HUMAN CAPITAL STRATEGY: HARNESSING THE ORGANIZATION?S COMPETITIVE ADVANTAGE. (original) (raw)
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Human capital is just one of an organization’s intangible assets. It is basically all of the competencies and commitment of the people within an organization i.e. their skills, experience, potential and capacity. Human capital management is a reciprocal relationship between supply and demand: employees, contractors and consultants invest their own human capital into business enterprises and the business enterprises need to manage the supplier. Any organization interested in its performance will naturally ask how well they are managing this asset to ensure maximum return on their investment. In the same way, all employees, contractors, consultants and providers of human capital want to ensure they are getting the appropriate return for their own human capital investing through salary, bonuses, benefits, and so on. The aim of this paper is to study of nature of human capital management and its strategic role in achieving of competitive advantage for the organization and it is a review paper. The results of this study show the strategic importance of human capital and managing them in organizations.
HRM Focus on Distinctive Human Capital and Strategy of Building-Retaining Competitive Advantage
Global Journals Inc. USA, 2013
Abstract:Every business is a people business. At the heart of every successful business are the people who make things happen. Human capital is its most valuable resource, which provides the solid foundation needed to build long-term profitability and ongoing success of an organization. Therefore, businesses must constantly seek new and innovative ways to attract and retain a top-notch workforce, and motivate them to perform to their fullest potential. The evidence from the literature review, the key success factor of business innovative and motivated human resource. Top management responsible for creating a positive organizational environment by intervening cooperative relationship within functional departments for innovation and creativity in organizational interfaces. Everything can be imitated but competent and innovative workforce cannot be imitated and it becomes a distinctive resource regarded as a competitive advantage. Human capital consists of the “people assets” that drive an organization’s continuous development and sustained growth, and includes the collective attitudes, skills, abilities, and knowledge base of an entire workforce. Human capital management, also commonly referred to as human resource management or workforce management, is a vital discipline that combines technology systems with advanced methodologies to help businesses effectively build, manage, and maintain their “people” assets, and best leverage them to achieve and maintain a competitive advantage (B.S., 2013) . The belief that individual employee performance has implications for firm-level outcomes has been prevalent among academics and practitioners for many years. Interest in this area has recently intensified; however, as scholars have begun to argue that collectively, a firm’s human capital can also provide a unique source of competitive advantage that is difficult for its competitors to replicate. The success of any organization falls back upon its competent and motivated human resources (Mohiuddin, 2008) . The results of global research on human resource management confirm that employees (for their abilities and motivation to work) represent a critical resource of any organization and demonstrate the positive impact of various practices in human resource management on organizational performance and competitiveness (Armstrong, 2007) . Management should recognize that employees and their behavior represent strong forces that can diminish or enhance effectiveness of every organization (Hasebur, 2013) . The world of business becoming more and more global and demanding, nowadays organizations are forced to seek for new means to withstand fierce competition and succeed in their operations. Among the challenges they have to face, the following ones are viewed as the most critical ones: the need to increase productivity, enhance organizational capabilities, expand into global markets, develop and implement new technologies, respond to more demanding customer needs and changes in the highly volatile marketplace, increase revenue and decrease costs, attract and retain high-performing and flexible workforce, introduce and manage relevant organizational change, etc. (Burke, 2005) . In response to the above changes, there is a dramatic change in management efforts to build and retain human resource for improving productivity of human capital. On the other side management scholars have been consistently investigated such possible sources of competitive advantage (CA) at both conceptual and empirical levels. It is now generally believed that human resources and their management serve as a strategic asset to the organization. However, there is an ongoing debate in scholarly publications, as to what in particular leads to the development and sustainability of competitive advantage in the organization (Rūta K., Ilona B., 2008) . This study is an attempt to discuss Human Resource Management focus on human capital and building and retaining human capital on