Resource-Based View in Human Resource Management for Competitive Advantage

This article discusses the Resource-Based View approach in Human Resource Management for achieving competitive advantage and organizational success. It also highlights the major threats currently facing organizations operating in the United Kingdom labor market, including Brexit, employment compliance, employment costs, automation, and regulations.

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1.0 How the Resource-Based View Can Be Adopted To Human Resource Management
to Help Deliver Competitive Advantage and Organisational Success
Due to global competition, viability, and the struggle for relevance, organizations
have been forced to adopt and utilize strategic approaches in their management practices
across all their business facets (Lin & Wu 2014). The field of the human resource, not an
exception. In the present human resource field, manager, and human resource management,
scholars are increasingly searching for the best way to establish the connection between
performance and human resources. The resource-based approach is one of the relevant
models which can help the managers to achieve organizational success as well as the
competitive advantage.
The resource-based approach is that a business’ capacity for competitive advantage
lies in the utilization and management of the available bundle of resources. This approach
describes the firm’s resources features based on four primary categories, which include:
value, inimitability, rarity, and non-substitutability. Firstly, the value represents the capability
of a firm’s resource to enable the firm in employing a value creation strategy, either by
preventing its shortcomings or by outperforming its competitors. Secondly, rarity suggests
that the resource should be rare for it to be of great value to a business. The support should
also be unique when it comes to availability for the other forms.
Third, the RBV model assumes that a firm can enjoy a competitive advantage if its
human resources have special skills, ability, and knowledge that is not easy to imitate. Thus,
inimitability describes the value attained from a resource when the organization's competitors
are unable to reproduce this strategic resource perfectly. Firms enjoy the inimitability
advantage due to isolating mechanisms. The isolating mechanism principle state that a firm
cannot duplicate a vital resource to compete with a firm which has that valuable resource
(Chae, Olson & Sheu 2014) For example, if the unique resource is based on social

