People: Your Competitive Advantage

It does not matter how good your product is, if you do not have good people to get it to market you have nothing.

When adopting their HRM practices, firms must take into account the desirability of fit between these practices and firm strategy.

As a consequence, one of the main goals of strategic human resource management is to ensure that HRM is integrated with the strategy and the strategic needs of the firm in order to gain competitive advantage.

In order to retain those good people it is common knowledge that a firm needs a set of principles/policies to administer employee relations throughout the employment phase, in recent years companies have begun to implement a series of human resource management (HRM) practices that are referred as high-performance or high-commitment. Among others these practices include employee involvement, training and organisational incentive plans.

Although the workforce is a resource over which the company is not able to exercise absolute control over, there exists methods through which management are able to exert their influence on the performance and quality thereof over the human capital the firm possesses. The HR Strategy becomes the “glue that binds divisions and groups together” toward a common objective.

The aim of these practices has been to achieve a more valuable and productive workforce, by selecting and retaining the more highly skilled individuals, and to increase motivation in the existing workforce.

Amongst modern managers it is commonly accepted that the employees are one of its main assets, and largely responsible for the success or failure of the firm. Human Resources, taken to be the pool of human capital under the firm’s control in a direct employment relationship, can provide the firm with a source of competitive advantage with respect to its rivals.

RESTRUCTURING: The word sends shivers through employees when this is mentioned, but restructuring of the firm may be needed to allocate resources effectively and use existing skills within the firm, before the need for hiring externally. The short sighted solution is to replace employees immediately should there be a vacancy, however never underestimate the value of a restructure and using existing skills. A so-called shakeup also adds new momentum (assuming no positions are lost) avoiding stagnation, “a change is sometimes as good as a holiday”.


In order to keep the staff loyal to the company, we should look into differnet incentive schemes, these are implemented monthly, though the achievement of certain thresholds, annually in which performance for the period is evaluated and on an ad-hoc basis. By providing ad-hoc incentives, it adds an element of excitement and rivalry between staff. 

Remuneration is effective to a point at which time personal satisfaction and recognition become important to the individual. The need then arises for the firm to become innovative and make other opportunities look uninviting to personal. These could be travel rewards, which are shared with a spouse, corporate fun days, flexible working hours, in-house relaxation, catering etcetera. The employer needs to make the employee feel needed and appreciated. We will look at customer loyalty at a later date.

It should be stressed that a successful HR Strategy is not one with well researched policies lorded over the workforce, but an ongoing adaptive process. The HR Strategy should include the tradition employee relation functions (Staffing policy / Training & development / performance & compensation) but should strive to achieve a fit between the individual and the firm (Required skills & fit with organisation culture), with culture encompassing both the values and norms of the individual and the firm, symbiotically. This in turn reduces any performance ambiguity.

A successful HR strategy encourages employees to be productive and have pride what is produced whether this be physical product or a service.

What are the key attributes to strive for?
  • recruit the best
  • keep costs down, becoming flexible and lean but empowering employees with the best training, rewards and equipment to do the job
  • develop a culture within the organisation which enables each member to contribute
  • involving and empowering people
  • become a learning organisation
  • use existing skills effectively for a desired outcome
  • train everyone to be competent in their present job and to extend beyond this level
  • develop – for the future
  • promote from within
  • link rewards to measured performances
  • being an equal opportunities employer through our behaviour rather than through legislation
  • to be seen by employee and others to be a good employer
The move away from the production era has necessitated a new look at employees and how they are managed , focusing on delegation, involvement, ownership, cross-functional teamwork, self-managed  teams, as is evident in the development of TQM concepts throughout the past ten years.

To implement a TQM policy then the following HR policies that have to be achieved, which are fair and equitable to both the firm and the employee. They are:

Outer Ring: 

  • Comprehensiveness - This includes all aspects of people management
  • Cost Effectiveness - Competitive fair rewards and promotion on systems
  • Coherence - HR Management activities and initiatives form a meaningful whole 
  • Control - Ensure performance is consistent with business objectives 

Inner Ring: 

  • Credibility - Staff trust top management and believe in their strategies
  • Communication - Objectives understood and accepted by all employees; open culture with no barriers
  • Creativity - Competitive advantage comes from unique strategies 
  • Competence - Organisation competent to achieve its objectives; dependent on individual competencies 

All leading to final Central Ring:

  • Change - Continuous improvement and development essential for survival 
  • Commitment - employees motivated to achieve organisational goals 
Should the firm achieve the final ring then it should also achieve a competitive edge.

Whilst there are many external factors which affect the firm, the fact is the same external factors affect all firms within the same competitive environment, most of which are totally beyond its control, the firm can and must control internal factors. The firm by controlling internal factors can make provision for externalities beyond its control.

Through encouragement and alternate remuneration policies, which create excitement, work becomes a thing the employees do, and not simply a place they go to.