fostering competitive advantages in the enhancement of organizational effectiveness 4. HRM Focus on Human Capital: Effective management of human resources is directly linked to business success (Hasebur, June 2013) . Soft or high commitment human resource management practices are those that generate trust in employees and these practices include giving employees empowerment and involvement in decision making; extensive communication about functioning and performance of the employees service; designing training for skills and personal development of employees; selective hiring; team-working where idea are pooled and creative solutions are encouraged; rewards system that commensurate with effort; reduction of status between the management and staff and all workers are valued regardless of their role (Pfeffer, 1998) . Society has entered a new era in the relationship between organizations and their employees. In this new era, people are the primary source for a company’s competitive advantage and organizational prosperity and survival depends on how employees are treated (Lawler, 2005) . Organizational performance and competitiveness are determined by employee performance. The essence of the positive relationship between best practices in human resources management and organizational performance and competitiveness is the optimal system of human resource management that enables to employ and develop capable and motivated employees and achieve expected organizational performance and competitiveness by achieving desired employee performance (Šikýř, M., March 2013) . HRM involves attracting, developing, and maintaining a talented and energetic workforce (Schermerhorn, 2008) . Its major responsibilities include: (1) attracting a qualified workforce, which involves human resource planning, recruitment and selection; (2) developing a qualified workforce, which involves employee orientation, training and development (T&D), and performance appraisal; and (3) maintaining a qualified workforce, which involves career development, work-life balance, compensation and benefits, retention and turnover, and labor-management relations (Southiseng, N., Walsh, J. March 2013) . HRM functions which have relationships with effective HRD included human resource planning; job analysis; staffing (recruitment and selection); compensation and benefits; equal employment opportunity; T&D; employee and labor relations; health, safety, and security; companies and job design, performance management/ performance appraisal systems; research and information systems ( Puvitayaphan, 2007) . Human resource management practices influence employee’s skills through the acquisition and development of a firm’s human capital. Recruiting procedures that provide a large pool of qualified applicants, paired with a reliable and valid selection regimen, will have a substantial influence over the quality and type skills new employees possess. Providing formal and informal training experiences, such as basic skills training, on-the-job experience, coaching, mentoring, and management development, can further influence employees’ development (Bassey E., Tiesieh T. 2012) . Human resource development (HRD) is another HRM function but it is possible for the HRD function to stand alone. However, to optimize HRD goals, it is necessary to interact with other HRM functions. HRM functions have direct association with dimensions of employee relations, rewards management, performance management, recruiting and selection (Thornhill et al., 2000) . 5. The Efforts HRM to Build and Maintain Human Capital: The most valuable corporate asset, in the 21st century, is seen by distinguished professors to be “the knowledge worker” (Drucker, 1959) . Human capital is the stock of competencies, knowledge, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value (Wikipedia, 2013) . Management accounting is often concerned with questions of how to model human beings as a capital asset. However it is broken down or defined, human capital is vitally important for an organization's success (Crook et al., 2011); human capital increases through education and experience. IBM is a leading professional services provider focused on excellence and innovation in Human Capital Management. With over 400,000 employees globally and over 5,000 focused on Human Capital Transformation and Outsourcing, our HR Transformation practice addresses organization and people issues associated with the evolution of the HR business function. (IBM, 2013) .
Human Resource Management: As a Source of Sustained Competitive Advantage of the Firms
This paper tries to emphasize why in the era of globalization human resources are viewed as a source of competitive advantage? Therefore, the aim of this paper is to reveal that human resources management is essential to ensure the success of any organization which is based on the belief that an organization gains competitive advantage by using its people effectively and efficiently. Regarding this new challenge of HRM, this paper strives to identify whether the HRM can be considered as a source of competitive advantage of the firms or not? Finally the result of this study highlights the value of human resources (HR) and its strategic activities which have an influence on organizations performance and competitive abilities.
Human Capital Management: A new name for HRM?
