According to Wikipedia, Human Resources (HR) is the set of individuals who make up the workforce of an organization, business sector, or economy.
When applying for a job or to discuss employment issues, you are often directed to the “Human Resources” department of an organization or business.
A study from Cornell University found that many top managers may not have much value in their HR Departments. HR can be separated into two categories: Big HR and Little HR.
Big HR referred to a department’s function and Little HR referred to the people of a company. Little HR was seen as very important and Big HR not so much.
The fault of top managers finding little value in Big HR or the function of an HR Department may come down to the HR executives not being able to explain “in economic terms, how a firm’s people can provide sustainable competitive advantage, and the role that the HR function plays in this process.”
Economically speaking, the role of HR in a company’s competitive advantage includes three components:
1. Physical Capital – A company’s physical property (building, equipment and finances).
2. Organizational Capital – A company’s internal structure, planning, HR system, controlling.
3. Human Capital – A company’s employees plus their skills and judgement.
When identifying the value of HR for a company, there are four questions that must be answered.
1. What can HR do to assist with increasing revenue and decreasing costs?
2. What characteristics does an HR department have that are rare (not easily found in other HR departments)?
3. What characteristics does an HR department have that cannot be easily imitated?
4. Is the HR department organized so that they can utilize the fruits of their uniqueness and value?
HR executives should focus their activities on their business’ resources that can help develop and maintain a competitive advantage.
General hiring of regular workers will not help much with gaining and maintaining a competitive edge as many other like companies have similar employees.
Although it is important for employees to have the general skills needed to complete their job, part of gaining competitive advantage may come from hiring employees who are highly skilled in these general areas.
Ongoing training of employees with your company’s specific skill set needed to do their job would help provide a competitive edge as these skills would pertain only to your company and would not be easily transferred somewhere else plus would provide employees the opportunity for growth and development.
Providing a team building workplace culture will help your company build and maintain a competitive advantage as there is a cohesiveness that accompanies those feeling like they are part of a team or family. These workers do a better job and stay longer because they have developed trust and relationships with others on the team.
A company can create a competitive advantage by implementing an employee selection process that will result in the best and brightest being hired, provide an excellent ongoing training program plus integrate a reward system.
Time must be taken to develop and integrate HR practices that compliment rather than conflict with each other.
As you can see there are many components that come into play when creating a competitive advantage or edge for your company which includes the HR Department.
Human Resources is important for any company big or small. Shabro Alternative Office Solutions can help with your company’s Human Resources.
Barney, Jay B. & Wright, Patrick M. (1997). On Becoming a Strategic Partner: The Role of Human Resources in Gaining Competitive Advantage.