guest 2011). These costs also put hurdles in the way of achieving cost leadership and competitiveness in the industry. Therefore, organizations always try to minimize and control these costs through various means and strategies. Employee training and skills development practices can not only save these costs, but also ensure a sustainable competitive advantage for the organization with the help of improved performance and service efficiency.

c. Increased Employee Morale:

Training and development sessions also help the human resource managers in enhancing the morale of their employees. These training sessions make these employees feel that they are an important player in the organization and should perform better to contribute towards the organization's success. Training not only improves the employee morale, but also makes them learn how to work together as a team. In training and development sessions, employees learn the new working environment, share information and job responsibilities with the co-workers from the other departments, and resolve the organizational problems collectively. When employees share their work burdens, information, and problems with their subordinates and superiors, they feel more comfortable at the workplace and work more efficiently and dedicatedly.

d. Brainstorming:

Brainstorming is a management technique by which lower level managers and workers also participate in the decision making process for the organization. It is a modern skills development and motivational technique used by human resource managers all over the world. The biggest benefit of brainstorming comes in the form of innovative ideas from the lower level employees of the organization. When managers ask these employees to participate in the short-term decisions of the organization and give feedback to improve the level of performance and productivity, these employees happily participate in these sessions and play their part. The main objective of brainstorming is not to get the decisions made from lower level employees, but to enhance their thinking abilities and managerial capabilities to prepare them for the future leadership positions (Vaiman & Vance 2008). These sessions are now gaining more and more importance in contemporary organizations where managers frequently use brainstorming to get innovative ideas from their low level managers and workers. Brainstorming can give a competitive advantage to the organization if employees participate in these sessions with an aim of improving the organizational performance. The feedback which managers get from these employees is largely helpful in eliminating inefficiencies from operations and getting new ideas and techniques to perform the day-to-day tasks.

3. Employee Motivational Techniques:

In addition to different training and skill development techniques to enhance the competencies and morale of the employees, human resource managers also use various motivational techniques to encourage their employees at the workplace. Contemporary research studies suggest that all kinds of motivational techniques bring significant improvements in employees' performance levels which is eventually beneficial for the organizations in the long run. An organization can truly gain a competitive advantage over all its competitors in the industry if it is able to successfully motivate and retain its employees. This competitive advantage is easy to be achieved by service organizations as compared to manufacturing organizations. Reason being, service organizations show greater concern towards their employee development practices (Browning, Edgar, Gray, & Garrett 2009). On the other hand, manufacturing organizations are more concerned with cost leadership, improving manufacturing capabilities through innovation, and supply chain management practices.

a. Happy Employees make the Happy Customers:

It is widely believed that a happy and motivated employee can better serve the company's clients. When an employee is satisfied with his job position, salary, working environment, and leadership, he tends to perform in a more efficient way than a less-satisfied employee. He can deal with the customers efficiently, listen to their queries, and solve their problems more effectively. Managers use motivational techniques to bring this satisfaction and efficiency in their employees. These motivational techniques are not just aimed to make the employees happy, but also to ensure superior customer services provided by these employees (Browning, Edgar, Gray, & Garrett 2009).

b. Less Turnover and Absenteeism:

High employee turnover and absenteeism are both harmful for the organizations. They bring direct negative impact on the organizations' operational and administrative expenses and generally increase the training and development costs incurred by them from time to time (Kandula 2007). Employees tend to leave an organization when they find a better job or get fully dissatisfied with their current job. Employers have to take this issue seriously and use motivational techniques to make such employees satisfied with the organization. First of all, they must know the reason for this dissatisfaction and low morale of their employees and then try to resolve the issues due to which they are leaving the organization (Armstrong 2007).

There are different motivational techniques which can be used in different situations. For example, some employees might be satisfied with their compensation packages, but want to quit their job due to conflict with their supervisors. In such cases, the HR Managers must try to resolve this conflict between supervisors and their subordinates. Similarly, some employees may want to leave the company due to inflexible work options or poor working conditions. In such situations, an employee either remains absent from his job duties more frequently or performs less efficiently than others. In order to resolve this issue and improve his performance, the HR Manager has to provide more flexible work options and good working environment which might enable the employee to keep a balance between his professional and personal life.

Less absenteeism and turnover are also considered among the real strengths for organizations. It is because the retention of employees in the organization for a long period of time is a difficult job for an HR manager if he keeps himself aside of employees' matters and day-to-day problems or does not use any motivational techniques. These two factors can strengthen the company's competitive advantage if managers truly wish to retain their employees for a long period of time.

c. Higher productivity:

Motivation has a direct link with the organizational productivity. When employees are fully satisfied with their organization, they tend to perform more effectively and efficiently. The cumulative efforts of all the employees improve the level of productivity and operational efficiency of the organization. With these cumulative efforts, they find innovative ways to improve productivity and efficiency. If they get successful in introducing new techniques to perform difficult tasks at the workplace, they become a competitive strength for the organization. These efforts are also beneficial for the organization in the future if it is able to retain these employees for a longer period of time (Birdi, Clegg, Patterson, Robinson, Stride, Wall, & Wood 2008).

d. Compensation Packages:

Compensation packages include all those financial and non-financial benefits which employees receive from the organization for their employment services. They consist of basic salary, bonuses and monetary rewards, medical allowances, health and life insurance, transportation allowance, children educational allowances, free memberships, pension plans at the time of retirement, etc. The most important part of compensation packages in the basic salary of the employee. The Literature is full of researches which argue that money is the biggest motivational factor for employees. If an employee receives a handsome salary and other non-monetary benefits from his employer, he seems to be happier and more satisfied with his job. As a result, he performs better and contributes more towards the organizational success and competitiveness. Good salary also increases the employee morale and he stays longer at the organization.

e. Performance Appraisal Techniques:

Performance appraisal is also considered an effective technique to motivate employees and improve the organizational performance. Some managers regularly do a performance appraisal on periodical basis while others prefer it to do at the completion of every new project. Performance appraisal is basically a technique to measure the level of performance of individuals and teams within the organization (Baudler 2011). However, some managers primarily use it to find out the most hard working and competent employees from the organization to fill up the higher level positions. After analyzing the performance level of all employees or team members, the manager is better able to decide who should be promoted to higher job position and who needs extensive training at his current job position (Chadwick & Dabu 2009).