MBAE 612: HUMAN RESOURCE MANAGEMENT

DATE: APRIL 8, 2019

INSTRUCTOR: PROF. DAN OFORI

QUESTION
HUMAN RESOURCE MANAGEMENT (HRM) IS IMPORTANT BECAUSE IT CAN BE A
SIGNIFICANT SOURCE OF COMPETITIVE ADVANTAGE. OUTLINE AND DISCUSS
FULLY, BOTH THE GENERAL FACTORS AFFECTING HRM PRACTICE, AS WELL AS
THE CONTEMPORARY (CURRENT) ISSUES THAT HR PRACTITIONERS IN GHANA
HAVE TO CONTEND WITH.

GROUP: ONE (1)

GROUP MEMBERS
NAMES I.D NUMBERS

MARILYN NAA DENSUA AMOO 10377381

SUSSANA OWUSUA KWARTENG 10706021

YVONNE SERWAAH BOATENG 10705878

RAPHAEL ADDAI FOFIE 10469618

RUTH OFORIWAAH AMPONSAH 10706090

 Human Resource Management (HRM) is the term increasingly used to refer to the
philosophy, policies, procedures, and practices related to the management of an organization’s
employees. HRM is particularly concerned with all the activities that contribute to successfully
attracting, developing, motivating, and maintaining a high-performing workforce that results in
organizational success. Human Resource Management (HRM) is also defined as the design of
formal systems in an organisation to ensure the effective and efficient use of human talent to
accomplish organizational goals (Onah, 2012).
The purpose of HRM programs is to increase organizational success and to develop the
potential of all members (Ukanwah & Ndaguba, n.d.). Human Resource Management also
emphasizes that HRM planning needs to be closely related to the organization’s strategic goals
and plans. There are a series of planned HRM activities that will ultimately influence the success
of an organization. Managers in all organizations recognize the importance of the core functions
of HRM in organizations, which include strategic human resource planning, recruitment and
selection of employees, training and development, performance appraisals, career development,
benefit and compensation administration, amongst others. Human resource management and other
functions must work together to achieve organizational success and compete locally and
internationally (Ukanwah & Ndaguba, n.d.).
As the business environment becomes more and more competitive, organizations are
realizing that their likelihood of sustained success is most dependent on learning to get the
maximum out of their employees (Kana, 2010) . Such a realization has had a significant impact on
the practice of Human Resources Management. Business forecasters predict that the role of
employees, managers, and HRM personnel are likely to see more changes in the decades ahead.
Thus, individuals entering the business environment today (and tomorrow) require an
understanding of the importance of human resources to organizational success (Barney, 1991).
The idea that human resources can serve as a competitive advantage is not new. (Barney,
1991) describes competitive advantage as occurring “when a firm is implementing a value creating
strategy not simultaneously being implemented by any current or potential competitors”. (Barney,
1991) goes ahead to state that, the resource-based model makes it clear that firm cannot expect to
buy or purchase sustained competitive advantage, in that the advantages, if they exist, can only be
found in the valuable, rare, imperfectly imitable and non-substitutable resources already present
in the firm. Thus, a competitive advantage enables the firm to create superior value for its

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customers and superior profits for itself (Porter, 1985). Therefore, if organizations are able to
effectively leverage and improve on their human resources, they have the potential of being their
industries leaders, if they effectively combine their human resources with other resources within
the organization.

In order for organizations to sustain competitive advantage, (Wright, et al., 1992) briefly
listed four criteria to sustain competitive advantage, using the human resources of an organisation.
He first stated that, in order for human resources to exist as a sustained competitive advantage,
they must provide value to the firm. This condition requires that there is a heterogeneous demand
for labour (that is, firms have jobs that require different types of skills) and a heterogeneous supply
of labour (that is, individuals differ in their skills and level of skills). Under this circumstance,
human resources can add value to a firm.

Secondly, a resource must be rare if it is to be a source of sustained competitive advantage.

