This paper aims to demonstrate the practical application of resource-based theory to the work of HR practitioners and to show how employees can be a direct source of competitive advantage for the firm.
A great deal of scholarly research demonstrates that employees do not just contribute to competitive advantage; they can themselves be a direct source of competitive advantage.
This paper is valuable to HR practitioners, HR consultants, organizational development specialists and strategic planners.
Paul J. Davis, (2017) "How HR can create competitive advantage for the firm: Applying the principles of resource-based theory", Human Resource Management International Digest, Vol. 25 Issue: 2, pp.4-6, https://doi.org/10.1108/HRMID-09-2016-0122
Expert opinion Eric Haveman
This research could be interesting for companies and policy makers as a mirror to answer the question of how value is being added in their own companies. Do they really see people as key differentiators or do they view them as random resources?
The researchers claim that the human factor is often still not considered to be decisive in creating a competitive advantage. I do not identify with these results and I think that many companies nowadays recognize that people can make the difference and therefore consciously and specifically invest in human resources.
Investing in the social climate
It is important to invest in a good social climate, because otherwise companies become unattractive for employees. They will lose trust in the company because they feel their input is not appreciated. The companies involved also harm their strategic interests and business operations because they will not be able to distinguish themselves from the competitors, do not seize opportunities to create value, and possibly also incur costs through unnecessary staffing, recruitment, on-boarding and training.
Companies can invest in a good social climate by being aware of its relevance as a first step. They could also be assisted or challenged by internal or external consultants and HRM employees or by someone or a team that is (partially) exempted by the management board. Other examples of how a company can invest in a good social climate: allocating training budgets, rewarding contributions and investing in teambuilding. In the end it only works when the company really believes in it, wants to give it priority and if there is visible commitment from the highest management levels, not only in words but also through acts.
Organizations can positively distinguish themselves from the competitors by making it visible in the way they operate, that they are committed to invest in human resources, for example by intensifying personal contact, extensive onboarding of new employees and by providing training and guidance (by experienced mentors). Also, the way a company promotes itself to outsiders (for example through advertising) is relevant. Promotion through employees can be put to practice by stressing the importance and the unique talent of each individual through all available channels and by bringing committed employees in contact with the outside world.
Companies which create value through human resources are often much more advanced in moving towards a self-managing organization because satisfied and trusted employees are also responsible employees. This is why many companies invest in well-designed HR-policy and a social climate in which people enjoy working. HR policies include good facilities, development options, clear career paths and a fair remuneration. A potential high ranking in ‘best employer’ lists, resulting from this, could be a very valuable promotional bonus.
A healthy social climate is good for your reputation and it creates attention and perhaps spontaneous applications which saves costs. Subsequently this can have a positive outcome on motivation, cooperation, relationships and performance.
To conclude: it makes sense to invest in a good social climate and to take people seriously. If people make the difference, the company will make a difference.
Edited by Eline Ammeraal