human resource department

A company’s human resource department is responsible for managing all elements of employment, including compliance with labor laws, administration, employment standards, and issues with hiring and firing. The HRM members perform the core responsibilities for the rest of the organization, which include administrative services, training, talent management, and oversight. The majority of academics in the subject of HRM have defined human resources as a combination of an individual’s abilities, knowledge, and skills (Arney 2014, p.23). On the other hand, a person’s motivations cause them to act in a particular manner. This there indicates a distinction between potential performances, that is, what an individual can do based on his/her knowledge and skills and the actual performance which is the potential performance an individual can exhibit.

Literature review

There have been opposing views within the strategic HRM literature as far as the relationship between HR practices and sustainable competitive advantage of an organization is concerned. Some have argued that it is the specific HR practices which create a sustained competitive advantage while others argue that what matters most is the match between the human resource practices and the environmental factors. As a result, this essay will try as much as possible to establish this two arguments validity. This would handle things like the HRM’s significance on the organization as well as determine whether the most crucial aspect as far as the HR is concerned is the relationship and the match with environmental factors (Sparrow, Brewster and Chung 2016, p.102).

Some of the organization factors considered crucial by HRM include financial investments, production element, return, emerging markets, etc. most of the HRM researchers have established arguments that in any given firm, the human resource function is mandatory and can’t be replaced. Every financial year, the company perform an audit on the performance of key areas. It is this report that the stakeholders use to determine the position of the firm in both the local and the international markets. Furthermore, it determines if the company is making profits or losses. Hence the HRM will now know what next move to take. However, some researchers have claimed that not every decision made in the organization affects the HR performance (Bartlett and Ghoshal, p.56). For instance, many firms have their cost-cutting ways to maximize profits and ensure further growth. If a business performs poorly, the management can decide to get rid of some of the HR function such as training. However, when the situation worsens, some of their employees are retrenched.

Many researchers and scholars have always wanted to establish the key factors which enhance a firm’s profit. For instance, some researchers identified the resource-based view whereby they examine the key roles of the HRM as far as achieving a competitive advantage is concerned. In this, capital plays a vital role when it comes to enhancing a company’s competitive advantage. Capital is dived into three; organizational capital, physical capital and human resource capital. The corporate money is concerned with the coordinating and planning in the firm while the physical capital is concerning with the enterprise’s infrastructure and equipping (Barney & Wright, 1998, p.23). The human resource capital comprises of the worker’s skills and intelligence levels which in return affect the firm. In the analyzing of what creates the competitive advantage, the human resource capital will play a key role.

Regarding competitive advantage, the HRM practices and policies, as well as the programs, streamline the firm’s decisions when it comes to HRM. To evaluate the impact of HR in an organization’s competitive advantage gains, the HR department has to be put into consideration. Therefore, for a researcher to comprehend the importance of human resource unit in the organization, a number of factors have to be put into consideration (Vogelsang 2013, p.215).

Organizational Mechanism

The organization plays a key role in determining the success of a firm. The organization has various possibilities for actively influencing the aggregate staff motivation. The company also enhances intrinsic normative motivation through socialized regimes. For example, a firm-wide event or a training session can be used to improve identification, hence proliferating the existing organizational norms and values amongst the workers.

Also, for a firm to ensure it fully exploits the available resources, it has to be organized in a way. Therefore, for the company to achieve that, it has to engage the human resource which in return develops practices and systems which create an environment under which the organizational objectives are met. To ensure this, the organization should focus on the incorporating of HR systems and not to have the human resource functioning as a single department (Stone 2014, p. 182).

Once the human resource gets organized, and they involve their employees in the decision-making, then the workers tend to utilize their knowledge and skills as well as their talents in handling the matter at hand. The overall effect of this will improve performance which translates to business growth and increased revenues in the long run. This is a sort of motivation which depends on several aspects of the organizational context. For instance, the employee’s individual preference as well as the strategic objectives, cultural norms, and values. Also, the VRIO framework helps to demonstrate the various ways in which companies have used to develop and nurture their human resource to ensure a sustainable competitive advantage. Even though organizational attributes are stable, they can change over time. In fact, it is also possible that the motivational levels influence the developing of the organizational characteristics.

A high-powered reward and tight control regime pushes regulatory norms and shared values towards increased opportunism. Also, the existence of a particular incentive or a specific job characteristic could attract and repel individual workers with a specific set preference. Therefore, over time, the workforce attributes changes. However, not every of these organizational aspects adds value and impact to the competitive advantage path. As a result, it is crucial for the HR team to carry out audit once in a while to highlight the aspects which are not adding value and have them dropped. Additionally, some HR factors do not provide rareness hence they are said to create a competitive parity. Therefore, human resource decisions affect the firm’s characteristics and performance both directly and indirectly hence playing a substantial role in the organization’s sustainability of the competitive advantage (Lengnick-Hall, Andrade & Drake 2009, p. 64)

Human Capital as Rare

It is evident that human resource plays an important part in every enterprise. However, this can be enough reason to offer an organization a competitive advantage. This is because once a firm’s competitors get to know of the company’s primary strategy, they would copy it and hence it won’t be able to leverage further. As a result, the human resource management should be very keen on the unusual characteristics which are likely to offer the company a competitive edge as far as competitors are concerned. In as much as the labor factor looks the same for all the homogenous firms, the human resource management should find that rare element to render their workers different in how they conduct themselves and carry out duties. Since there is no notable difference from personal support to the organization, it will not be possible to create value through the human assets. It is important to note that organizations have a set of diverse jobs that necessitate different skillsets thus making labor supply not to be homogeneous. Therefore, rareness has helped to analyze how human resource programs provide a theoretical rationale regarding how human capital increases a firm’s value (Lengnick-Hall et al., p19).

