Introduction
Research into the association between human resource management and organizational performance has for the last two decades received broad attention from academics and practitioners (Purcell et al., 2009).
Most of the findings drawn from these studies demonstrate that human resource (HR) research has broadened in focus as well as scope, from the micro-analytic perspective that mainly focused on terms and conditions of work for employees to a more macro or strategic approach that predominantly deals with how human resource strategies can be aligned with core business objectives to achieve competitive advantage (Camps & Luna-Arocas, 2009; Ulrich et al., n.d.).
It is against this backdrop that the present paper will focus on analyzing the types of organizations that are mostly impacted by human resource management (HRM) practices in terms of maintaining competitive advantage. In addition, the paper will focus on the types of competencies that are needed by HR managers to enable organizations to achieve and sustain competitive advantage.
According to Boxall & Purcell (2011), HRM is a function within a firm that deals with the management of work processes and people so as to achieve entrepreneurial success and organizational growth.
Researchers have over the years examined the role of HRM in enabling an organization to achieve and maintain competitive advantage, particularly after the realization that competitive advantage is positively correlated to organizational performance (Jabbour & Santos, 2008).
However, Camps & Luna-Arocas (2009) observes that approaches to HRM should be evaluated within the context of the organization if they are to make an impact to the attainment of competitive advantage, hence the need to evaluate these organizations.
Types of Organizations
Before evaluating the types of organizations, it is imperative to evaluate why, in the first instance, organizations need to have an effective HRM strategy to achieve competitive advantage.
This matter has attracted diverse responses from scholars as well as practitioners, but the bottom-line is that HRM harmonizes all the processes and activities that allow the organization to remain externally competitive and internally efficient (Chan et al., 2004).
This therefore implies that organizations that enjoy higher congruence between their HR practices and business strategies stand to achieve superior performance either in the public or private sector.
Although almost all organizations require a HR component, it is evidently clear that HRM has enabled some types of organizations to achieve competitive advantage more effectively than it has done for others.
Service organizations, in particular, have benefited tremendously from HRM by virtue of the fact that these firms not only put up with intense competition in the marketplace, but the must also develop mechanisms through which they can stimulate and reinforce employee behaviours needed for the successful implementation of effective customer-oriented strategies (Jackson & Schuler, 1992).
Managers in service organizations have realized the need to establish a direct and instantaneous customer-oriented relationship so as to remain competitive, thus the need to initiate effective HR approaches aimed at shaping employee behaviours to reflect what is required in the market.
The manufacturing sector has also benefited immensely from effective HRM practices, primarily because the function not only serve as the basis for introducing creative and innovative workforce that enables the organization to compete favourably through product design and development, but it also ensures a greater congruence between human capital and the adoption of technology that will ensure that organizations operating in this sector remain competitive (Carroll & Wager, 2010).
It is a well known fact that most manufacturing organizations operates from remote locations, thus the need to empower employees with effective information and communication technologies to keep them abreast of market trends and enable the organization to stay ahead of competition (Ferris et al., 1995).
Public-sector organizations must not only be able to respond to varying political and economical dispositions, but they must also be in a position to deal with a large number of employees, trade groups, government regulations as well as employee welfare issues (Ferris et al., 1995).
In addition, most countries have established performance benchmarks to guide the public sector, thus the need for effective HRM strategies if public-sector organizations are to achieve competitive advantage.
HRM Contribution to Sustaining Competitive Advantage
According to Boxall & Purcell (2011), the attainment of economic capability and stability is evidently one of the most essential priorities for organizations. Organizations who achieve economic viability often succeed in the ever-changing and ever-competitive business environment of the 21st century, while those that are unable to achieve this capability fail.
One of the primary focus areas of any HRM approach is to develop and implement frameworks through which human resources can be better aligned with critical business objectives to achieve economic viability (Chadwick & Dabu, 2009).
It is the function of HRM to train employees on how to deal with customers and to initiate technology adoption activities so as organizations are able to maintain a competitive edge over other players within the sector.
In the case of service organizations, it has been discussed how HRM should be used to stimulate and reinforce the behaviours of employees through orientation programs and on-the-job training if organizations are to implement successful customer-oriented strategies (Jackson & Schuler, 1992).
If employees are empowered to respond to customers’ needs through training, it means that the customers will be willing to spend more on such organizations, thus the linkage between HRM, economic viability and the achievement of competitive advantage.
Organizations in nearly all sectors exist to provide stakeholders with the kind of financial or material returns that sustain the stakeholders’ commitment to the organizations (Boxall & Purcell, 2011).
Manufacturing organizations, for instance, must be able to provide investors with financial returns for them to justify their existence.
HRM contributes to the attainment of these demands by introducing cost-effective strategies through which the right kind of personnel can be recruited into the organization and by motivating employees through wages, benefits, training, technology adoption, and work-life programs, among others, to enhance organizational performance and competitiveness (Boxall & Purcell, 2011; Chan et al., 2004).
