A PRESENTATION ON HR AS A PROFIT CENTRE Presented by K.Gayatri 8129

Gaining Competitive Advantage through HR On Becoming a Strategic Partner The VRIO Framework The Changing Role of HR Future Challenges of HR Conclusion

CHANGE AND COMPETITIVE ADVANTAGE Two major elements of Competitive Advantage : Positioning the product line more effectively than the competitor; Defending the source of this market position against rivals.

Following are the requisites for the HR to succeed in attaining competitive advantage across international boundaries: Foreign language capability International experience Anticipating and managing change Computer literacy Leadership

HRM in modern enterprises has two distinguished roles: 1. To foster the performance of an enterprise; and 2. To act as a support for achieving competitiveness through people as phase three in Fitz-Enz’s “Data-to-value cycle”.

DATA-TO-VALUE CYCLE 1. Phase One Human Capital – Plan, Acquire, Maintain, Develop, Retain 2. Phase Two Tasks & Processes – Design, Make, Sell, Service, Finance, Administer Business Unit – R&D, Sales, Production, Distribution, Service Outputs – Service, Quality, Productivity 3. Phase Three Competitive Differentiation – Price, Delivery, Support Enterprise Goals – Profit, Market Share, Reputation, Stock Price

The model of organizational learning & Strategic HRM for sustainable Competitive Advantage Organizational Learning Strategic HRM Strategic HR Practices Organizational Performance Sustainable Competitive Advantage

ACADEMIC FINDINGS ON RELATIONHIP BETWEEN HRM & COMPETITIVE ADVANTAGE THROUGH PEOPLE 1. Snell & Dean (1992) – HR practices enhance the firm’s competitive position by creating superior human capital kill, experience & knowledge that contribute to firm’s economic value. 2. Boxall (1996) – By hiring & developing talented staff & synergizing their contribution within the resource bundle of the firm. 3. O’Relly & Pfeffer (2000) – Companies need cultures & sytems in which great people can actually use their talent, and even better, management practices that produce extraordinary results from almost everybody.

4. Khandekar & Sharma (2005) – By recognizing, developing & utilizing capabilities embedded in the collective knowledge of firms’ members. Furthermore, they observed that more & more organization are deigning their HR systems in a way that enable employees to use the knowledge for competitive edge.

THE RESOURCE BASED VIEW OF COMPETITIVE ADVANTAGE Three basic types of resources can provide competitive advantage : 1. Physical capital resources include such things as the firm’s plant, equipment & finance. 2. Organizational capital resources consist of such things as the firm’s structure, planning, controlling, coordinating & HR systems. 3. Human capital resources include such things as the skills, judgement & intelligence of the firm’s employees.

The Question of Value The Question of Rareness The Question of Imitability The Question of Organization

Valuable?Rare? Difficult to imitate? Support by Organization? Competitive implication Perform ance No….. Negligible Competitive Disadvantage Below Normal YesNo…..Low Competitive Parity Normal Yes NoMedium Temporary Competitive Advantage Above Normal Yes High Sustained Competitive Advantage Above Normal Is a Resource….

The Enforcer Management Representative Strategic Partner Employee Advocate

THE GROUP HR ROLE 1. Core Compliance 2. Shared services 3. Value Added Parenting Linking influence Standalone influence Corporate development

Challenge 1 : Responding to Multiple Stakeholders Responding to learning supply chain stakeholders Promoting corporate accountability beyond shareholders to communities & societies. Demonstrating strategies for addressing multiple needs. Negotiating various stakeholder interests.

Challenge 2 : Measuring HRD Impact & Utility Designing & conducting measurement & analysis across the organization Pinpointing the influence of HRD effort on employee productivity & organizational performance. Linking past research results to current practice.

Challenge 3 : Orienting Towards the Future Anticipating what research is needed & how it can contribute to HRD practices Making it available in ways that maximize the likelihood that research findings influence practitioner behaviour. Discussing the potential learning applications of likely business decisions. Being proactive rather than reactive.

Challenge 4 : Focusing on Problems & outcomes of HRD Practice Identifying current trends such as increasing pressure for organizations to deliver shareholder value, globalization etc. Working in problem-focused, solution-driven, multidiscipline teams within organizations. Moving beyond a silo mentality & embracing the perspective that organizational problems are sytemic.

Challenge 5 : Achieving Professional Recognition Constructing a sound theory base & applying those theories to practice Continuing education & professional recognition of HRD practitioners Avoiding investing energy in the building of bureaucratic process of credentialing. Focus on values, ethics, the quality of practice & a set of competencies.

HRD is a relatively young field, it needs to be developed. The goal is to banish complacency & encourage dialogue. HRD’s human resources are impressive; they must now be focused.