Assets, defined as a ‘valuable thing’ by Oxford Dictionaries, are key success determinants of any organization. The perception of value in an organization, brand or product, merits customer adoption while supplementing organizational goals that could, in the long term, determine financial sustainability and success of a company.
The idea that human resources, employees across all levels of an organization, as the most important asset is increasingly staking its claim in the 21st century business landscape.
The business environment has continually, in the past and present, shaped the way in which countries are governed, how companies strategize and the way economies shift. Increasingly, developed countries are moving away from past economic structures such as manufacturing, into a knowledge-based system that encapsulates modern day advances in technology and science (Aubert, 2004).
The 21st Century Business Environment
Without a doubt, the Internet has been a main driver in structuring the modern day economy. Advances in Internet technology has contributed to important functional changes affecting companies across the world.
Internet interconnectivity has made the world smaller, allowing companies, small and large, quick knowledge access into understanding and entering different markets across the globe. This in turn, has spearheaded the ideology of an inter-networking, inter-connected world or in short, globalization.
Added to this, the open knowledge framework made available through the Internet has also contributed to a conducive, creative environment that has significantly, in a short span of time, enhanced technological breakthroughs.
With globalization and technology being key driving forces behind the 21st century business environment, a rising company success determinant has increasingly been brought to the fore, its competitive advantage (Aubert, 2004).
Never in time has a company’s competitive advantage been more critical. With the rise of globalization and technology came increased competition, increased demands for new products and services along with a shorter product lifespan and segregation of target consumers.
Sustainable Competitive Advantage
In order to tackle this trend, emphasis placed on traditional tangible assets such as financial and physical assets are gradually shifting towards intangible assets (Noe et al, 2010).
Drucker (1999) suggests that the most valuable asset of a 21st-century institution, whether business or nonbusiness, will be its knowledge workers and their productivity.
Such an emphasis is in direct correlation to knowledge-based economies, where intangible assets such human knowledge and skills are desirable and is seen as advantageous in the competitive environment (Brinkley, 2005).
However, it is important to note that as Jackson et al (2003) suggests, intangible resources, in the form of human capital, are most critical and critical competitive advantage due to it being difficult to imitate.
Human Capital as a Strategic Function
Understandably, businesses are now seeing human assets as capital, which are important strategic functions in achieving organizational goals and success.
Due to the change in nature of gaining a sustainable competitive advantage as previously discussed, fulfilling human resource needs is becoming a rising issue as the eclectic business environment demands businesses to continually evolve while meeting the needs of consumers across widening income gaps.
This has contributed to the demand for workers who are not only skilled and knowledgeable, but are also critical creative thinkers who are able to solve and provide quick, timely and effective solutions to gain competitive advantage for rising trends (Armstrong, 2006).
Inevitably, this had led to Talent wars where companies are recognizing the value of human capital, and that...