Human Resource Management – The Value Of People

The Value of People

Managers & economists traditionally have seen HRM as a necessary expense, rather than a source of value to their organization. Economic value is usually associated with capital – equipment, technology & facilities. However, “in the changing corporate environment, more & more organizations are awakening to the importance of human capital & next competitive advantage.

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The concept of HRM implies that employees are resources of employers, as a type of resource, human capital means the employees of the organization, described in terms of their training experience, judgment, intelligence, relationships & insights – the employee characteristics that can add economic value to the organization.

HRM is critical to the success of an organization, because human capital has certain qualities that make it valuable. In terms of business strategy, an organization can succeed if it has a sustainable competitive advantage. Therefore, we can conclude that organizations need resources that will give them such an advantage. Human resources have these necessary qualities:-

  1. Human resources are valuable. High quality employees provide a needed service as they perform many critical functions.
  2. Human resources are rare in the sense that a person with high levels of the needed skills & knowledge is not common. An organization might spend months looking for a talented & experienced manager or technician.
  3. Human resources cannot be imitated. To imitate human resources at a high performing competitor, you would have to figure out which employees are providing advantage & how. Then you would have to recruit people who can do precisely the same thing & set up the systems that enable those people to imitate your competitor.
  4. Human resources have no good substitutes. When people are well trained & highly motivated, they learn, develop their abilities, and care about customers. It is difficult to imagine another resource that can match committed & talented employees.

These qualities imply that human resources have economic potential. An organization realizes this potential through its approach to human capital management that is how it practices human resource management.

Effective management of human resources can form the foundation of a high performance work systems – an organization in which technology, organizational structure, people & processes, all work together to give an organization an advantage in the competitive environment. Maintaining a high performance work system might include development of training programs, recruitment of people with new skill sets, & establishment of rewards for such behaviors as team work, flexibility & learning.


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