Core Employee Competencies, Sustainability of Advantage, and Continuum Resource Sustainability - Essay Example

Introduction With the continuing movement of the economy – may it be a decline or growth – every businesses and companies are using every possible means to keep the company at a stable end. Every organization must have the capability to adapt to the movement of the market and the ever-changing needs of the customers. However, an organization can only do this if it has already identified the company’s present state (Hannon, et.al. 1995). Based on studies and proven experiences by various corporate personnel, organization itself is the backbone of any business, hence understanding it is very critical. The structure of the firm can provide two different and extreme impacts to the company – it can either enhance or hinder the efficiency and productivity of the company. Simply put, the flow of information within and outside the company, redundancy in the equipments and work processes, clarity and preciseness of reporting structure, and innovation and promotion of new ideas are detrimental part of ensuring the success of the business. However, apart from these all, organizational structure also influences the behavior of each and every employee (Hannon, et.al. 1995). This is why organizational analysis is very important. Every organizational analysis is aimed at tackling the entire structure of the business and eventually seeks a general solution to every problem the company is facing. This undertaking also involves examining all fundamentals issues that are related to the business. (Hannon, et.al. 1995). This paper is aimed at identifying the core concepts related to organizational analysis, particularly that of resource-based approach to organizational analysis. Specifically, this answers the following question: 1. How can the firm assess the core and distinctive competencies of every employee? 2. What are the ways to maximize the company resources and thereby gain competitive advantage? 3. What are the ways to ensure sustainability of an ‘advantage' and 'continuum resource sustainability'? Resource-based View of Organizational Analysis Analyzing the organization structure is categorized into four different ways. This includes (http://www.liebowitzassoc.com/articles/organizationanalysis.shtml): Explicitness or non-explicitness of the company’s vision and strategy Premeditated information and work flow in and out of the company Appreciation of the culture of the organization Knowing the people in terms of how they are selected, what are their qualifications, what are their most recent salary and benefits, when was their last promotion and what is their career path With these four categories, it is very clear that organization is not only focus in how to earn money but also on how to maintain harmony inside the company by maintaining ideal communication flow and having and retaining qualified employees. Human resources play a major role in maximizing the company resources to maintain competitive advantage. Various researches undertaking in the strategic management area is done to highlight the role of diverse firm resources in achieving and sustaining great competitive advantage (Peteraf, 1993). Because a lot of companies have been realizing this fact, they have been putting a lot of effort in utilizing the human resources and in studying different approaches on how to strategically and properly take full advantage of the people resources so as to ultimately put the company at a steady end. Thus, a model now coined as the resource-based view of the company boomed into prominence (Wernerfelt, 1995). This resource-based view approach has now been used to explain why firms differ in performance (Wernerfelt, 1995). This view relies on its premise that the internal resources of the company are responsible for competitive advantage and are the source of sustained competitive advantage (Amit & Schoemaker, 1993). Core and Distinctive Employee Competencies The employees are one of the biggest weapons of the company. They are the workers who ensure that the company is working right on target and the customers are satisfied with what the company is offering. This is the very reason why the organization sees to it that all the staffs are equipped with the right armament to keep them competitive and effective in their respective responsibilities. Among the many strategies to keep the human resources at a greater advantage over their rivals is by properly motivating and training the people. This is a proven way of keeping the staffs; in fact, American businesses have been spending billions of dollars annually on employee staffing and training (Georgenson, 1982). Because of this, there have been series of studies conducted to really discover the linkage between the success of business strategy and the training practices of the company. From a mere business strategy typology that provides strategic challenges translatable into specific job and skill requirements, newer and advanced theoretical perspectives are now being revealed in the pursuit of understanding how firms acquire and shape the human resources to establish a sustainable competitive advantage (Wright and McMahan, 1992). Based on the resource-based perspective, firms possess unique bundles of resources that are largely incomparable (Peteraf, 1993). Some of these resources are collected in a path-dependent manner, which in turn make it difficult and expensive to replace or acquire quickly when needed (Dierickx and Cool, 1989). Meanwhile some resources are simply not tradable, for example, tacit know-how. Firms possessing such difficult-to-create resources are then forced to work with their existing stocks and not rely on creating them again as and when needed. Indeed, resource-based view plays a very significant role for this can be utilized to understand how firms develop and accumulate human resources as a basis for creating sustainable competitive (Winter, 1987). On some other studies, it has been proven that the resource-based view of competitive advantage implies that the human resources provide enduring distinctive advantages to the company because they are able to remain inadequate and/or hard to replicate, have no direct substitutes, and enable companies to pursue distinguishing business opportunities (Barney, 1991). Thus, the