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An organization is collection group of people who have got together in order to achieve a common set of goals. Usually an organization divides its activities on various functional bases like Finance, Marketing, Sales, R&D, and Human Resources...etc. Each of the functions that an organization performs has an input in the product and/or service the organization offers. Hence the success or failure of the organization depends on how best the organization performs its functions as compared to a competitor (Competitive Advantage). In fact the long-term survival of the organization depends on how the organization creates a competitive advantage over its rivals and how it sustains it.
An organization is regarded as a unified organism that constantly learns and adopts to find better ways of doing its business processes in response to the dynamic environment it faces. The question then is what the organization should do in order to capitalize on opportunities that are arise from the dynamic environment or to minimize the threats posed also by the environmental factors. Should the firm focus on its Production process, Product Design, Marketing Mix, Financial situation, R&D, technology, or its Human Resources? In order to find answer to this question we will first explore what other researchers have concluded.
According to Foltter et all (1990) if an organization wants to attain and reinforce its competitive advantage it needs to have appropriate human resource practices. Sound HR is viewed as a way to contribute to quality across the organization, profitability, and other organizational objectives through attractive and supporting organizational performance. A carefully crafted HR strategy may result in a source of competitive advantage in the market place. According to MacMillan (1983,p 48 ) gaining a competitive advantage requires consideration and expectation of response obstacles, intelligence systems, infrastructure chucks, pre-emption potentials, general management challenges, calculated sacrifices, and knocking competitor and counter-knocking competitor planning.
Coff (1994) argues that human capital is the key to sustainable advantage because of causal ambiguity and systematic information creating them incomparable. According to Boselie and paauwe (2004), Top performing firms have HR professional who have the main input in the strategic planning. These professional make possible the change management, shape and manage organization wide culture, and have contribution in the strategic level decision and create market led connectivity of the business process. Researchers in the field of strategic HR have emphasized that human resource practices results in superior organization performance and a sources of continued competitive advantages (Wright, Dunford and Snell 2001). As the world has become a global village, competing in today's confused environment have posed additional challenges to the HR function in creating the anticipated value to create and uphold competitive advantages. For effective functioning, HR executives must possess the necessary competencies, and that possession of HR knowhow comes from knowing the concepts, communication skills, judgment, research, and practices of HR (Brockbank, Ulrich, and Beatty 1999)
Peters and Waterman (1982) in their book "In search of excellence" says that all the excellent organizations that they have surveyed made efficient use of their HR, by employing sound HR strategies. According to Losey (2005) technology is advancing so rapidly that it is forcing organizations to change their strategies, in respect of product mix and the way HR is organized and delivered.
Du Plessis (2007) have stated that HR can play a vital role in the future of an organization by enacting organizational change to get competitive advantage while resistance to change can serves as an obstacle for successful execution of planned changes, as it encompasses behaviours that may slow down or even terminate a planned organizational change. If the organization uses an appropriate strategy during the period of change, an employee may feel that he is being treated and looked after by the organization. If such sort of feelings arouse in employees it can change an employee attitude and his resistance towards the planned change.
According Wofford (2002), the process of strategic planning identity the firm decisions and proceedings that offer greatest advantage under changing environmental conditions. The combination of HR and firm's strategy provides the foundations that enable HR function to sustain and realize long-rang plan to achieve a competitive advantage to the organization.
But never the less Zanko (2003) is of the opinion that besides the factors mentioned above, the organization works in a rapidly changing environment. He states that in order to be successful in such situation the organization HR needs to hold this change by making it sure that the firm has the exact people with the knowledge, skills and attitude, and the organization have created a culture that contributes positively towards change. Gratton (1997) has identified six factors for success in the dynamic environment namely the commitment of top management; the team's aspiration; the motivation and aspirations of recruits; the core capabilities of the management team; organization ability to build and maintain alliances; and the integration of the business into a global network. Byars & Rue (2006) are of the view that to face the challenges of the tomorrow's the HR departments must be much more stylish than their predecessors. This is due to the constant changes in external environments, things that works today need not to work tomorrow.
