How can human resources management be instrumental in helping a company create a competitive advantage?

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Human resources play a key role in creating a competitive advantage for many different types of company. Especially in the "resource light" new economy, the main value in some companies lies in the ideas and talents of creative and innovative people rather than in capital or other tangible assets. The innovative ideas and designs of Steve Jobs for Apple or Bill Gates for Microsoft or Warren Buffett for Berkshire Hathaway were the keys to the successes of those companies. What this means is that attracting and retaining top talent is the key to success in many industries.

Human resource management, though, is about more than just the stars at the top ranks of a company. At every level of a company's workforce, workers can be more or less productive. A strong human resources department can facilitate finding the best people for every role, providing them with the training to constantly hone and update their skills, and providing a positive work environment which improves productivity and reduces turnover. This improves the bottom line and creates competitive advantage.

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Human resources management is about making sure that your company has the right people working for it, and without the right people, you can't possibly build a competitive advantage!

Let us look at an advertising agency as an example. In order to gain a competitive advantage, the agency needs to be able to show clients that they can produce superior graphic design work. If the company does not have a sound human resources policy and hires only junior graphic designers fresh out of college, then these designers will not have the skills to produce work that stands out. If, on the other hand, a sound human resources management team is in place, they will ensure that enough senior designers are hired in order for the agency to create work that is impressive enough to gain them a competitive advantage.

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Companies want to gain a competitive advantage over their competition, and this can be done through efficient management of human resources. There are several ways this efficient management can be accomplished. One way is to hire people who have experience working in the industry. If a company constantly has to train its employees, this can be an added cost to the company. Having employees who already possess important skills can, therefore, help create an excellent workforce. Employees with experience should have knowledge of the industry and marketplace, and they can apply that knowledge immediately upon being hired.

Another way to achieve this is to develop a compensation package that makes workers happy and encourages them to stay at the firm if they are doing their job well. Minimizing employee turnover helps to keep employee costs under control. Additionally, understanding the needs of the workers and creating an environment within the company that will allow the workers to thrive is another way to gain a competitive advantage through the workforce.

Having a skilled, experienced workforce and strong human resources team can be very helpful to a company. When companies have an advantage over their competition, they will have a greater chance of being successful.

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In order for us to understand how this can be accomplished, let us look at the definitions of human resources management and of competitive advantage.

A competitive advantage is anything that a business does that can make it more productive than its competitors.  Human resources management is the process of making sure that a company hires the best possible people, that it trains them as well as possible, and that it keeps them happy and solves problems as well as possible.

One way to gain a competitive advantage is to have a superior workforce.  If a firm has better workers who are happier than those in other firms, it will be more productive and more profitable.  This can be accomplished, in part, through human resources management.  If a firm’s HR department is excellent, it can recruit and hire better workers.  It can do a better job of training them.  It can arrange compensation packages that satisfy the workers.  It can create a work environment that the workers appreciate and in which they would like to keep working.  If the HR department does all of these things better than the HR departments of other firms, the firm can gain a competitive advantage.

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