concept of human resources as a source of competitive advantage shows that the people have competencies, experiences, and knowledge which provide significant economic value to the company. Barney and Wright (1998) even disclosed that in order for human resources to bring in sustained competitive advantage, they must remain hard to imitate, create value, and co-align, uniquely, to the organization's business strategy. Maximizing Company Resources With the idea on core and distinctive employee competencies comes the maximize utilization of company human resources. With Wright’s, McMahan’s, and McWilliams’ (1994) expression that discloses that the human resources have the highest probability of providing the source of sustained competitive advantage for the firm, below are the suggested ways on how to maximize this company human resource: Regard the Human Resources as Valuable In the resource-based perspective, it is strictly suggested that the human resource be valuable before it can help maintaining sustainable competitive advantage for the firm. One of the best thing to note and ensure if the resource offers great value to the firm is by assessing if there is a heterogeneous labor in the firm. This means that the jobs of firms differ and these jobs require different skills and the supply of labor is equally heterogeneous in a way that individuals vary in both the types and levels of their skills (Steffy and Maurer, 1988). In line with the idea of heterogeneous supply and demand of labor, there are studies that can prove that the idea stating that the demand for and supply of labor are heterogeneous, at least with regards to skill levels of individuals. In connection with this, Lawler (1996) has argued that human resources must have power, information, knowledge, and rewards (PIKRs) to be a source of competitive advantage. One best example of this is the fact that personnel selection, training, and utility analysis has verified that more highly skilled individuals do better than lower skilled individuals (Boudreau, 1991). More so, these performance differences have been able to provide value to firms. Thus, more skilled individuals are more likely to possess these (Hunter & Hunter, 1984). Ensure that Human Resources is Rare Any firm’s human resource must be rare, especially if it aims to be the source of sustained competitive advantage. Human skills are normally dispersed in the population, but human resources with high skill levels are rare (Jenson, 1980), In the same manner, the responsibility attached to working in a company or firm requires variation in skills to offer variation in contributions (Hunter & Hunter, 1984). This is also the very reason why redundancy in human resource is extremely avoided. In every organizational structure, the role of each member of the organization, his/her responsibility, his/her direct contribution to the realization of the company’s goal is always being assed so at to checked that every member of the organizational chart is rare and that every body is contributing a unique input to achieving the desired output of the company. Consider Human Resources as Inimitable Like the idea that human resource is rare, if a human resource is difficult to imitate, it can be the source of a sustainable competitive advantage. In support with this, it has also been noted that resources is a lot difficult to imitate if in the presence of causal uncertainty and social complexity (Barney 1991). Causal uncertainty or ambiguity happens when it is hard to understand the link between a firm's resources and its competitive advantage (Reed & DeFillippi, 1990). Thus, in human resource’ point of view, competing firms which cannot identify the human resources that are responsible for the competitive advantage, or the way by which human resources create the competitive advantage only signifies that they cannot imitate the advantage (Alchian & Demsetz, 1972). It is also in this point of view why it is noted that team production often leads human resources to causal ambiguity. This is because with team production, difficulty in isolating and identifying the particular human resources (individuals) that produce the superior performance of the team can be expected (Alchian & Demsetz, 1972). Social complexity, on the other hand, usually occurs from transaction-specific relationships, and the competitive advantage these relationships create may be due to transaction-specific human capital, i.e., human capital, such as knowledge, that is only important during the focal transaction (Becker, 1964). In various firms, different enablers interact with different people in and out of the company premises, This in turn enable them to establish relation which can be company-related or not. Because of such relationship, a very complex social situation may result and this may constitute a competitive advantage for the firm. Even if the relationship can be considered as too intricate to dissect, it is also reasonable to hypothesize that the value of the focal relationship may be due to transaction-specific human capital, wherein the knowledge and trust that are developed over time by the focal personnel (Becker, 1964). Regard Human Resources as Non-substitutable It should be noted that any human resource is considered as a source of a sustainable competitive advantage if it is a non-substitutable resource. Human resources are among the firm’s few resources which can be transferred to series of technologies, products, and/or markets so as to prevent becoming obsolete (Harrigan & Dalmia, 1991). In today’s modern time, a lot of technology types can now be used to replace human function. Continuous upgrades of equipments, series of technology linkages, and even non-stop innovation and invention offers threat to the strength of human-resource. Like for example, the general human capital resources such as learning capability which can now be transferred across a wide variety of technologies, products, and markets (Harrigan & Dalmia, 1991). Furthermore the firm’s continuing acquisition of individuals with high levels of learning capability and eventually training in various state-of-the-art technological skills could also mean that the resource does not become obsolete (Harrigan & Dalmia, 1991). Therefore, it is very unlikely the substitution of human resource to technology would eliminate the advantage