Human Resource Management is the tactical approach aimed towards successful management of the employees of any given firm. Human Resource Management usually deals with the hiring, motivation and sustaining the lab-or force within the businesses. The HR department is designed to optimize worker’s performance in the delivery of employer’s planned objectives. Effective Human Resource Management makes sure that highly qualified and skilled workers possessing abilities to undertake certain tasks are employed, placed, tutored, developed, and motivate in order to tap maximum potential(Noe et.al, 2006). This, in turn, ensures that a given business attains a competitive advantage in respective markets. Effective Human Resource Management can be helpful in the enhancement of a company’s competitive advantage or creation of an entirely new competitive advantage and this is through the implementation of Human Resource Policies. The paper offers a discussion of some of the major ways in which effective Human Resource Management can enhance the competitive advantage of organizations.
Competitive advantage is a superiority that a firm has over its rivals that creates greater benefits. Human Resource Management (HRM) policies are continuing strategies on the approach a firm plans to adopt in the management of its workers (Arlett, Myers, and Roukes 2011). They outline the values and philosophies of the company in the manner in which people should be handled (Briscoe, Tarique and Schuler, 2012). Discussed below are some HR policies that can be implemented to enhance the competitive advantage of a company.
First off a company may decide to alter competition by posing the lowest market prices. To attain this, firms have to make sure that their operations are using the minimum costs possible so as to maximize the profits of the business. This could be done by getting human capital from -available independent contractors and/or offshore vendors and combining this with other approaches to reducing costs. (Rezabakhsh et.al, 2006) asserts that organizations can leverage this method to attain tremendous profits against competitors.
Employment security: If a firm assures guaranteed employment by stating and ensuring that none of the existing workers will be dismissed for lack of or reduced work in the organization, it provides a signal of long-term commitment to its workers (Bailey et.al, 2018). This exercise generates worker commitment and loyalty as well as a motivation to put in an extra effort aimed towards benefiting the organization. Selectivity in recruitment: This involves careful selection of fit workers and in the right manner since a highly qualified workforce yields twice as much as unqualified one. Moreover, if a firm is selective in its hiring practices, in away informs applicants that they are getting into an elite institution which pertains high expectations in relation to workers ‘performance (Goetsch & Davis, 2014). Hiring competitive workers ensures that optimal productivity is reached by hiring the minimum possible workers. This could save the firm some production costs raising its competitive advantage.
Incentive pay: this involves ensuring that the workers who have contributed to enhanced levels profitability and achievements are allowed to have a share of the benefits gained. This can motivate such employees as they perceive incentives pay as just and fair. On the other hand, if all benefits generated from the workers’ efforts and ingenuity go to top administrators, the workers may see this as unfair, making them feel discouraged, and abandon their determinations. Offering incentives to workers, therefore, lead to higher productivity among workers increasing the firm’s competitive advantage (Cleeve, 2008).
Training and skill development: This entails offering employees with skills that are necessary for partaking their jobs. Training of workers ensures that workers and their managers undertake their tasks competently and at the same time demonstrates the organization’s commitment to its labor force. Training workers ensure that the workers are up-to-date with current technology and improvements. It also enhances their skills and ensures the production of quality products and raised output leading to giving it an advantage over its rivals (Rousseau, 2004).
Participation and empowerment entails fostering the decentralization of choice making and wider employee participation and empowerment in the regulation of their work process. Firms should shift from a hierarchical coordination and control of procedures to a system in which lower-level workers are allowed to undertake activities to enhance performance. Certain studies have proved that participation raises both productivity and employee satisfaction (Pfeffer, 2005).
Fig1. A model showing connectedness between HR policies and competitive advantage
In the United Kingdom, there exists a number of firms that have enjoyed a competitive advantage in their markets, attributed to the efficient implementation of Human Resource Policies. An example of such organizations is the Prudential Company which is an insurance-based organization. It is regarded as a regarded to be a niche competitor in the life insurance market. A steady operating functioning on the back of its asset management business which is high performing, a powerful global presence, and in-depth reach in the pension risk transfer market site the company for long-term growth. HR statistics and key prudential personnel show that the firm doesn’t have high turnover, have low absence rates, and its disciplinary procedure standards are well implemented (Li, Pike and Haniffa, 2008). The firm accredits its human resource achievement to its transparency and aptitude to tell its story. The firm’s history is revealed with all its staff, discoursing the ups and downs, success and challenges, with each person. The firm maintains an open mind in HR procedures and embraces revolution and innovation whenever it’s necessary. It has been very successful in its industry and some of the main Human Resource Policies undertaken by the company to maintain a competitive status in the market include the following.
Prudential collaborates with highly educated external and internal experts, who possess a great experience and substantial know-how concerning various fields, and who constantly acquire developed knowledge by the use of information technology.
The success of Prudential Company business success is founded on their successfully completed projects, satisfied customers and the appealing business results they have attained by their professional support and help.
Prudential offers training to all its workers for exceptional performance globally, helping client’s inquiries an offering procedures for their products. The training entails one to one teaching for better learning development and capabilities. The firm provides an online teaching management system for its workers to keep track with data and upgrading the firm’s up-to-date information. There exist 3,500 modules that are available, such include foundation skills program as well as functional technical and leadership management.
Additionally, the firm through its informative team constantly upgrades its operations by re-inventing and understanding the current insurance and life concerns through research, interviews from clients and feedback. This ensures that the firm provides exceptional solutions for all problems and advance current offerings (Yadav & Mohania, 2015).