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complexities or knowledge, casual ambiguity will likely occur since these resources are
primarily exclusive to a firm in which they are found.
Finally, the resource-based model suggests that a resource has to be non-substitutable
for it to give the firm a competitive advantage. Even if a resource is perfect, rare, and
potentially creates value, it is the non-substitutability aspect that makes it useful is giving the
competitive edge to a firm (Lockett & Wild 2014). Lack of substitutes that would be taken up
by other businesses renders a, and it makes an organization achieve a high degree of success.
It is, therefore, worth noting that the four head criteria are individually necessary, but they are
not individually sufficient for a firm to gain a sustained competitive advantage.
The resource-based view approach helps a firm to achieve a competitive advantage
when the firm uses it to implement the value creation strategy, which is not easily
implemented by the competitors. All the resources available to the firm are not equally
important, and not all of these resources have the potential to give a sustained competitive
advantage to a firm (Szymaniec-Mlicka 2014). Therefore it would be necessary for a firm to
categorize its resources in order of competitive advantage attached to the resource. The
resources which create the competitiveness must pass the five tests which are inimitability,
appropriateness, durability, competitive superiority, and substitutability.
The human resource managers can adopt valuable resources which will enable their
organizations to achieve success in competitive advantage. They are termed as valuable if
they can reasonable the human resource managers to improve the firms process effectiveness
and efficiencies (Kramar 2014). There is a degree of complementarity between resource-
based view and the environmental theories of competitive advantage such as the SWOT
analysis. SWOT analysis highlights the resources available to a firm that will help it
neutralize the threats and exploit opportunities (Lin & Wu 2014). Therefore, human resource
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managers can achieve a competitive advantage and organizations success by utilizing only
those resources that can create better value for a firm than its competitors.
Another essential characteristic of the RBV model that human resource managers
should consider is durability. Durability tests how long the resource is expected to last before
it depreciates. For example, the human resource should work to retain their top talents and
workers who possess specialized knowledge and skills so that the firm can continue deriving
competitive advantage from these skills. The longer a resource lasts within an organization,
the better and more valuable it is for such an organization. Just like imitability, durability
tests whether a resource can continue delivering a competitive advantage to a firm over time.
Due to the fast-changing technological advancements in the current era, the resources
depreciate and become obsolete quickly (Cooke, Saini & Wang 2014). For instance, technical
know-how and high level of mechanization in a fast-changing business environment are
rapidly causing a waste of resources. Human resource managers should realize that early
movers with new creative and innovative ideas dominate the market initially and earn super-
normal profits. Therefore, a firm should aim at adopting new ideas as fast as possible so that
it can achieve a competitive advantage over the other firms.
Imperfect mobility of the resources may be another reason why resources may
provide a competitive advantage. Imperfect mobility is based on whether the resources
available to a firm in terms of competencies and capabilities can be tradable. If these
competencies can be traded, then a competitive advantage to a firm may not be possible
(Sheehan 2014). The human resources should realize that their firms may have a benefit of a
highly creative research and development team. However, this valuable resource may be
poached by the competitors, which make it tradeable. However, resources such as the firms
brand image and name may be difficult for a competitor to obtain. Besides, some resources
are geographically immobile due to relocation costs and logistics cost. A firm which
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possesses such resources may achieve a competitive edge over the competitor, which would
ultimately result in the success of the organization.
In conclusion, it is suggested that the resource-based view holds a degree of relevance
for helping human resource managers to understand the link between the HRM and the
performance of an organization. The RBV model is especially crucial to human resource
managers since it highlights the unique aspects of resources that make a firm to be
competitive than its competitors. Such elements include the rareness, inimitability, value, and
non-substitutability of resources. From this concept, it is also understood that not all of the
substantial resources have equal importance in achieving competitive advantage (Nyberg,
Moliterno, Hale & Lepak 2014). It is therefore essential for the human resource managers to
use the environmental models of a firm to help it select and employ these resources that
would help it achieve sustained competitiveness.
2.0 Major Threats Currently Facing Organisations Operating In the United Kingdom
Labor Market
Currently, many threats are facing the United Kingdom labor market. One of these
threats is the desire of Britain to exit the European Union in what that is commonly described
as Brexit. Such a decision by the United Kingdom will significantly affect its labor market,
and therefore there is the need for an elaborate strategy by this nation to address issues
associated with lack of enough human capital (Gumbrell-McCormick et al. 2017). The Brexit
is expected to have direct consequences on the policies governing human resources. Some of
these policies will have negative impacts on the United Kingdom manufacturers and their
workforce recruitment issues. The issues of both employment compliance and employment
costs are expected to be a threat which will affect the retention of the organization’s
employees (Becker Fetzer and Novy, 2017). There other employment issues which are
foreseen to change the workforce diversity in many organizations. For instance, free
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movement of the workforce and human capital from one country to another within the
European Union might be limited due to new policies and laws associated with the Brexit.
Employees might no longer be allowed to work across the European Union’s borders; it
might be challenging to find enough and qualified workforce for the organization operating in
the United Kingdom.
Research has indicated that over the last two decades, the United Kingdom has faced
a myriad of challenges concerning inadequate human capital and workforce (Esmail,
Panagioti & Kontopantelis 2017). That implies that the decision of the United Kingdom to
exit from the European Union will increasingly worsen this situation. Therefore, the
organizations operating within the United Kingdom need urgent planning on vital human
resource areas such as sourcing, recruitment, retention, automation of processes as well as
improvement of employees’ engagement terms. Brexit will threaten the profitability of the
organization in the United Kingdom as the cost of hiring new employees is expected to
increase due to the increase of the human capital demand (Tilford 2015). Therefore, it is
necessary for firms to renegotiate terms of employment with their workforce or shift their
operations to other areas that have an adequate workforce.
The compounding of the current inadequate workforce challenges and the challenges
associated with Brexit means that a prevalent problem will arise. This problem will make the
firms and businesses to insource the labor supply from an already small population which is a
problem because the united kingdom is already facing a shortage of human resources
(Marangozov, Williams & Bevan 2016). As a result, human resource managers will be forced
to outsource the human capital from outside, which will be far more expensive because the
new workers may demand high salaries and benefits from the employers. The implication is
that the production costs will rise and therefore reduce reducing the revenue to the firms,
which in turn makes outsourcing another problem.
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Brexit will also present other challenges to the manufacturers based in the United
Kingdom. The human resource managers will be forced to give incentives to the workers in
terms of giving attractive benefits packages and other allowances so that they can retain their
workforce. The threat will also result in restructuring and re-organization of the
manufacturing and associated process so that the firms can accommodate the new challenges
(Dolton, Nguyen, and Castellanos & Rolfe 2018). Also, companies may be forced to
automate their processes or relocate to other countries so that they can adequately address the
threats as a result of Brexit.
Another threat that is currently facing the United Kingdom labor market is
automation. There is increased use of the current technology by most of the manufacturing
firms in the United Kingdom. Most of the blue collar jobs in the United Kingdom are being
replaced by the machines or the robots (Noe, Hollenbeck, Gerhart & Wright 2017). The
threat here is that there is a high cost of replacing human labor as these machines require
prohibitive installation and maintenance cost. That makes the firms to experience lower
profitability in the short term though these machines are expected to have benefits to the
firms in the long run. The result is that the small and the medium businesses are unable to
acquire these technologies because most of them require a large scale form of production
(Albrechtn et al., 2015). Therefore, these small organizations in the industry are either forced
to form mergers with large firms or completely shut down due to lack of competitive
advantage. Besides, firms whose operations are mainly seasonal and that do not require
permanent workforce are forced to acquire the machines which they would not need to use all
of the time. This hurts those firms since they have been relying on temporary jobs as a source
of their competitive advantage. They will have reduced profits and revenues because the
acquisition of permanent capital goods will force them to pay for the maintenance costs even
when these machines are not in use.
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The workers' compensation regulatory agencies and the government are currently
advocating for the increase in the employees' salary and benefits. The human resource
commission has especially significantly increased the United Kingdom national minimum
wage, living wage, and compliance checks. In the health care sector, the employers are forced
to pay their workers who work during the night a back pay of up to six years since the night
time job has now been categorized as not part of working time (Delery & Roumpi 2017).
This is a threat to such organizations as they may end up losing most of their revenues in
paying for such benefits. Others may not be able to pay, which might threaten their future
operations (Taylor, Doherty & McGraw 2015). If these costs were and regulations were
initially known to the employers, they would have been appropriately factored in the pricing
of goods and services. That means that these organizations will lose a significant amount of
their assets in compensation for their workforce.
Other regulations that threaten the organizations and businesses operating in the
United Kingdom are those relating to modern working practices. While these regulations are
favorable in many aspects, the employers will have increased operating costs for their
businesses. The result is the profit margins will be eroded if these significant costs are not
transferrable to the customers or the clients (Snell, Bohlander & Morris 2015). The United
Kingdom has recently recommended that the employees should be given good work plans
whose objectives is to protect and increase transparency for the employees and ensure that
they are fairly paid. Due to these regulations, the organization working within the United
Kingdom are expected to comply by adhering to the policies. Most of these policies threaten
the businesses since the production costs are expected to increase, which in turn would
reduce the revenues available to these firms.
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