The Importance Of Human Resource Management

1956 Words8 Pages
The human resource (HR) function routinely faced battle in an effort to establish, legitimise and justify its position within organisations, in order to demonstrate value and therefore, exercise influence, as a strategic decision-making partner with the ability to develop and maintain competitive advantage (Aldrich, Dietz, Clark, & Hamilton, 2015; Wright, Dunford, & Snell, 2001). Focus on the resource-based view (RBV) shifts emphasis away from the external factors such as market environment that drive competitive advantage, to internal factors such as human capital, attracting credibility to the HR assertion that people are the strategic link to competitive advantage (Hoskisson, Hitt, Wan, & Yiu, 1999), and not purely a cost (Pfeffer, 1994).…show more content…
, 1991). Human capital, as a resource in the form of labour, adds sustainable competitive advantage based on those conditions, in the following ways: becomes valuable to an organisation when the demand and supply for labour is divergent; i.e., different jobs require differing skill sets, simultaneously occurring with a heterogeneous labour supply. The variance in the capacities and abilitites required and supplied, indicates that human capital is able to effect value for an organisation (Wright, McMahan, & McWilliams, 1994). High quality human capital resources are rare, as is evidenced by the ’War for Talent’ (Frame, 2013), whereby highly skilled employees are the currency of a knowledge economy and cognitive ability is supported as one of the best predictors of individual job performance (Schmidt, 2002). Rareness of human capital is therefore demonstrated within human capital by nature of its presence in one organisation, at the expense of another. For a human capital resource to be imitated, it first needs to be absolutely identified as the specific element in the resource pool that is providing the competitive advantage and in turn, exactly replicated in terms of the resource pool and the element itself. Dierickx & Cool (1989) argue that organisational skills and codes are aggregrated via organisational culture, plus, as learning and development on-the-job; these tacitly accumulated skills are distinctive to the organisation, rendering them less replicable to external sources due to their causal ambiguity, social complexity and historical timing. The inability to exactly determine and understand the source, is as causal ambiguity, whereas, social complexity refers to the network of relationships created between individuals in organisations, providing unique working
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