Why does effective management of human resources provide a firm with competitive advantage?

HR jobs are often thankless roles in which the HR manager must balance the needs of the organization with the needs of the employees. This hard work often goes unappreciated by both sides!

HR teams have a lot of responsibilities that can directly impact how well a company can compete against others. Let’s take a look at some examples.

How HR Can Be Used as a Competitive Advantage

Here are some of the many ways the HR team can help create and maintain a competitive advantage for the organization:

• HR can use data to analyze turnover rates and determine where problems may lie, thus allowing the company to more quickly find issues and get them resolved. For example, if the data show that most turnover is from new hires, the team can focus on what problems may be the cause of that. Or if the data show that one group has a higher turnover rate than the rest of the business, focus can be turned there.
• HR can help managers source the right talent to get the skills the company needs to grow and be competitive. HR expertise can allow the organization to know where to look for specialized talent when needed. (If your organization doesn’t already assess which talent streams are best utilized for different types of candidates, you can start now!)
• HR can provide insight into the going market rates for talent and what it might take to get high-quality hires on board. HR can review the competitive talent landscape and determine what compensation strategy will be best aligned with company goals.
• HR can give insights into how other organizations within your industry are structured—there may be information that can be useful in determining which positions the company still needs to create or fill to become or remain competitive.
• HR can use data to show how the skill sets of the employees are evolving over time, and to show business leaders where skills gaps may exist so those gaps can be addressed proactively.
• HR can also design employee development pathways that take into account the strategic and long-term needs of the organization, ensuring that key employees get the right training before it must be utilized. This impacts retention and improves the skill sets for the organization as a whole, all while ensuring the organization is addressing big-picture competitive issues proactively.
• HR can use data to find potential employee issues before they become problematic. By tracking employee engagement scores over time, for example, HR can discover when engagement levels are waning—hopefully before they have a significant impact on morale and turnover—so the organization can take action sooner rather than later.
• HR can put together succession plans that take into account the organization’s strategic goals. This can allow the organization to remain competitive even when there is turnover in key roles. (This is a critical time when a less organized company may falter.)
• HR can analyze which employees are high performers and alert the management about who should be fast-tracked for promotions and new projects.
• HR guidance on legal issues can keep the organization out of costly legal problems. This not only saves the company money but it can also save the company from major setbacks.

Does your organization utilize HR to the fullest potential? Does HR have a seat at the table when it comes to making strategic internal moves?