It is not possible to conclude that human resource is not limited because of unemployment. Hence employees are in excess. Under such conditions like a variable in individual contribution affects the quality of human resource which becomes limited. For instance, cognitive ability is considered as a measure of human resource, as a result of empirical support. Similarly, since the cognitive capability is mostly spread across the residents, highly skilled levels become rare by definition. Therefore, it would be safe to say that organizations with high average cognitive levels relative to their competitors have more valuable human capital resources. Similarly, since the total talent pool is not unlimited, organizations that have invested in human capital resource gain their money on behalf of others.

Human Resource as Unique

The firms enjoy increasing profit margins from valuable and the unusual characteristics of the human resource functions over a period. For an organization to have a source of competitive advantage as a resource, the resources must be inimitable. However, when the competitors imitate these beneficial features, they will copy, and this won’t become a competitive advantage. Therefore, the HR team should come up with unique characteristics which no competitor can copy.

Therefore, for the resource to be imitated the opponent identifies the source of the competitive advantage. Secondly, competitor determines exact duplicate of the resources from the human capital and how they function. It is highly possible that over time, the human capital resources are imitable regarding their capacity. For instance, the company could establish a staff that is highly skilled and efficient, unlike their competitor. However, the competitor that is far from them can create a staff that has the same skills. The historical conditions may determine the manner in which human resource acts as a competitive advantage. HR should examine the organization’s history and make sure they align the proposals with the organizational culture as well as ensuring they have the best practices that their competitors do not have (Boxall 1996, p.98).

Besides, Human resource team should make sure that their functions give the organization a competitive advantage by ensuring that their processes such as employee selection are extensive and credible. By adjusting their interview questions in a way to allow them to choose the best and qualified candidates who would easily integrate into the company’s culture. This is a trait which will be hard for other competitors to copy hence ensuring the organization stays on top of the competition. Also, selection of credible employees in respect to their fairness.

Human Capital as Valuable

First, for a human resource reason to continue sustaining a competitive advantage, they have to provide value to the organization. When the demand for work is diverse, people vary in the type and skill levels. As a result, there will is a variance in the individual’s input value and the value of the organization. Therefore, this shows that human capital creates value for the enterprise. The recent works in the area demonstrate how human capital can create value for the organization (Grugulis 2017, p. 278).

It is evident that firms create value through the reduction of product and service costs. Other ways to create value include product differentiation in a way to offer opportunities to charge excellent prices. As a result, human resource aims at impacting the value of an organization using the human resources. Furthermore, the HRM can lower the cost of production by adopting policies which seek to create a culture of hard work.

On the contrary, other researchers have raised arguments that the most important thing to consider is the match between human resource function and environmental factors. This argument claims that an organizations performance as well as attaining a competitive advantage is achieved through a strategized coordination between the HRM and other departments. For instance, training and hiring cannot be isolated from other human resource functions (Wright, Dunford, & Snell 2001, p.715)

Secondly, high culture and work ethics help to sustain a competitive advantage. Any firm with strong ethics and code of conduct will attain a high percentage of performance. Therefore, such factors would ensure a company remains competitive. After factor which plays a key role is the human resource practices which are integrated into the organizational culture (Pfeffer 1995, p.87) Hiring and employee retention, promotions, recognition, fairness, and talent acquisition enhance growth as employees would feel appreciated and wanted. This means that an efficient and transparent human resource will ensure an organization stays at the top of the competition.

Conclusion

It is essential to note that analyzing of the organization’s human resource to understand its essentiality and sustainability is critical as it helps organizations achieve a competitive advantage. For this to be achieved, a sound, transparent and efficient human resource management with the best practices is essential. Therefore, human resource management plays a significant role in sustaining an organization’s competitive advantage.

References

Barney, J. B., & Wright, P. M. (1998). On becoming a strategic partner: the role of human resources in gaining competitive advantage.

Boxall, P. (1996). The strategic HRM debate and the resource-based view of the firm. [S.l.], [s.n.].

Grugulis, I. (2017). A very short, fairly interesting and reasonably cheap book about human resource management.

Lengnick-Hall, M. L., Andrade, L. S., & Drake, B. (2009). Strategic human resource management: The evolution of the field. Human Resource Management Review. 19, 64.

Pfeffer, J., 1995. Producing sustainable competitive advantage through the effective management of people. The Academy of Management Executive, 9(1), pp.55-69.

Sparrow, P., Brewster, C. and Chung, C., 2016. Globalizing human resource management. Routledge.

Stone, R. J. (2014). Human resource management. Milton, Qld, John Wiley and Sons Australia.

Wright, P.M., Dunford, B.B. and Snell, S.A., 2001. Human resources and the resource based view of the firm. Journal of management, 27(6), pp.701-721.