Human resource managment

Sanz-Valle et al. argued in 1999 that human resources management (HRM) was going to increase in importance. At the time, they illustrated how HRM had made the transition from a line function within the business entity to a key strategic resource capable of delivering sustainable competitive advantage. Indeed, what we have seen over the course of the past decade since that article was published is that HRM has become more vital to strategy. The move to a more information-based economy, combined with the increasing scarcity of well-qualified individuals, has heightened the need for superior hiring practices and the development of an employment brand. The need for creative solutions has increased the importance of designing HRM systems to encourage such behaviors and practices.

Sanz-Valle et al. (1999) made the point that the rise in importance of HRM is tied to the rise of the resource-based view of management. By employing this view, the organization can be seen as a set of resources that flow through systems in order to generate an output. The systems, therefore, must be designed in such a manner that the inputs are matched with the desired outputs. Human resources therefore plays two vital roles in this equation. HRM is critical for acquiring and maintaining a supply of one key input -- talent. HRM is also critical in the throughput part of the equation, as the human resources department is responsible for designing the systems that allow the organization to convert the inputs into the desired outputs.

In order for the human resources department to identify, recruit and retain the talent necessary, it must be involved at the strategic level in the company's management. HR must understand fully and completely the types of tasks that will lead to the desired outputs. Moreover, the HR department must have a clear understand of how those outputs are to be achieved. This is critical in this era of scandal and ethical breaches. Organizations must not only acquire talent, but they must acquire talent with certain ethical and moral standards if the organization is to avoid scandals such as the ones that have plagued firms like Enron, Worldcom, and others.

In order for a company today to find the ideal employee both in terms of talent and ethics, the company must build its employer brand. This relatively new concept illustrates the degree to which HRM has become a strategic endeavor. Firms of old were viewed strictly as competitive in the marketplace with regards to goods and services sold. When firms began to realize that the best way to compete in that marketplace was to compete for the top talent to develop and sell its goods and services, the shift was made towards the development of the employer brand. Firms now must sell themselves to the available workers in order to bring on the best and the brightest.

Once quality workers have been attracted, HRM takes on two other critical roles. The first is training, which not only includes fundamental job skills but also ethics and corporate culture. Employees must be made to work within the system, and instilling the corporate culture in the workers allows for this. The second critical role for HRM is retention. The competition for employees does not only take place prior to the hire, but it takes place constantly, a function of the at-will employment system. Firms must constantly work to keep their best employees, and to motivate them through a combination of intrinsic and extrinsic motivators.

Perhaps nowhere is the strategic nature of the human resources function more evident than in the throughput function. Motivation is one key throughput factor, but perhaps even more important is the role that creativity and innovation play. Sustainable competitive advantage is achieved when an organization is able to do something better than any of its competitors, and can sustain this advantage over time. If an organization can foster an innovative workforce, it can continue to stay ahead of its competitors. 3M is a company that has become successful through constant innovation and new product development. In a knowledge-based industry, a firm can drive success by creating an environment by which that knowledge is constantly tapped to the company's advantage. Human resources can achieve this through culture, motivation, organizational structure and chains of command, and by attracting and retaining key personnel.