Employees are a critical part of the knowledge of an organization as they pave the way for the attainment of competitive advantage. It follows that current studies have indicated that human capital elements including skills, experience, and training specifically human capital have a direct impact on organizational results (Wright et al., 1995). Even though knowledge application is a critical factor in the competitive environment, it is inadequate to rely on the employees’ knowledge. The capacities and resources used by companies in the present could be rendered less valuable in the future by changes in the industrial structure, consumer demands, and technology. Thus, it is imperative for businesses to establish their competencies and knowledge in a way that companies can establish a competitive advantage in the long-run.
Overview and Summation
The research focuses on a comprehensive evaluation of the application of human resource management with the aim of improved organizational performance. It also offers a conceptual framework that can be used in studying human resource management in institutions of learning. The findings presented in the paper are based on detailed literature on human resource, organizational learning, and human resource management. The research offers advice and useful information for knowledge management officers, HRM managers, strategists and individuals that are interested in gaining more knowledge on human resource management systems. It meets the need to establish the technologies and methods for comprehensive knowledge and information on management support in companies. The research is structured in two sections each focusing on a different topic. The first section discusses the significance of human resource management as a crucial strategic resource in the contemporary competitive environment. The second section studies how strategic human resource management influences human resource practices and systems to establish a dynamic capacity that acts in line with competitive challenges in the dynamic and steady environments.
The evaluation seeks to establish if the article has provided sufficient evidence to prove that the management of employees’ competencies can pave the way for organizations to facilitate their competitive advantage. It also examines whether the article has used appropriate theories in justifying the assertions presented. It follows that the author gave a justification of the use of the resource-based theory by giving its background and how it applies to the topic. The review evaluates the use of examples in supporting the assertions presented by the authors. The paper is examined for its comprehensive evaluation of key concepts in their relation to the topic in question. It defines the concepts and explains how they fit into the present study. The review seeks to establish if the article has made use of extensive research and relevant findings to support the assertions presented in the study. The discussion will demonstrate if the arguments proposed in the survey are factual and how they apply to firms in the present times.
The first section on individual competencies and human capital is evaluated using the research-based theory that has received a high level of attention from practitioners and scholars. The model is appropriate as variants such as the relational view, the knowledge-based view and the relational view can be used in the analysis (Bromiley and Fleming, 2002). The impact of the resource-based model can be ascribed to a wide range of factors. The theory is associated with the leading issue in strategic management which seeks to establish why some organizations perform better than others. Additionally, it delves into critical topics including diversification, growth, and heterogeneity. It goes hand in hand with strategy researchers owing to its links with familiar strategy ideas including distinctive competence. It introduces an unparalleled rigor to these ideas by establishing them in economic concepts that have received acceptance in the economic field.
The resource-based view is influential and has received a high level of attention in strategic management studies. Its focus on the internal evaluation of a company provides an important conceptual framework to strategic human resource management that can be used to examine the ways in which companies develop their human resources with the goal of converting them into a sustainable competitive advantage as explained by (Wright and McMahan, 1992).
The notion that human resources can be utilized as a source of competitive advantage in business has been discussed over the years as explained by Ordóñez de Pablos (2004). It is widely accepted that companies can establish a competitive advantage based on their management and human resources practices. As such, efficient human resource management will create a higher capability to attract and retain employees that are motivated and are qualified for the job. Organizations also profit from having a high number of qualified individuals. Additional benefits include less rotation, higher profitability, increased product quality, decreased manufacturing costs and the faster implementation and acceptance of the organizational strategy.
It can be observed that organizational resources contribute to sustainable competitive advantage when they have no substitutes are inimitable, rare and valuable. These are the four measures that are used in establishing a possible competitive advantage. It can be observed that if an organization is interested in getting a competitive advantage over its competitors, it will be required to utilize its resources (Ulrich and Lake, 1990).
Individual skills are typically distributed, and this assertion can be examined using these requirements. To start with, human resources must establish organizational value to be considered as a source of competitive advantage. Resources are found to be of value if they pave the way for businesses to develop strategies that facilitate efficacy and efficiency. This stipulation requires that both offer and job demand are heterogeneous. In other words, organizations are deemed to provide jobs that require diverse skills. On the other hand, individuals demonstrate differences in skill type and levels. Therefore, there are differences in the value that employee contributions made to organizations which means human resources can add value to organizations as explained by Wright et al. (1995).
Secondly, resources should be rare for them to be perceived as an element of competitive advantage. The characteristic is dependent on heterogeneity in the job pool in the human resource context as expressed by Wright et al. (1995). If the levels and types of skills are not normally distributed, it will be possible for some organizations to get the required talent while other will not whereby holding all factors constant, this type of human capital is considered to be a form of sustainable competitive advantage. Furthermore, the uniqueness of the criterions is also associated with the idea of labor mobility as well as resource specificity.
The third principle states that a resource must be inimitable to be considered as a source of competitive advantage. Companies can get human capital from the market or through developing it internally. If a resource can be imitated or duplicated by another company in the human resource context, it does not contribute to competitive advantage. The final principle states that for a resource to have a sustainable competitive advantage, it should not have any potential substitutes. Human resources are unique as they have the potential not to be transferred to a wide range of markets, products and technologies or become obsolete.