(Wright, et al., 1992) noted that due to the normal distribution of ability, human resource with high
ability levels are, by definition rare. The goal of virtually all selection programmes is to ensure
that the organization is hiring only the highest ability individuals. The issues then are the validity
of the selection system and whether or not the organization is able to attract and retain those
applicants deemed to be of the highest ability. Thus a firm could theoretically obtain employees of
superior ability through a combination of valid selection programmes and attractive reward
systems.

Thirdly, in order for a resource to be considered a source of sustained competitive

advantage, human resources must be inimitable. (Wright, et al., 1992) use the concepts of unique
historical conditions, causal ambiguity, and social complexity to demonstrate the inimitability of
competitive advantages stemming from human resources. Unique historical condition refers to the
particular historical events that have shaped a firm’s practices, policies, and culture. Causal
ambiguity describes the situation where the causal source of the competitive advantage is not easily
identified. Social complexity recognizes that in many situations example, in team production,
competitive advantage stems from unique social relationships that cannot be duplicated. Thus,
(Wright, et al., 1992) argue that due to the fact that many competitive advantages that might be
based in a firm’s human resources are characterized by unique historical conditions, causal

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ambiguity, and social complexity, it is highly unlikely that well developed human resources could
be easily duplicated.
Finally, a resource must not have substitute if it is to be considered a sustained competitive
advantage. This raises the question of whether or not other firms’ resources such as technology
have the potential for offsetting any competitive advantage attributable to human resource. In order
to address this issue, it is important to note that human resources are one of the few firm resources
that have the potential to not become obsolete, and be transferable across a variety of technologies,
products, and markets. Although the rapid pace of technological change has resulted in new
technologies that make former technical skills obsolete, many human capital resources are quite
generalizable. Thus, if a firm has obtained individual with high levels of cognitive ability, then
constant training in the state-of-the-art technological knowledge ensure that the resource does not
become obsolete. Therefore, it might be possible to substitute other resources in the short term,
but it is highly unlikely that such substitutions could result in sustained competitive advantage.
This stems from the fact that to the extent that the resource offsetting the advantages of human
resources is not rare, inimitable, or non-substitutable, then it will be imitated and human resources
will once again constitute a competitive advantage.
Recognizing that Human Resource could give an organization a competitive edge if
utilized effectively, just like any other practice, it encounters some internal and external challenges
that may hinder it from functioning effectively. Some of these factors may be global, or even more
localized.
One of the key factors affecting HRM practice in general is availability of labour pool.
Perhaps the main function of human resources departments is to maintain adequate staffing levels
through workforce planning. One external factor that influences the ability to recruit qualified
candidates is the labor market availability, which is affected by unemployment rates, number of
qualified workers in the reasonable commuting distance and, in some cases, the availability of
applicants with specialized skills such as nursing or technology (Joseph, 2018). An organization
might have difficulty identifying and attracting suitable candidates, especially if the same skill sets
are in demand throughout the industry. The company's geographic location may also be a factor if
the labor pool is not large enough in the immediate area. Then, HR managers may need to focus
their recruiting efforts outside the region and pay relocation packages as appropriate to encourage
qualified staff to take up a position (Joseph, 2018).

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 Also, government regulations within the jurisdiction in which the organisation exists could
be a factor that may hinder the effective utilization of HRM practices in general. National and
workplace laws and regulations are external factors affecting human resource management that
require human resource managers to ensure the company is in compliance. Regulations can
influence how a company goes about hiring, training, compensating and even disciplining its
workers, and a misstep could result in sanctions against the company or even lawsuits filed by
employees, prospective employees, vendors and customers (Joseph, 2018). An example is the
Ghanaians with Disabilities Act, which in many cases creates the need for companies to modify
their office configurations or provide other reasonable accommodations for individuals with
disabilities.
In spite of the general factors that HRM practices face globally, in our very own Ghanaian
setting, HR Managers tend to face some peculiar issues which they have to contend with in
implementing HRM practices. One major issue HR practitioners have to cope with is the
introduction of new technology in organisations. The main problem is the willingness for the HR
department and company management to use technology to aid in certain key human resources
functions. For example, companies that make greater use of tools such as online benefits
management, where employees can make changes to their benefit plans on their own, provide
human resources workers with more time to focus on other areas like recruiting or training and
employee development (Adler, 1998). This can free up a considerable amount of time and
resources across the organization. Also, there is the effect of technology on HRM practices
globally where there is the use of electronic communication methods, open door policy (can
communicate with anyone in the organization), global monitoring and the use of virtual offices
(the firm has to central place). The major effect of the introduction of new technology can result
in downsizing.
Culture is defined as the set of important assumptions, which are often unstated, that
members of a community share. Taking into account that, culture is one of the most important
factors influencing Human Resource Management (HRM) globally; culture often determines laws,
education, and economic systems affecting HRM in the global markets. Culture also determines
the effectiveness of other various HRM practices. Culture has an impact on approaches to
managing. It often differs on how employees expect leaders to lead, how decisions are handled
within the hierarchy and what motivates individuals. Culture may influence appropriateness of

