How do human resource people in an organization contribute to the competitive advantage of an organization?

Competitive Advantage definition

Companies with a competitive advantage have an identifiable part of their proposition that allows them to achieve a greater degree of success than similar businesses in their industry. There are many different types of competitive advantage, such as pricing structures, manufacturing capacity, access to contacts and superior customer service.

Competitors will attempt to mitigate or neutralise a competitive advantage so the most valued competitive advantages are those that are sustainable and strong enough to withstand external pressures.

Competitive advantages are commonly split into comparative and differential advantages. Comparative advantages are financial – a lower cost of manufacture, for example, or their own distribution network. Differential advantages are product-based differences that lead customer perceptions over quality.

HR can help create a strong competitive advantage through their personnel management policies – productivity and employee happiness is an advantage that often results in superior customer service, which can help drive sales and repeat customers faster than in companies that do not provide the same service.

Strong competitive advantages, particularly those that are innovative, are frequently referred to as unique selling points (USP).

What is your company’s competitive advantage? 

Competitive advantage means positioning your company ahead of other companies in order to achieve superiority in quality, low cost, value or innovation. Regardless of what it means to a company, it may be the single factor to attaining success and business sustainability. There are many strategies that contribute to achieving a competitive advantage, but maximizing your human capital is a major contributor to achieving a competitive edge in the marketplace.

Linking HR Strategies to High Performing Companies

Numerous studies indicate the importance of aligning human resource strategies to achieving business goals and enhancing business performance [Darwish, T.K., Singh, S., & Mohamed, A.F. (2013) and Huselid, M. S., Jackson, S. E., & Schuler, R. S. (1997).] Such studies indicate that true competitive advantage can be achieved through people and the people practices of organizations. Companies that leverage their human capital to achieve their business objectives, especially growth have more positive results. These companies have well-defined HR practices that align with the company’s business goal. Their employees stay employed longer and contribute positively to the overall financial performance. Companies without a clear people plan are at risk of losing or never obtaining a competitive advantage.

What are these HR strategies and how can they help you gain a competitive advantage?

Each company has different business objectives that contribute to developing a competitive advantage. Your HR strategies should be developed to achieve these objectives.

Business Growth- If you are planning to expand your business, you most likely will need additional employees therefore establishing a workforce plan is necessary to ensure you are able to hire the right employees in the time in which you need them. Developing a workforce plan involves forecasting how long it will take to hire the employee, where you will source your applicants and when you need to begin the recruiting process. Failure to implement this strategy could interfere with your ability to scale your business according to your plan and most likely the quality of your services and products will suffer.

Maximizing and Optimizing Operations- Whether your goal is to achieve quality, quantity, or efficiency, ensuring you have the right people in the right positions is critical for achieving business operations goals that are linked to profitability. In addition, a workforce plan can accomplish this objective.  Workforce planning also includes conducting an inventory of your current talent and identifying gaps in technical skills that relate to the areas of importance. Once these gaps have been identified, then creating a plan to either develop employees within your organization or hire from the outside to minimize the gaps.

In addition to the technical aspects of human capital, developing a competitive edge means selecting and retaining employees with specific traits and behaviors that support competitive strategies. Some of these traits are listed below:

When recruiting and selecting employees, these traits should be evaluated on applicants as part of your selection process. For existing employees, these traits can be developed in a company culture where management supports intrepreneurship and innovation.

Developing innovation as a competitive edge.

Developing innovation is fostered in a company culture that provides opportunities that support intrepreneurship.  Intrepreneurship is the concept that your employees have the resources and abilities to solve the company problems that lead to increased productivity and profitability within your company.

One way to develop a company culture that fosters intrepreneurship is to allow employees from all levels of the organization to solve problems in either a group setting or individually. As part of this initiative, managers must understand that failure is part of the process. Managers that allow employees to fail and look at failure as opportunities for growth will yield better results.

Developing opportunities that encourage creativity can serve as a platform for managers to engage with their employees in this environment. A work environment that fosters intrapreneurship and innovation typically has a high level of employee engagement. High employee engagement will lead to high employee retention and increased productivity which leads to profitability.

At the end of the day, your people are your competitive edge. They are the ones interfacing with your customers and producing your products and services. They are generating new ideas and solving problems. They represent your quality, value and innovation. Make sure you have specific HR strategies to attract, develop and retain the human capital you need to be competitive.

How HR can contribute to creating competitiveness?

How an organization's employees contribute to a competitive advantage for the organization?

How can strategic human resource management help an organization gain a competitive advantage?