Why can human resources help enterprises win competitive advantage?

Human resource is not the source of enterprise's sustainable competitive advantage, but systematic human resource practice is the source of enterprise's sustainable competitive advantage. Systematic human resource practice is the source of enterprise's sustainable competitive advantage for many reasons.

How to win the competitive advantage of enterprises through systematic human resources practice

The hypothesis of systematic human resource practice can be divided into two types. The first assumption is to treat employees as costs. Enterprises that regard employees as costs will keep flexible allocation of human resources according to the supply and demand of the external labor market, so that the total cost of human resources of enterprises will be the lowest, and they will make full use of human resources and pay less attention to the development and training of employees' knowledge and skills. We regard employees as systematic human resources practice with cost, which is called systematic human resources practice based on cost. The second assumption is that employees are regarded as assets of the enterprise. Enterprises that regard employees as assets often cultivate a series of unique behaviors, attitudes and relationships of employees and provide extensive on-the-job training. While making full use of human resources, we should emphasize the development of human resources and provide employment security and career development opportunities.

(1) Recruitment screening. Systematic human resource practice based on cost usually adopts relatively simple recruitment and screening procedures, channels, methods and means. This can make recruitment and screening easier, with fewer procedures, save a lot of manpower and material resources, directly reduce and control the cost of recruitment and screening, and help to establish the advantage of relatively low cost.

(2) Training and education. Systematic human resource practice based on cost is to obtain the human resources needed by enterprises from the external market. They expect to directly recruit employees who meet the needs of enterprises and already have skills, such as recruiting candidates who have obtained technical qualification certificates and skills, so that enterprises do not need to invest in employee education and training. Therefore, such enterprises often have no formal training plan or only provide very little job-related simple skills training, trying to minimize the cost of human resources development such as education and training in order to establish and maintain the relative cost advantage of enterprises.

(3) Definition and scope of work. Systematic human resource practice based on cost has fixed work definition, clear work procedure and work scope definition. Employees are usually required to carry out efficient production within a clear scope of work according to the provisions of work regulations. This can reduce coordination work, improve employees' work proficiency and labor productivity, ensure orderly, stable and efficient production, and obtain stable output of products and services, thus achieving relative cost advantage.

Systematic human resource practice based on assets has relatively flexible work definition, loose work plan and wide work scope. Encourage employees to expand in related work fields besides performing their job responsibilities, encourage employees to participate in decision-making, continuously improve their work ability, give full play to their work enthusiasm and creativity, and pay attention to flexible work management in order to establish a distinct competitive advantage.

(4) Career development. Systematic human resources practice based on cost generally does not plan employees' career development, and there is almost no relevant career development guidance. It emphasizes less occupational mobility of employees (not advocating job rotation) and reduces the negative impact of occupational changes on production efficiency to meet the low-cost requirements of enterprises.

In contrast, asset-based systematic human resources practice usually provides employees with broad career development prospects, formal career development plans and related career development guidance, and provides paths, steps and directions for employees' career development.

(5) Employment security. Systematic human resource practice based on cost generally does not provide job security, and the view that employees are costs determines the cost minimization goal of enterprises. Therefore, enterprises will flexibly decide the number of employees according to production needs. When the economy is depressed, the market demand is shrinking, and enterprises reduce production, in order to achieve the optimal number of employees needed for optimal production and reduce the burden caused by surplus personnel to enterprises, employees are likely to be dismissed. With the economic boom, high market demand and increased production, will enterprises need more employees? Enterprises usually hire the required employees from the external labor market. Due to the lack of employment security, such enterprises can freely and flexibly hire or dismiss employees according to their needs, and can determine the best number of employees according to their output, thus reducing labor costs and winning the advantage of minimizing costs.

In contrast, the systematic human resource practice based on assets has a solid job security, and the enterprise clearly stated that it will continue to maintain the employment relationship. Although due to the cyclical change of economy and the fluctuation of market demand, enterprises may have surplus or shortage of human resources, and may lose some advantages of the production labor cost of enterprises, the practice of systematic human resources based on assets provides employment security and is conducive to meeting the needs of employees' sense of security and belonging. Thereby stimulating the enthusiasm and creativity of employees.

(6) Performance evaluation. Systematic human resource practice based on cost regards performance evaluation as a mechanism to control employees. Strict performance appraisal is only used to measure employees' work performance and efficiency, in order to better control employees' operations. This kind of performance evaluation pursues the standardization of employees' work, reduces or eliminates unnecessary actions or work, and seeks lower cost and higher efficiency in order to establish and maintain low-cost advantages. However, this kind of performance evaluation makes employees lose their flexibility and control over the work process.

In contrast, asset-based systematic human resources practice regards performance evaluation as a mechanism for employee development. Although this performance evaluation also emphasizes the measurement, evaluation and guidance of employees' performance, it also pays more attention to the development of employees' skills and knowledge.

(7) salary system. Systematic human resource practice based on cost provides employees with external market-oriented salary, and requires and supervises employees to complete the specified tasks and achievements. In this way, the cost can be kept relatively low, which is conducive to the establishment of cost advantages for enterprises.

Systematic human resource practice based on assets provides employees with salary based on job performance and personal ability development. This salary system encourages employees to increase their work flexibility and be willing to undertake other tasks outside of work. This salary system, which encourages employees to participate and cooperate widely across job boundaries, team boundaries and departmental boundaries, is conducive to stimulating employees' creativity and realizing the differentiated competitive advantage of enterprises.