3.0. Competitive advantage
The general concept of the competitive advantage is a reasonably straightforward. Each business tries to gain the advantage that helps to increase the market share, margins or profits. A comprehensive HR Strategy makes a difference. A smart organization recognizes that competitive and different people management techniques can make the business attractive. Such an organization attracts the best talents, and they want to use their creative minds in the favor of the enterprise. They just develop products and services attractive to customers and profitable for the organization. They can create a successful business that is widely recognized by competitors.
An efficient management of the capital always brings an advantage. The organization does not lose resources in ineffective investments. It keeps a tight control over the budgeting process. This applies to the management of human capital, as well. The right allocation of available resources allows the business to speed up the development of new products, introduce innovations and focus on small market wars with competitors.
Human Resources has to develop such an HR Strategy that meets the requirement of the efficient management. It does not mean the costs have to be lower. The organization just need to gain a better competitive advantage over its competitors.
There are several models how to build the competitive advantage:
- Cost Leadership;
- Innovation Leadership;
- Differentiation Leadership;
- Operational Effectiveness Strategy
Figure1.1:HR Strategy and Competitive Advantage
HR planning helps the organizations to increase the competitiveness with the competitors:
Human Resources planning helps the organizations to increase the competitiveness with the competitors. It just has to align the approach with the general corporate strategy. HR cannot choose a different approach from the rest of the organization. It would just result in unmanageable conflicts. The HR Strategy is not a standalone strategy. It should be the natural part of the business plan, and the HR Team should be clear which approach to choose to build a competitive advantage in Human Resources.
First, Human Resources has to respect the corporate strategy but it can still choose to deviate slightly from the general organization’s approach. Even a low-cost company can pay higher salaries than competitors because it manages employees better. It can decrease costs by the increased productivity and performance. Even in the severe cost management environment the compensation policy can offer the wider range of reward opportunities to managers just because they can be asked to deliver more in return. It is just about the smart approach of Human Resources. It has to make sure that employees produce a higher value added to ensure that the company operates with lower costs than competitors.
The HR Leader has to make sure that the leadership team supports the general approach of the HR Strategy. They have to trust that the successful implementation will bring benefits. They have to accept to change themselves, as well.
Second, the HR Leader or the HR Strategist has to decompose the business strategy. They have to identify the right spots for Human Resources to kick in. They have to prepare the plan that will lead to the development of the sustainable, attractive corporate culture. The people do not like processes; they love emotions. They have to like the company. They must be proud of the brand name. Human Resources has to help the leader of the business to shape a vision of the company and its mission statement. This will always set the burning platform for the HR Team. They will like to design, implement and cultivate the environment that acts as the primary source of the Competitive HR advantage.
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