of the human resources for long. This is proven by the fact that technologies can already replace the people. So why would a company continuously hire a person – who will be receiving years of benefits, medical benefits, and even retirement benefits that are all too costly- if the company can only buy a certain technology and use it without even worrying for the benefits that human resource have. However, it is also worth noting that there are certain limitations that technology has which human resource does not have. First is the fact that technology is now and continuously being internationalized. This just proved the fact that technology may be easier to imitate or be substituted as competition becomes more global because (Mansfield, 1984): The number of companies with equivalent R&D resources increases as an industry goes global. There is a direct relationship between the knowledge and the number o firms in a way that as the amount of knowledge available to build on increases, the number of firms also increases. The property rights to intellectual capital turn out to be increasingly hard to protect. With this idea, the competition of technology versus human resource became more on the side of the former, if it is managed properly. This is because as competition becomes increasingly global, technology also become increasingly imitable, which, in turn, argues for the increasing importance of human resources as a source of sustainable competitive advantage (Mansfield, 1984): Sustainability of ‘Advantage' and 'Continuum Resource Sustainability' The sustainable competitive advantage of the organization can be sourced out from two interconnected mechanisms – attaining higher level human capital and capitalizing on multiple labor pools. First, in the attainment of higher level human capital, there is no end point but the realization of the firm’s productivity advantages it relation to its competition. Like for example the strong linear relationship between human capital skills such as cognitive ability and job performance. Clearly, in this relationship, the firm with higher human capital resources in terms of cognitive ability should is normally expected to achieve higher productivity levels. In the same manner, the firm with greater human capital is also expected to maintain its advantage in flexibility and adaptability over its competitors (Hunter & Hunter, 1984). Thus, a firm with higher levels of human capital in relation to its competitors has an advantage in the ability of its work force to be flexible and adaptable to new market demands and new technologies. Like wise, a firm with the best human resources has the greater potential for sustainable competitive advantage (Harrigan & Dalmia, 1991). Meanwhile, capitalizing multiple labor pools is considered to be one of the noticeable advantages of the transnational firms mainly these types of companies can draw from many different labor pools from which to choose the most appropriate workers. Indeed the heterogeneity of demand and supply of labor creates the potential for a sustainable and continuum competitive advantage (Harrigan & Dalmia, 1991). Conclusion The firm’s organizational structure reflects how people or employees interact with each other, how communication flows in and out the company, and how power relationships are defined between the management and the workers. It is by this reason why an organizational analysis is considered as the value-based choices made by the company (Wernerfelt, 1995). Needless to say, the organizational structure tells exactly how the jobs and responsibilities in the firm are formally divided; how different value orientations of organizations influence structure; and what are the importance of achieving high levels of production and efficiency by using formal procedures, centralized authority, direct supervision, and specialized labor (Wernerfelt, 1995). Some of the most important facets of resource-based organizational analysis is the ability to highlight (Wernerfelt, 1995): Quality values that are involved by which the importance of maintaining high quality standards has been communicated to all employees and adopted throughout the organization. Information and analysis which include the scope, validity, use, and management of data and information that support the quality management system, and are being done by the enablers – the human resource which are the most integral part of any organization. The utilization of human resource utilization in a way that the full potential of each and every employee has been utilized. In the same manner, all employees are enjoined or being motivated to involve in teamwork production system, and in which quality education and training programs are in place for all employees. Quality assurance approaches used by the organization and maintained by the human resource to assure the high quality of goods and services based on process design and control, and the assimilation of process control with continuous quality improvement. Lastly, the knowledge of customer which ensure the organization's knowledge and ability to meet the requirements and expectations of internal and external customers Thus, in any resource-based organizational analysis undertaking, the ultimate goal is always to ensure continuum sustainability and competitive advantage of the company. Based on the research, there are various factors to consider to achieve such goal. First among the conditions lies on the fact that the resource, such as the human resource, should be valuable in a way that it provides the opportunity to exploit some environmental opportunity or neutralize some threat. Resources are seen as valuable when they enable a firm to conceive of or implement strategies that improve the firm's efficiency or effectiveness (Barney, 1991). Second factor is the fact that the resource’ characteristic is rare. If a large number of competitors possess such valuable resource, then it is no longer considered as a source of competitive advantage. This is the reason why heterogeneity is fundamental in the resource-based view, which means that a firm that possesses unique bundles of skills and resources attains a sustainable competitive advantage (Barney, 1991). The third factor is dependent on the condition of imperfect mobility of resources. 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