Why might employees be crucial to competitive success Essay

Why might employees be crucial to competitive success - Essay Example In general, competitive success of an organization has an increasing impact on individuals and the community. The problem under analysis has been widely discussed in the literature. Such gurus of management as M. Porter (1985), Tomer (1987), Storey (1989), Arthur (1994), Huselid (1995), Pfeffer (1996), Huselid and Becker (1996), Pickus and Spratt (1 997), Ichniowski, et al (1997), Patterson et al (1998), Guest (2000) etc. analysed the impact of employees performance on competitive success of a firm and interdependence between HR strategies and successful business performance. They explain why employees are crucial to competitive success and what strategies a company should implement to achieve competitive success. M. Porter, in his book "Competitive Advantage" singles out the main criteria for success. Cost leadership, high quality and innovation are the main elements of competitive success (Porter, 1985). Cost leadership advantage is based on a firm's position as the industry's low-cost producer, in broadly defined markets or across a wide mix of products. For a company managing for high quality means more than just fine-tuning production controls. High quality is used as a weapon and companies are wanting to produce products that meet customers requirement. The idea is to get products to a market with fewer defects. A high degree of rivalry usually compromises the potential profitability of an industry and typically results in innovation which stimulates consumer demand for the products of the industry. Without an adequate supply of staff and employees commitment to work, it will be difficult to achieve sustainable competitive advantage. M. Armstrong agrees with Porter saying that: "unique talents among employees, including superior performance, productivity, flexibility, innovation and the ability to deliver high levels of personal customer service, are ways in which people provide a critical ingredient in developing an organization's competitive position". (Armstrong, 2001, p. 110) Decision about the future strategy of the organization are made by people and strategies are implemented by people. The success or failure of a current strategy will depend not only on decisions made in the past but also on how those decisions are being implemented now by people employed by the organization. It is therefore important to questions about who, how and why people are doing what they are doing and what they should do to achieve competitive success. Employees' skills, knowledge, and abilities are among the most distinctive and renewable resources on which a company can draw, their strategic management is more important than ever. Increasingly, organizations are recognized that their success depends on what people know, that is, their knowledge and skills. According to this Porter's theory (1985) any organization can gain competitive advantage by developing resources, which add unique value, which can't be adopted by another company. Human capital adds value to the company and it cannot be imitated. Employees are crucial for competitive success because human capital becomes" a philosophy that appeals to managements who are striving to increase competitive advantage and appreciate that to do this they must invest in human resources as well