human resource management ( competitive advantage)

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Barney 1991 suggests that, in order for a resource to qualify as a source of sustained competitive advantage, the resource must add value to the firm, it must be rare, it must be inimitable and it must be non substitutable. Wright, et al 1994 have shown that human resources meet Barney’s criteria for being a source of sustainable competitive advantage.

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sources of competitive advantage have shifted from financial resources to technology resources and now to human capital. In other words, success does not depend primarily on the size of the budget or the products supporting technologies. It really depends on employee’s attitudes, competencies and skills; their ability to generate commitment and trust, communicate aspirations and work in complex relationships.

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When a firm is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors, then we can say the firm has a Competitive advantage

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when a firm is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy, then we can say the firm has a sustained competitive advantage

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There are two major models that have to be considered.

The position or environmental model

The resource-based view model. Innovation strategy

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Porter shows that there are five competitive forces which play a major role in the company success or failure

1. The entry of new competitors,

2. The threat of substitutes,

3. The bargaining power of suppliers,

4. The bargaining power of buyers, and

5. The rivalry among the existing competitors. 7

Porter 1985 defines the competitive strategy as the positioning of a company in its competitive environment

Cost Leadership Strategy Differentiation Strategy

Schuler and Jackson Innovation strategy Cost reduction strategy Quality enhancement strategy

The competitive advantage can be sustained in one of the two ways (Porter 1985):-

1. Uniqueness

2. Quick Improvement

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Sixteen practices of competitive advantage through people

1. Employment security

2. Incentive pay

3. Participation and empowerment

4. Symbolic egalitarianism

5. Long-term perspective

6.Selectivity in recruiting 10

7. Employee ownership

8. Teams and job redesign

9. Wage compression

10. Measurement of practices

11. Cross-utilization & cross-training

12. High wage

13. Information sharing

14. Training and skill development

15. Promotion from within

16. Overarching philosophy11

Analysis Job Description Job Evaluation

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Selection Performance Appraisal and Performance

Management Rewards – also learn the purpose of

reward system

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The core strength of any organisation comes from its employees. To develop and strengthen them will lead to a solid foundation for the organisation’s future

It takes strong executive leadership to bring about positive patterns of employment relationships

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for organisations to maintain a competitive advantage they must focus on enhancing performance through a process of continual learning.

Top managers Requirement

› Personal Characteristics› Skill

Communication Organizational Group

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Employment relationship has been recognised as a socio-economic exchange process which involves the mediation of different interests- the interest of employer to minimise the labour cost and the interest of the employee to maximise the labour price.

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Boxall’s Framework (Boxall, 1995)

Guest’s Framework (Guest, 1987)

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1. How can the organisation identify Human Resources?

2.  How can the organisation defend its Human Resources?

3. How can the organisation gain a competitive advantage through its employees?

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1. Goals/objectives

2. Recruitment

3. Commitment

4. Tracking/coaching

5. Measurability

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6. Signing – On

7. Interesting Work

8. Communication

9. Minimize Threats

10. Design a Personal Appraisal and Reward System

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1. The firm should use an analytical framework

2. Trust their workers

3. Choosing the right leaders

4. Providing good job descriptions and realistic targets

5. Designing an effective rewards system

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6. Making communication system effective

7. Common goals

8. CA focused Objective

9. Management commitment to full employment

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1. Qualcomm

2. General Electric

3. Honda

4. Southwest Airlines

5. SAP

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One factor that can set an organisation apart from its competitors whether in services or products, in the private or public sector is its employees

Human resources are a critical component in every area of the organisation, from finance to sales to customer service to line management

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