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Competitive advantage in HR refers to the quality of the employees who can not be copied, unlike company's systems and processes. Competitive advantage in HR definitionCompetitive advantage in HR refers to the quality of the employees who can not be copied, unlike company's systems and processes. It comes down to the fact that companies with better employees have the competitive advantage. HR is important as it helps in creating strong competitive advantage through their personnel management policies – productivity and employee happiness is an advantage that often results in superior customer service, which helps drive sales. Do you use a modern recruitment software? If not, you're missing out. See how your life can be easier. Start your free 14-day TalentLyft trial.Start my free trialSimilar to thisLast updated on September 18, 2019 Featured in:
The four Ps of marketing – product, place, promotion, and price – certainly present many compelling ways to differentiate your firm’s product or services from those of your competition, and it is often where new entrepreneurs start. However, as you plan to get your business off the ground, you need to consider more than just marketing strategies to achieve a sustainable competitive advantage, no matter which market your firm is in. One of the most
important aspects of your business is what is known as your HR strategy and your human capital – you, your team, and your employees.
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Shutterstock.com | Rawpixel.com In this article, we explore, 1) the importance of human capital, 2) HR as a source of competitive advantage, 3) building your team, 4) obtaining business services, 5) subcontracting, and 6) your first (and subsequent) hires. Effectively and efficiently managing your human
capital – moreover, successfully leveraging your human capital to achieve your firm’s strategic business objectives, can help you achieve considerable success in the marketplace. Conversely, failing to do so, through a lack of planning or poor implementation, can result in reduced productivity and profits, and even a poor brand reputation. Many fledgling entrepreneurs often overlook human resources planning in the early stages of their firm’s creation. Many think that human resources begins when a firm grows large enough to have a formal human resource department – an office, a director, a dedicated budget line, and other hallmarks of a large firm. However, the truth is that HR strategy starts when a firm is a single person. Whether or not you have a formal written plan for human resources at the start-up stage for how you handle your own entrepreneurial education, compensation, and working hours, HR strategy can set the stage for how you will handle these kinds of decisions when you decide to hire your first employee(s). Similarly, how you acquire business services to fulfill business functions you do not have the time or expertise to fulfill, and subcontractors for those extra services you wish to provide, will lay the foundation for how you make those decisions when your firm grows larger. Therefore, it is critical that you approach these decisions strategically from the very beginning. Moreover, you do not have to be an expert in HR at this stage to do so. It is critical, however, that you are able to answer these questions:
HUMAN RESOURCES AS A SOURCE OF COMPETITIVE ADVANTAGELet’s explore the ways human resources can help you enhance your competitive advantage, or even help you create a new one:
BUILDING YOUR TEAMYou’ve committed to starting your business, but you may not want to do it alone. You may not have the expertise to develop your vision, but you have no capital. Or maybe you already have an equity partner with whom you are working, but need another one or two folks with the right talents to take your idea and make it a reality. However, you do have no prototype or product, or revenue, with which to compensate them.
© Entrepreneurial Insights The good news is that with the proliferation of the digital world, and the growth of multinational distribution channels, has come a world full of would-be entrepreneurs both in the U.S. and abroad. There are undergraduate and graduate degrees in entrepreneurship, start-up networking groups, and even reality shows like Shark Tank, which illustrate actual entrepreneurs obtaining funding and strategic partners. Short of auditioning for a reality show, how do you go about finding like-minded individuals willing to work on your business idea, for only the promise of possible success? Online networking sites, such as Founder2Be, match entrepreneurs with fledgling enterprises. College campuses are another great place to look. You may consider auditing a class in a particular area to shore up your expertise; why not take advantage of the campuses business networking groups while you are there? When looking for an equity partner, here are a couple of things to consider:
OBTAINING BUSINESS SERVICESYou may be a sole proprietor, or even just a fledgling entrepreneur with zero capital, just an idea and insomnia. You may think to yourself, “I cannot afford to take a salary, so how much HR planning can I do?” To start with, it is unlikely that you have enough time or expertise to fulfill all of the functions of your firm – from marketing to IT to accounting to legal to finance to sales. Some of these functions will have to be obtained from third parties as business services. How do you go about obtaining these services in such a way that advances your overall business strategy? How you approach plugging up your deficits as an individual is a human resources problem and sets the stage for how your firm handles human resources down the line.
SUBCONTRACTINGYour time is finite and valuable. Chances are you may be burning the candle at both ends trying to produce a certain type and number of products/services, in the early stages. But what happens when a client comes to you with a lucrative order for a related product/service that you don’t have the time, or possibly the expertise, to offer? One solution is subcontracting the work to a third-party firm. This can be lucrative: by increasing capacity, you may be able to meet increased demand, and/or offer new products/services. But be careful. A subcontractor’s performance or lack thereof reflects on your brand, not theirs. You are ultimately responsible –and liable- for meeting the client’s demand, which makes subcontractor selection a crucial decision. Some things to consider:
YOUR FIRST (AND SUBSEQUENT) HIRESOnce you have reached a point where you can hire, you may have already made many HR decisions. You may not have thought of them as such, but team-building, obtaining business services, and subcontracting are all HR decisions. A strong employee can increase productivity and profits, while a weak employee can decrease the same, and even potentially harm tarnish your reputation. When hiring, “[it helps], if I form a relationship with the person prior to the job,” says Brian Murphy, owner of Murphy’s Tavern and Victory Cantina in New York City. “It keeps me competitive because people don’t only work because it’s their job, but they often try harder to ‘help me out’ because of the bond we form. I also tend to [give] the recommendations of other valued staff [great weight when hiring].” When asking what advice he would provide fledgling entrepreneurs, he offers, this on hiring: “I would say use your best judgment. Get someone based on personality and their ability to work, not on their past work experience. Just because someone has been doing something for a while does not mean that they haven’t developed bad habits or are good at what they do. Get someone who is willing to learn what you want to teach them.” All important points. Others to consider include:
How can HR achieve sustainable competitive advantage?The best way to create a strong human resource that can lead to a competitive advantage is through recruiting and maintaining employees with both soft and technical skills. With this, the employees will be able to compete effectively with others in similar organizations.
What is an example of sustainable competitive advantage?A well-known example of a company with a sustainable competitive advantage is Walmart. Walmart maintains a sustainable competitive advantage in part because its strategies are specific to its organization and these strategies are known for creating a gap between Walmart's performance and that of its competitors.
How can HR help build a more competitive organization?As the organization of the future takes shape, HR will be the driving force for many initiatives: mapping talent to value; making the workforce more flexible; prioritizing strategic workforce planning, performance management, and reskilling; building an HR platform; and developing an HR tech ecosystem.
What are the 4 sustainable competitive advantages?The idea here is that if a firm is to maintain sustainable competitive advantage, it must control a set of exploitable resources that have four critical characteristics. These resources must be (1) valuable, (2) rare, (3) imperfectly imitable (tough to imitate), and (4) nonsubstitutable.
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