For instance, a HRM practice that introduces efficient technology in a manufacturing firm and trains employees on the best way to use this technology not only reduce costs for the organization, but also enhances employee productivity, motivation and creativity. This way, HRM can be said to contribute to the sustenance of an organization’s competitive advantage.
High-commitment HR practices have been used to effectively manage employees in sectors where the production system is capital intensive or where high adoption of technology is involved (Boxall & Purcell, 2011).
Many manufacturing industries, for instance, employs a large number of employees, thus the chances of poor morale, employee turnover, union strikes and go-slows are ever present. As such, it is the function of HRM to develop and implement high-commitment strategies aimed at reducing the costs associated with such undesirable but common outcomes, hence enhancing an organization’s competitive advantage.
This could be achieved by developing better remuneration and training packages for employees, and by adoption of technology to ensure that employees’ motivation and commitment to the organization is kept high (Ferris et al., 1995).
The basic premise that underlines this perspective is that as the employees utilize latest technology to develop products that meets or surpass customer expectations, the unit cost of labour will plummet and productivity will rise, thus making sure that the organization is able to sustain competitive advantage (Boxall & Purcell, 2011).
This HRM approach can also be used in service organizations to ensure that employees are motivated to deal with customer needs and expectations.
Purcell et al (2009) observes that “…there has always been an intuitive feeling that the way employees are managed affects the performance of organizations” (p. 1). Some HRM practices such as knowledge expansion, skills development, and employee participation have been known to contribute to the competitive advantage of the organization.
Organizations in the public sector, in particular, have for a long time used employee skills development to enable them accomplish the required performance benchmarks as set out by governments or other actors (Ferris et al., 1995).
In line with the above, it is clear that some organizations, especially in the services sector, develop superior practices in critical areas such as employee recruitment, training and team-building to guarantee that only the best people are employed and that the employees develop high levels of expertise through continual training.
However, as noted by Purcell et al (2009), it is highly improbable that any competitive advantage will be achieved by the practices themselves since they are easily replicated across industries; rather, it is the HR processes and routines needed to oversee the implementation of these practices that determines to what extent will the organization be able to achieve competitive advantage.
To maintain competitive advantage, organizations in nearly all sectors must be able to adapt to changes occurring within the internal and external business environments. Evidence has been adduced to the fact that organizations that readily embrace and adapts change stand a better chance to succeed than those who don’t (Jabbour & Santos, 2008).
In this perspective, organizations that want to remain ahead of the pack in terms of competitiveness have taken to developing HR practices that are specifically intended to enhance capacity to change and build organizational flexibility.
Organizations, especially in the manufacturing sector, have developed HR practices that make it easier to hire or dispose labour at short notice, bring greater flexibility into the cost of labour, and guarantee the capacity of an organization to survive in an ever-changing and competitive environment (Boxall & Purcell, 2011). These HRM practices contribute to the sustenance of competitive advantage.
Competencies of HR Managers
HR managers need to be competent enough if they are to develop and implement HRM practices that contribute to the sustenance of competitive advantage. Ulrich et al (n.d.) opines that “…for HR professionals to respond to changing business conditions, they must demonstrate new competencies” (p. 2).
To be effective, HR managers must not only strive to master the competencies dealing both with people and business management, but they must also posses the ability to use these competencies to the advantage of the organization.
In shifting business conditions, HR managers must demonstrate people-oriented competencies, which include high-level employee engagement strategies, communicating care, compassion and concern, talent management, and ability to become a credible activist to ensure the rights of employees are respected (Ulrich et al, n.d).
Such competencies galvanize employees and motivate them towards the realization of the organization’s key business objectives.
However, business concerns also require that HR managers be attuned to internal and external drivers of change as well as customer and investor needs and expectations. In addition, the HR manager must have ample business knowledge to execute operational and functional strategies, and effectively be able to align employees to the broader objectives of the organization (Ulrich, n.d.; Key Competencies, n.d.).
These competencies demonstrate that a HR manager must indeed be a business ally to the organization. However, it should be noted that the HR mangers must not exhibit people-oriented competencies independent of business-oriented strategies as this will definitely lead to failure. The vice-versa is also true.
Conclusion
This paper has discussed, at length, the role of HRM in sustenance of organizational competitive advantage. Findings demonstrate that indeed HRM should be a central core of any business venture that aims to achieve and sustain competitive advantage, but it is especially instrumental in service, manufacturing and public sector organizations.
The many capacities of HRM in ensuring the sustenance of competitive advantage have been well expressed. It is now up to individual firms to develop and implement HRM practices that will enable them to effectively deal with the hurdles and uncertainties presented by the ever-changing business environment.
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