Human Resource as a Source of Competitive Advantage
Why is it important for companies today to make their human resources into a competitive advantage?
Competitive advantages focuses on condition or circumstance that puts a company in a favorable or
superior business position. Explain how HR can contribute to doing this.
References�6-7 scholarly citations/reference
Human Resource as a Source of Competitive Advantage
As business environment become increasingly complex and dynamic, organization are
relying on their human resource for development and sustainability of competitive advantage.
Competitive organization are dramatically increasing the weight, the value and strategic role of
their human resource departments in developing new business ideas and innovations to gain the
competitive advantage in the market (Bartlett, & Ghoshal, 2013). Competitive advantage is
defined as an advantage that a company has over other key players or competitors in the market.
Competitive advantage enables a company to generate more sales or margin or win more
customers as compared to its competitors in the market. Competitive advantage is derived from
the firm’s product offering, cost structure, distribution network, branding and customer support.
It is important for organizations to mold their human resource into a source of
competitive advantage. The reason is that human resources are one of the most valuable assets in
an organization. Employees can either build or destroy an organization within a short period. The
better the organization employees regarding efficiency, creativity, and innovation increase the
company production, profitability, and development of sustained competitive advantage (Doz &
Prahalad, 2013, January). Human resource is one of the real assets and plays an important role in
creating products from natural resources as well as providing services on the organization clients.
It is the same human resource that interacts with customers when offering their products and
services in the market. Therefore, customers will be more inclined to like an organization with
friendly employees as compared with an organization with poor customer relation.
Because of the ever-changing business world, companies strive to employ employees
with requisite skills to help in driving the organization towards attaining organization
sustainability. Skills demand jobs also keep on changing from time to time and as such
knowledge is becoming more and more valuable in an organization. It is the role of the human
resource department to recruit the best employees, design appropriate and effective employee
training plans and come up with successful retention programs that can help an organization gain
competitive advantage (Buller & McEvoy, 2012). Talent is a significant feature that improves
organization performance. Statistics indicates that organization with engaged employees who are
enthusiastic and committed to their work perform better as compared to their competitors
regarding productivity, customer ratings, and profitability.
Innovation is also important if an organization wants to gain competitive advantage. Most
great ideas and innovation often emanates from within the organization. Therefore, having a
potent human resource management that can help secure the best employees, develop
communication and networking within the organization and provide the necessary training to
enable employees to become part of the organization innovation team is imperative. A variety of
perspectives within the organization can yield pioneering ideas relating on how to differentiate
company products or service or how to create new products. Human resource is one of the
richest sources of new ideas and innovation. Therefore, an organization should develop a culture
that permits employees to explore their skills and natural talents to promote creativity and
innovation in the workplace.
Competitive advantage is derived from offering lowest prices on the market. This can be
achieved through minimization of operating expenses to maximize the organization profits.
Having efficient human resources that can produce value at the minimum expense can lead to the
minimization of cost, and thus the organization can lower their prices as compared to its
competitors and thus gain competitive advantage. This is achieved by hiring the best employees
that can work as a team to increase organization productivity as well as minimize production
cost. The human resource department can also train its employees.
A company can also derive its competitive advantages from operational effectiveness. In
such a situation, having skilled employees, who develop ways to reduce operation cost, can help
increase operating margin. Having a strong organization culture, and high employee morale and
engagement through motivation can help the organization to increase its productivity,
profitability, and competitive advantage.
Human Resource also provides various skills and experience to the company. For an
organization to attain competitive advantage, the organization requires various skills ranging
from production to customer service delivery. Human Recourse Department can play an
important role in the recruitment of specialist who understand organization strategic goals and
can play an important role in bringing success to the company. The human resource department
can also help in designing job descriptions and training programs to bring out the best of the
employees. By aligning human resource goals with the organization long term goals, the
company will be able to derive competitive advantage from its human resource.
Human Resource can also help in the transfer of skills necessary for effective operation
of a company. That is older employees in an organization can transfer their skills to their juniors
and new employees in the organization (Aswathappa, 2013). It is the duty of the human resource
department to ensure retention of such valuable skills within the organization. Therefore, human
resource helps an organization to retain important, valuable skills that can be used to derive
The human resource also helps to enhance organization corporate image. A company is
essentially the stakeholders, management, and staff. It is the employees of the organization that
interacts with customers in the market. Therefore, human resources are the bearers of
organization corporate image (Decenzo & Robbins, 2015). The way employees interact with
customers of the organization can determine how the company is perceived. Employees who
treat customers with respect and using corporate ethics plays may enable a company to gain
reputation and thus competitive advantage. Employees are also the ones who carry their
companies brand when relating with people in the community.
The human resource department also plays an important role in shaping organization
human resource into a source of competitive advantage. The human resource is responsible for
recruiting employees with the requisite skills necessary for handling business operation. It is also
the duty of human resource management to design job descriptions and training programs
(Wagner III & Hollenbeck, 2014). On the same note, the department is also responsible for
advising a company on where to source for the best candidates to work for the organization.
It is also the duty of the human resource to ensure that employees stay motivated through
the provision of reward systems to appreciate and reward employee performance. It is the duty of
the HR department to develop performance evaluation programs to point out and reward
exceptional performance in the organization. As such help motivate employees to work towards
attaining organization goals and thus organization sustainability.
In conclusion, human resource is a valuable asset to company, and when utilized well it
can be a source of competitive advantage. Human resource provides a competitive advantage
because it is the human resource that produce products from raw materials or provide services to
the organization clients. Similarly, it is the human resource that interacts with organization
consumers, help improve productivity, minimize production cost through efficient operations and
thus a source of competitive advantage.
Bartlett, C., & Ghoshal, S. (2013). Building competitive advantage through people. Sloan Mgmt.
Doz, Y., & Prahalad, C. K. (2013, January). Quality of management: An emerging source of
global competitive advantage?. In Strategies in Global Competition (RLE International
Business): Selected Papers from the Prince Bertil Symposium at the Institute of
International Business (p. 345). Routledge.
Buller, P. F., & McEvoy, G. M. (2012). Strategy, human resource management and performance:
Sharpening line of sight. Human resource management review, 22(1), 43-56.
Wagner III, J. A., & Hollenbeck, J. R. (2014). Organizational behavior: Securing competitive
Aswathappa, K. (2013). Human resource management: Text and cases. Tata McGraw-Hill
Decenzo, D. A., & Robbins, S. P. (2015). Fundamentals of human resource management. John
Wiley & Sons.