A sound HR policy adopted by an organization lead to the attainment of organization goals, and ultimately to its mission, this is due to the fact that employee in such organization works with commitment and have a "can do" approach. Guest (1990) says that if an organization trust its employees and give them challenging assignments, employees will respond with high enthusiasm, high dedication and high achievements for the organization. Sound HR practices can augment firm's competitive edge by creating both leadership and differentiation. According to Miller & Cardy (2000), employees and organizations need constancy and core values, even in a dynamic environment. People as well as organization both benefit from satisfying the terms of a psychological contract. However English and Jordan (2005) are of the opinion that due to implied nature of the psychological pact it is mainly fragile, and if employees feel it has been violated, will create a momentous impact on employee level of motivation and dedication to the organization. When HR ensure positive psychological contract between member of the organization and the organization itself, it overcome any negative feelings which may come from employees arising out of change.
Taylor (2001) say, that from a HR perspective, globalization is having a number of implications for the organization including diversity of workforce and cultural differences, self-development and acquiring knowledge in the management of expatriate labour; HR department of the organization needs to develop the aptitude, skills and mindsets required to participate in global village. Organizations are becoming more dependent on their HR to bring business performance by activating management and systems that provide factors essential for success for a global and local competitive advantage. Rhinesmith (2006) supports this by saying that HR has become the most important factor in initiating, defending and taking advantage of operating on mega scale in a global world. In order to be competitive and successful, organization needs to support their HR processes more effectively with strategic organizational vision and mission.
In order to create value and provide results to the organization, the HR executives must not only focus on the HR activities but also define the deliverables of the HR work. The role of HR in building a competitive advantage include strategic human resources management, transformation management, change management, infrastructure management, and management of contribution of individual employee (Ulrich 1997). Although the stated roles are important and have provided values to organization, in recent years, now there is a critical need to move beyond the strategic business role to become a player in the business (Ulrich & Beatty, 2001). According Ulrich and Beatty, players contribute to the profitability of the firm; results oriented, and achieve desired goals by making difference. Coaching, designing, constructing, changing the organization, creating followers, and playing by rules are how the player manages their organizations. Another aspect of HR role suggests that in successful companies, HR executives play four key roles including strategic business partners, innovators, collaborators, and facilitator (Schuler & Jackson 2000) As a strategic partner of the firm, HR professional need to understand the nature of the organization from strategic, operational, tactical, and financial aspects, in order to manage the organization effectively and efficiently. Innovator role suggests that HR executive should continuously for actions to create value and to function positively in a dynamic environment. Furthermore, HR should serve as collaborators by linking the various levels of management, to execute business strategic business plans. Finally, serving as facilitators, HR executive function as the change agent by providing foundation, support, and promptness for considered changes planned to sustain the business strategies.
Various concerns have been raised that HR personnel should be held responsible regarding, how can HR add value? Who has the skills of a strategic partner? And, how can HR make certain that personnel across the organization remain committed during times of commotion? (Larsen & Brewster 2003). The abovementioned shortcoming suggests that firm's strategic planning process should be revisited in terms of how employee contributes to achieving the desired result as part of an overall strategic objective attainment (Holbeche 2004). While still some people believe that HR is not carrying out its function properly, especially in the areas of strategic management, performance management in the boardroom or in a real leadership role (Boxall & Purchell 2003).
It is clear from the above discussion the HR is as an invaluable asset the organization possesses. For an organization HR creates values, utilize information to eliminate ineffective investments, and to serve as a critical resource in strategic planning and allocations of budgets. One can say that if we remove the HR from organization it will be just a useless structure worth nothing. In this paper efforts are made to first study that how HR creates organization wide success, and then how HR creates competitive advantage. The upcoming discussion will be based on the literature review. In fact efforts will be made to refine the existing knowledge so that organization can use its HR effectively and efficiently in pursuit of its long term mission.