The purpose of this paper is to contribute to the understanding of human capital management (HCM) and to make a case that it is much more than a new name for Human Resource Management (HRM). The paper reviews the theoretical and empirical Human Capital (HC) literature, as well as the literatures regarding Strategic Human Resource Management (SHRM), and Knowledge management (KM) to develop a framework pertaining to the management of HC. The framework developed will assist researchers and practitioners in the identification and exploration of variables linked to the effective management of HC within organizations. It is concluded that managers of organizations need to understand the complexity of managing HC and must combine their HRM strategy with their KM Strategy to leverage their Human Capital. By integrating several fields of the literature that relate to HC management, the paper suggests propositions that deserve future research consideration. Keywords - Human capital, Human Capital Management, Knowledge Management, Resource-Based View, Strategic Human Resource Management""
Human Capital Management: Understanding Its Implications Over the Business
International Journal of Economics, Finance and Management Sciences, 2019
In the knowledge-based economy, human has emerged as the major intangible assets of the organizations and key determinant of sustainable competitive advantage. The human resource of an organization is now regarded as invaluable organizational capital, commonly known as human capital. Organizations are now more aware of the effective utilization of its human capital and ensure business success. However, despite the growing awareness of the importance of human capital, it could not get popularity as expected. From the initial investigation, it was revealed that there are several challenges in applying for the human capital management program. The challenges are a lack of precise definition of human capital and human capital management, overlapping scope and jurisdictions, identifying desired human capital and linking it with the business strategy, measuring the outcome of human intervention and reporting and so on. This literary paper would try to resolve these issues in the light of theoretical underpinnings. It is believed that this paper will be able to give HR managers and practitioners a meaningful guideline to apply for the human capital management program more confidently and effectively. In addition, this research would contribute to existing HR literature, too. An extensive literature search was the main source of information for this paper. For data validity and reliability data and information also collected from other sources, too such as, expert interviews, analyzing policy papers and personal observation, etc. To get an in-depth understanding of the research issues exploratory methodology has been applied in this study.
Human Capital Production Function in Strategic Management
Research-based view studies indicate that companies can distinguish themselves in competition through a profound understanding of their resources and through continuous improvement of their human competencies. It seems that human competencies form an intangible asset, which in turn forms sustainable, unique strengths that are key to firm-specific superior performance. Evidence-based human resource management argues that gaining competitive advantage through human capital development should be verified and estimated scientifically. This article presents the scientifically solid theory of Human Capital Production Function, which explains tangible and intangible human capital's worth to business scorecards in terms of profit and loss account metrics. This article illustrates how Human Capital Production Function explains human resource management's essential role in supporting strategic aims in either achieving cost advantage or differentiation advantage.
The Role of Strategic Human Capital Management in Achieving the Competitive Advantage 1
These days Human Capital is considered most important element of competitive advantage in most organizations. In is just one of the organisation's intangible assets; it is basically all of the competencies of the people within an organization. These competencies are various skills, education, and experience, potential and capacity. It is believed that if a company know how its human capital contributes to their success, it than can be measured and managed effectively. Developing human capital in the organisation is the major challenge for the leaders for formulating future competitive strategies. "Dynamic and complex competitive landscape has created considerable uncertainty for firms, however conditions of uncertainty also present opportunities" (Hitt et al 1998). Organizations are increasingly looking at human resources as a unique asset that can provide sustained competitive advantage. The changes in the business environment with increasing globalization, changing demographics of the workforce, increased focus on profitability through growth, technological changes, intellectual capital and the never ending changes that organizations are undergoing have led to increased importance of managing human resources.
Impact of Human Capital Management on Organizational Performance
European Journal of Economics, Finance and Administrative Sciences
The study attempts to explain the relationship between human capital management and organizational performance. Hypotheses were developed to test the impact of HCM on the performance of organizations. Data was collected from 16 firms (knowledge intensive industry segment) located in Peshawar (Pakistan) in where source of competitive advantage is human capital namely higher education institutions and pharmaceutical firms. Employing sample size of 316 employees and 16 executives on HCM score card and organizational performance constructs data were collected. The reliability of the constructs is validated by Cronbach's Alpha value. Pearson correlation and linear regression were used to test hypotheses. Results of the study show that firm's HCM has a significant positive impact on organizational performance. Study results provide support to strategy of investment in human capital and its management for competitive advantage at organizational and national level.
CASIRJ Volume 2 Issue 2 Impact of Human Capital Management on Organizational Performance
The study attempts to explain the relationship between human capital management and organizational performance. Hypotheses were developed to test the impact of HCM on the performance of organizations. Data was collected from 16 firms (knowledge intensive industry segment) located India) in where source of competitive advantage is human capital namely higher education institutions and pharmaceutical firms. Employing sample size of 316 employees and 16 executives on HCM score card and organizational performance constructs data were collected. The reliability of the constructs is validated by Cronbach's Alpha value. Pearson correlation and linear regression were used to test hypotheses. Results of the study show that firm's HCM has a significant positive impact on organizational performance. Study results provide support to strategy of investment in human capital and its management for competitive advantage at organizational and national level.