HR & competitive advantage: what’s the link?

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Effective human resource management can give a company a competitive advantage by hiring the right employees, preparing and developing their human capital, and offering attractive benefits. A well-developed HR department with a strategy for retaining employees is crucial for success.

The relationship between human resources and competitive advantage is the fact that an effectively implemented human resource management regime can be leveraged to a company’s competitive advantage. Competitive advantage refers to the various strategies that a company can implement that will give it a competitive advantage over rivals within that industry or in other related industries. Human resources can be utilized in a variety of ways to achieve this desirable competitive advantage. Hiring the right employees to meet the company’s goals, preparing a company’s employees, and offering attractive benefits are all examples of how human resources and competitive advantage are connected.

The human resources department is responsible for identifying manpower requirements in companies and for engaging competent employees to fill these vacancies. During the establishment of companies, goals and objectives are visualized and in order to achieve these goals, the company must hire the right mix of employees who can help the company in its pursuit. Successfully hiring employees with desirable human capital is one of the links between human resources and competitive advantage. A company with the right staff will be able to leverage the wealth of knowledge and experience deposited in the human elements of the corporation to increase performance and gain a competitive advantage over companies with less skilled workers.

Another way in which human resources and competitive advantage are related is that the human resources department can channel the company’s resources to prepare and develop the company’s human capital base, aligned with the specific requirements of the company. This practice includes resources such as training, courses, seminars, personal development programs and conferences, which will be sponsored by the company. The purpose of this type of human capital development is to instill the company’s vision in employees, in the hope that they will channel the company’s outlined strategies to gain competitive advantage.

Most truly successful companies have a well-developed human resources department with an established strategy for attracting and, more importantly, retaining employees. Companies that don’t have a really good employment practice end up losing their most valued and qualified workers to competitors who offer better employment packages. This connection between human resources and competitive advantage includes factors such as attractive wages and other financial compensation, reasonable assurance of job security, and the promise of further employee development through company-sponsored training and personal development programs. Good welfare packages, health insurance, and an inclusive organizational corporate culture also help the company solidify its human capital base, which can be applied to competitive advantage.

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