An organization environment entails the circumstances, conditions, and influences that impact the organization capability to achieve its goals and objectives. Every firm operates in an environment that has both internal and external elements. The internal and the external environment can be categorized into five elements, they include the physical, social, technological, economic and political elements (Schaltegger and Burritt, 2017). The external elements affect how human resource operations are performed. The internal environment affects both human resource procedures and policies and the persons who form the workforce in an organization. Again, the functions of human resource management influence the external factors of an organization. The increasing number of HRM supervisors, their function goes past the interpreting and sensing the effects of environment on an organization. Therefore it is vital for firms to participate in and affect the environment.
Most of the things that affect an organization capability to respond and successfully complete a task are the surrounding environment both external and internal. The success and failure of an organization is an aspect of the business culture (Wheelen and Hunger, 2011). The internal environmental factors determine how the organization proceedings both as an independent business entity and with respect to its external environment. It is therefore significant for an organization to determine the possible impacts of the environment on HRM practice and policies (Armstrong and Taylor, 2014). The external environment that affects Human Resource Management practice and policies may include the following environments.
The elements of the physical environment include climate, geographical location and other physical features of the area the firm is located. The physical environment can benefit or hinder the organization’s ability to attract and retain the workforce. Commuting, housing and the cost of living can differ from one surrounding to another and can have a great impact on the reward employees expect. The geographical change in the population following the supply of and demand of employees in the home country job market. Renee (2008) states that businesses that rely on engineers and scientist, for instance, they pay heed to the geographical location where they can train competent workers. For instance in the London workers are to benefit from HR programs to improve office space suppleness, the natural environment, and air quality.
We live in a very competitive period and it’s only through technological advancements and innovations can organizations create new products and services as well as improve the value of the existing goods in order for the firm to remain competitive (Renwick, Redman and Maguire, 2008). Additionally, technology forms the basis for an organization to reach the quality and productivity required for the firm to competitively remain relevant.
Technological advancement has enabled businesses to exploit an information explosion. By the use of a computer, an unlimited amount of information can be stored, used in various ways and the data can be easily retrieved, and can also be used from controlling complex equipment to simple recordkeeping. In our day to day lives, we see airline reservation clerks, bank teller, cashiers in the supermarket using computers to perform their duties. According to (Laursen and Salter, 2006) from the library computerized card catalog to the automated bank teller machines in the bank, we come into contact with the computers ourselves. The less seen are systems that monitor employees efficiency, speed and accuracy. For instance, a company such as United airlines use complex devices to measure employees output. While large organizations and computer industries trained computerized monitoring systems as a successful way of improving productivity, the use of computerized control systems by firms have been associated to increasing stress on workers, health risk, lack of job privacy and job dissatisfaction among workers.
Advancement in technological levels affects the number of workers needed and the level of skills required on the job. Above all advancement in technology tends to increase the number of opportunities that require significant skills and reduces the number of jobs requiring skills. Due effects of advancement in technology. The HR manager plays a major role in organizing for its implementation. Employees are seen as assets which need to be utilized other than minimizing the cost (Dodgson, 2018).
Advancement in technology has greatly changed HR in organizations around the universe. For instance, in the United Kingdom, several companies have made a substantial change in the HRM organization systems. For instance, Smith Kline Beecham has established a new service centered on voice mail technology that they have made it accessible to all their employees. London underground has created a training system which is computer based to help their workers with clearing procedures in the event of a fire.
Progressively employers are presumed to illustrate a greater sense of obligation towards the employees and the society at large. Moreover, the employees expect similar rights, freedom and benefit from their jobs as those enjoyed by members of the society (Noe et.al, 2006). For example retirement, health care and safety issues show some of the significant areas where organizations are expected to balance social and economic concerns. An employer who fails to appreciate these facts experience difficulties with their workers. Additionally, employers are being restrained by laws and court decisions that back the rights if the employee in the line of duty (Collier and Esteba, 2007). Today, many employees are less preoccupied with attaining wealth and they view life satisfaction as more often resulting from equating the challenges and benefits of a job with those in their private lives.
Although most people still enjoy working and want to succeed in their jobs, they appear to be looking for ways to live a more meaningful and less complicated life (Cornelius et.al, 2008). The new lifestyle will have an impact on the ways in which employees must be managed and motivated. Therefore HRM has to turn out to be more and more complex than when employee’s main concerns were economic survival. For example the introduction of more fun in the workplace to boost productivity. Organizations in London are introducing fun activities such as office pets, table football, and giant beanbags to make the work environment more positive while still maintaining professionalism.
In summation, we can conclude that Human Resource Management practices significantly impact the competitive advantage of a firm. This is through successful implementation of Human Resource Policies by the firm. Such practices include employment security, selectivity in recruitment, incentive pay, training and skills development ensuring lower market prices among others. These policies and procedures altogether, when applied efficiently makes a firm to attain a competitive advantage by enhancing productivity through lowering its production costs and the market prices of its products, production of higher output and high-quality products. Additionally, the internal and external environment of an organization can affect the HRM procedures and policies. The external environment affects HR operation performances while internal environment affects HR policies and procedures. Therefore it is essential for the HRM systems on an organization to participate and affect the environment for the company to retain its competitive advantage. The HRM systems are developing from simple to more advanced and complex systems to accommodate the changing society and the advancement in technology.
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