Human Resource Management can Improve the Competitive Ability of Business
The starting point for a human resource strategy is the organisations
strategic plan. A workforce must be put in place which provides
departments with the correct number of appropriately skilled employees
to accomplish targets in all departments. In order to achieve this,
the likely demand for products or services must be anticipated and the
future implications for recruitment and training considered. Effective
communication between departments is vital if this approach is to
succeed. For example:
· The marketing department can supply estimates of future demand.
· Operations management can detail the level of skill needed to
produce the goods.
· Human resources can then recruit or fire people in line with the new
· Training may also need to send people on courses if the skill mix of
employees is inappropriate.
Workforce planning is therefore an integrated process. It requires an
overview of the whole operation of the business. In order to
use human resources successfully to create a competitive advantage,
the future position of the firm must be considered. A workforce must
be put in place which will allow the strategic plan of the business to
be put into effect. The main benefits of creating a human resource
· To put the appropriate employee mix to allow the organisation to
achieve its aims and objectives.
· To communicate the culture of the business to the workforce.
· To develop employees in a way which brings benefits both to the
individual and to the organisation.
· To provide targets by which the actions of the human resource
function can be assessed.
Human resources strategy can provide an organisation with competitive
advantage in two ways:
· Human capital advantage – this involves selecting appropriate
employees, appraising their performance, then rewarding then in a way
which fosters commitment. The human resources cycle can be used to
shape employees to the needs of the organisation.
· Human process advantage – this involves developing the ability of
people within the organisation to learn from past experiences. For
example implementing the firm’s strategy, working together and
developing innovative ideas.
A competitive advantage based on organisational learning may last
longer than one based on human capital. This is because competitors
can also select or develop individuals with appropriate talent and
this type of knowledge is not easy to copy, which gives the
organisation an advantage.
The human resource cycle identifies four functions...