The VRIO framework (Barney, 1995) is one of the most significant approaches that suggests ways to achieve sustainable competitive advantage through HR.
HR executives must address a primary question “How can HR aid in either decreasing costs or increasing revenues?” In today’s time when everyone is talking numbers; the HR department has to prove its worth and show that it creates value for the organizations. HR can help a firm achieve sustainable competitive advantage by creating value.
Example: FedEx, which are the market leaders in the courier business, believe people are the primary link in the value chain, and thus, value is created by focusing on employees first. HR practices should be related to employee attitudes which would be consequently related to customer satisfaction.
Only value alone cannot help the HR department to achieve sustainable competitive advantage for organizations. HR executives must examine how to develop and exploit rare characteristics of the firm’s human resources to gain competitive advantage. If the same characteristic of human resources is found in many competing firms, then that characteristic cannot be a source of competitive advantage for any one of them. In order to drive the strategic decisions, HR executives should being the ‘rare’ factor in the talent they recruit.
Example: Nordstrom is one of the most reputed brands in the retail sector. The recruiting process, compensation practices and culture at Nordstrom’s have helped the organization to maintain the highest sales per square foot of any retailer in the nation.
If the competitors in the business can easily imitate what you offer, then you are at loss! The HR executives must attempt to develop and nurture characteristics of the firm’s human resources that cannot easily be imitated by competitors. This essentially means leveraging on organization’s unique history or culture that helps in gaining competitive advantage. In...
Please join StudyMode to read the full document