In general, companies and organisations are driven by a series of elements which, in economics, are called Factors of Production. These factors vary in type such as raw materials, energy resources, machinery, human resources, etc.

Each factor is important to a certain degree according to the activity and the technology used. However, there is one essential factor that every organisation or business needs: Human Resources. All businesses need human relations to function properly whether it involves employees, technicians, managing leaders, etc.

But, what does the term human resources actually mean?

Some of the first definitions considered human resources to be an accumulation of employee knowledge and skills. Later on, this idea was expanded to include definitions including the vast variety of employee attributes and how this effect employee performance within the workplace.

One of the most comprehensive definitions of human resources is offered by Barney and Clark (2007) which defines human resources as the knowledge, experiences, skills and employee commitment to the company and to the rest of their co-workers, subordinates or superiors. This definition also includes relationships with groups external to the organisation such as clients, suppliers, etc.

This definition not only involves employee skills and knowledge but also social relationships and their attitudes and how they feel about the organisation.

Why are human resources considered a competitive advantage for an organisation?

Nowadays, the business sector is experiencing an increase in competition. This means that the survival of any organisation depends on whether or not they possess an advantage over their competition. These advantages can be external to the organisation such as new technology, but in order for them to work to the company’s advantage they will need to be utilised effectively.

Therefore, the difference between businesses are marked more by intangible factors such as employee knowledge and skills as well as innovative approaches. Tangible factors like technology or goods can be acquired by anyone so they do not actually add any competitive advantage.

This undoubtedly means that human resources are one of the most valuable assets a company can possess. In order to manage this area effectively, many businesses have developed a human resources department in charge of managing the employee personnel. This area aims to acquire, retain and/or develop these resources.

Human resources management assumes the responsibility of carrying out human resources planning, recruiting, and selection of personnel to fill each job post as well as assess the personnel and the tasks they complete. They are also in charge of the maintenance of human resources and its development, in order to later assess and evaluate it.

The human resources of any organisation or business can encompass three different meanings:


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