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HRM practices. For example, culture can influence compensation systems, communication and
coordination process. Cultural diversity programmes foster understanding of other cultures to
better communicate with them (Bernardin, 2003).
Another point worth mentioning is education, in terms of human capital. Human capital
refers to the productive capabilities of individuals, that is, the knowledge, skills and experience
that have economic value. Countries differ in their levels of human capital. A country’s human
capital is determined by a number of variables, primarily, educational opportunity. Countries with
low human capital attract facilities that require low skills and low-wage levels. Countries with high
human capital are attractive sites for direct foreign investment that creates high-skill jobs. A
company’s potential for finding and maintaining qualified workforce is therefore a critical element
of my decision to expand globally (Joseph, 2018).
Also, political or legal systems could contribute as a barrier to Human Resource
functioning effectively. Political and legal systems dictate requirements of certain HRM practices
such as training, compensation, hiring and layoffs (Bernardin, 2003). Legal system is an outgrowth
of the culture, reflecting societal norms. For example what constitute as sexual harassment differ
from country to country both culturally and legally. There is also influence on work safety
practices, sex discrimination policies and physically handicapped quota policies. In addition,
national regulations control the process of labor management negotiations. A typical example is
the Ghana Labour Act 2003 Part IV, which talks of General Conditions of Employment, and Sub-
Part II which emphasizes on hours of work, pay methods, overtime and hiring (Ghana Labour Act,
2003).
From the above discussion, it is evident that human resources still remain the most
important resource in achieving competitive advantage, and no organisation can totally wipe out
its human resource. However, in employing Human Resource Management functions there are
some challenges HR managers face both globally and locally, that can pose as a threat to the
organization if not managed effectively. In view of this, organisations are advised to adapt best
practices in recruitment and selection, HR planning, training and development, reward
administration, safe and healthy work life and ICT into their HR policies in order to develop a
workforce that can compete favorably in the global business environment.

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References
Adler, R. P., 1998. Jobs, Technology and Employability: Redefining the Social Contract. Queenstown:
Aspen Institute.

Barney, J., 1991. Firm Resources and Sustained Competitive Advantage. Journal of Management,
Volume 17, pp. 99-120.

Bernardin, H. J., 2003. Human Resources Management: An Experential Approach. New York: MacGraw-
Hill Incorporation.

Ghana Labour Act, 2003. Ghana Labour Act 2003. Accra: Govenment of Ghana.

Joseph, C., 2018. Internal and External Factors Affecting Human Resources. 21 11.

Kana, M. A., 2010. From Brain Drain to Brain Circulation. Journal of Medicine, 4(1).

Onah, F. O., 2012. Engaging the challenges of human resources management in public organizations in
Nigeria. Nsukka, s.n.

Porter, M., 1985. Competitive Advantage. New York: Irvin McGraw-Hill.

Ukanwah, H. C. & Ndaguba, A. E., n.d. The Place of Human Resource Management in Achieving
Competitive Advantage in Nigerian Public Organizations uner the Global Economy. Africa’s Public Service
Delivery and Performance Review Journal , Volume 3, p. 196.

Wright, P., McMahan, G. C. & Mcwilliams, A., 1992. Human Resources and Sustained Competitive
Advantage: A resource-based perspective. International Journal of Human Resource Management, 1
May, Volume 5, pp. 301-326.

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