Organisation and HR as Distinctive Competitive Advantage
Competitive advantage refers to the ability of an organisation to formulate strategies to exploit rewarding opportunities, thereby maximising its return on investment. Competitive advantage occurs if customers perceive that they receive value from their transaction with an organisation. This requires a single-minded focus on customer needs and expectations. To achieve this, the organisation needs to tune its policies in line with changing customer’s requirements. The second principle of competitive advantage derives from offering a product or service that your competitor cannot easily imitate or copy. An organisation should always try to be unique in its industry along dimensions that are widely valued by customers. For example, Apple stresses its computers’ usability, Mercedes-Benz stresses reliability and quality; Maruti emphasises affordability of its lower-end car Maruti 800.
In order to enjoy the competitive advantage, the firm should be a cost -leader, delivering value for money. It must have a committed and competent workforce. Workers are most productive if (i) they are loyal to the company, informed about its mission, strategic and current levels of success, (ii) involved in teams which collectively decide how things are to be done and (iii) are trusted to take the right decisions rather than be controlled at every stage by managers above them (Thompson). A good team of competent and committed employees will deliver the goals if they are involved in all important activities and are encouraged to develop goals that they are supposed to achieve. In recent years, a new line of thinking has emerged to support this view known as Strategic Human Resources Management (SHRM).
The benefit arising from a competitive advantage based on effective personnel management is such an advantage that can not be emulated by others. An organisations HR strategies, policies, and practices are a unique mix of process, procedures, personnel, capabilities, and organisation structure etc. The HRM of an organisation is an important non-imitable resource if it is practised effectively and efficiently. HR strategies and policies ensure that the firm has higher quality people than its competitors, the intellectual capital possess by the business is developed and nurtured, organisation learning is encouraged, organisation specific value system and culture is existed and have the right focus.