The second section of the paper looks into human resource management and human-based competencies as the factors contributing to organizational competitive advantage in the long-run. Through concurrently combining two essential goals by means of human resource, companies can establish a competitive advantage in the long-term. It is clear that simultaneous goals are a strategic fit and organizational flexibility. Strategic human resource management must pave the way for the application of the behavior, knowledge and human resource management practices of the employees concerning the needs of the organization that are stipulated in its organizational strategy. On the other side, a human resource management system is obligated to facilitate the establishment of a dynamic organizational capacity that develops responsive reactions to the needs of the present organizational strategy. In short, the strategic human resource management system should promote flexibility with the aim of attaining a dynamic fit and sufficiently responding to the needs of the environment and strategy.
Accordingly, human resource management should study how the complementarities and integration of resources, organizational capacities, and practices facilitate the attainment of the competitive advantage for business organizations. It is essential to investigate how human resource architecture can influence methods and human resource systems towards the establishment of competitive organizational capacity. Notably, the concepts of external fit and internal fit are valuable.
The concept of ‘internal fit’ is termed as the level in which human resource components are associated in a logical fashion and support themselves. On the other hand, ‘external fit’ concentrates on the level of integration of human resource systems with the content and process of organizational strategy (Milliman et al., 1991). Strategic human resource management has demonstrated the significance of flexibility owing to the fact that businesses with a dynamic and complex environment require flexibility to keep up with the changes in the business environment. Specifically, they underscore the need for businesses to make the necessary external and internal changes and alter the structure of the organizational resources particularly for the companies that exist in dynamic environments. It has been found that companies that have a high level of flexibility have the ability to study the environment, examine the competitors and the market and make changes and transformations that place them ahead of the competitors as expressed by Snow and Snell (1993).
The link between organizational flexibility and strategic fit should be studied further. They establish a framework for the evaluation of the dual responsibilities to attain. On one side, the fit of the organizational strategic needs with human resource system and, one other side to establish the human resource system in a move to come up with a strategic answer to a wide range of issues in the long-run. It has been found that a strategic management pattern should entail the goals of flexibility and fit. At the top of the pattern the forms in which companies show behaviors, employees’ skills, human resource practices fit together with their direct competitive necessities are based on strategy as expressed by (Wright and Snell, 1998).
The article states that research on internal fit in human resource practices is focused on the identification of strategic human resource management patterns. As such, the examination of these configurations is imperative in understanding how people and human resource systems and individuals establish a competitive advantage for organizations. Human resource practice systems create causal ambiguity and social complexity and support value creation and establish a competitive advantage for companies. While it might be easy to replicate the compensation plan by an organization in its compensations, it has been found to be difficult to replicate a complete system that entails career development, feedback, evaluation and compensation as expressed by Delery and Doty (1996).
A close relationship exists between human resource management, external fit, and human-based competencies. External fit concentrates on the empirical and theoretical links between human resources and the organization’s strategic orientation (Teece et al., 1997). Strategic management in human resources must not structure the practices that only apply to a specific competitive capacity but the one that promotes the establishment of a human infrastructure that establishes capacities that promote multiple strategic dimension. As much as actual organizations commonly chase different strategic orientation such as leadership costs and differentiation, it is essential to develop configurations that lead to a better understanding of external fit in the context of strategic human resource management.
Strategic human resource management is required to develop flexibility within an organization. It follows that flexibility in the context of strategic management is defined as the extent to which human resource management in organizations have the behavior and skills repertoires that offer some alternatives that seek out strategic alternatives in a competitive environment of organizations. Additionally, the level which the critical human resource management practices can be improved, developed and identified in a move to take full advantage of the human resources.
The flexibility of a company is dependent on the flexibility in the workers’ behavior. Therefore, employees have a wide range of behaviors that they can apply in diverse situations instead of acting in line with the set procedures. This improves the probability of companies to come up with new competitive strategies. In addition to resource flexibility, businesses can attain flexibility through the regulation of behavior between groups and individuals. Owing to the fact that these behaviors are more homogenous, the diversity of a company’s prospects is minimized reducing the probability to establish conflict (Lytras, Naeve & Pouloudi, 2005) The patterns shared by individuals are also utilized as coordination strategies. Finally, the establishment of the capacity to attain flexibility and match the strategic needs that evolved continuously are representative of a valuable resource specifically for businesses that are found in dynamic environments (Ordóñez de Pablos & Lytras, 2009)
Understanding of Organizational Informatics Principles
The article has demonstrated an understanding of organizational informatics principles by evaluating how knowledge leads to a competitive advantage in business. It has shown the role that the employees play in shaping the knowledge that is held in companies. An important consideration that is discussed in the paper is the concept of fit that evaluates human resource constituents and how they are associated with flexibility in an organization. Additional studies should be conducted on how the concepts that are discussed in the paper apply to the business environment in the present times.
The paper concludes that human resource systems can facilitate the development and application of organizational competencies. Additionally, it states that human resource systems may have a negative impact on organizational competencies. The implementation of human resource systems that develop competencies are vital in helping companies attain a competitive advantage in the short-run. It is crucial for human resource systems to be difficult to replicate in other companies. It is essential for organizations to research human resource practices configurations that are distinct and improve the institutionalization, transfer, and creation of knowledge. The lessons offered in the text are valuable for the strategic management in companies to maintain a competitive advantage over their rivals in the long-run. This can be achieved through configuring human resource practices and systems.
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