Developing HR as a Core
Competency: An Approach for Gaining Competitive Advantage
Vaishno Devi University, Katra, J&K
Vaishno Devi University, Katra, J&K
Dr. Jyoti Sharma
Faculty, College of Management,
Shri Mata Vaishno Devi University, Katra.
changes are remodelling the approach with which organizations create value and
conduct business. These changes have initialised the urgency of creating a
scenario where the organizations will be in a position to create and sustain
difference in their capabilities and functions over and above their
competitors. Consequence of this ongoing challenge is particularly compelling
HR function to step up their capabilities for adding value so that the only
non-imitable resource of the organizations, namely, capabilities of employees
can be identified and utilized as a source of differentiator. Though till now
the process of inculcating a set of competencies by HR function has been
initialized but has not been fully implemented due to lack of awareness on the
part of the organisation about the benefits derived from such competencies. This
necessitates the need for identification of the set of competencies required for
HR function and inducting them into the practices and policies of HR. The
present study, therefore, is an attempt to explore different kinds of
competencies which will craft HR not only as a source of competitive advantage
for the organizations but also as a core competent component of the
organization. The study also suggests that HR should take a leading role in
implementing competencies suitable for the business to attain its ultimate
Core Competency, Human Resources, Competitive Advantage, Key Result Areas
Classifications: O15, C120
Environmental changes are
remodelling the approach with which organizations create value and conduct
business. These changes have initialised the urgency of creating a scenario
where the organizations will be in a position to create and sustain difference
in their capabilities and functions over and above their competitors. This has
also led organizations to realise that human resources are critical to
organizational success and are the key source for sustained competitive
advantage as these are non-imitable resources of the organizations which cannot
be copied (Wright et al. 2001). Consequently, organizations
now-a-days are working with HR function for identifying and implementing certain
practices which will differentiate it from its competitors at market place.
These distinctive practices are the competencies which will provide
sustained competitive advantage and can rekindle HR as core competency of the
organization (Prahalad and Hamel, 1990). The present study is, therefore, an
attempt to examine different HR competencies practiced by the organisations which
may lead to the competitive advantage. Based upon the benefits derived by
various organisations from different competencies adopted by HR, this study
summarises course of action which will assist HR to rekindle itself as core
competency of the organization by providing competitive advantage to the
The present study is based on the
review of existing studies from a variety of fields conducted to know the different
kinds of competencies implemented by various organisations. By bringing
together different theories and identifying their implementation in the
corporate sector, this study is trying to make an attempt in suggesting how different
kinds of competencies can craft HR not only as a source of competitive
advantage for the organizations but also as a core competent component of the
organization. Accordingly, contributions of different researchers in the field of
research where HR has been portrayed in a leading role in implementing
competencies for attainment of ultimate objectives of organisations were taken without
any set date range in order to ensure the most comprehensive analysis of those competencies
of organisation which has given them an edge as compared to their counterparts.
of Core Competency
concept of core competency was first brought out by Selznick (1957) to depict
the corporate advantage through various value activities by using distinctive
competency. Prahalad and Hamel (1990) defined Core Competency as a "key
ability or strength that an organization has acquired and differentiates it
from others, gives it competitive advantage, while contributing to its
long-term success." They further explained that core competency can be in
any form including technical know-how, a reliable process or close relationship
with customers etc. The idea underline is core competency can be anything which
is non- imitable and provides competitive advantage to an organization over its
competitors. Prahalad and Hamel (1990) indicated the presence of strong linkage
between Core Competency and corporate competitive advantage and stated that
core competencies are linked with competitiveness. Besides, Chen and Chang
(2011) indicated that Core Competencies are more comprehensive than KSAs. To
quote an example, they further explained that core competencies can be used to
assess and train employees for future needs, while KSAs focus typically on what
is needed to do the job today. Moreover, Competencies are build upon the same
KSAs but are more inclusive in the sense that they also include traits,
motives, and behaviours (Hayes, 1979; Hartle, 1995). Additionally, key
knowledge, skills and abilities can be clustered to form a set of core
competencies that determine superior, not just basic, performance (United
States Office of Personnel Management, 1999). Thus, core competencies can then
be linked to a set of behaviours that answer the question, “How do we know good
performance when we see it?” which can serve as the foundation to hire, train
and develop employees and ultimately to set their pay. Moreover, Lahti (1999)
explained that the concept of core competency is derived from set of competencies
that highlights a close linkage to the strategic thinking, which though
originated from individual level yet can be easily linked to organizational
level. This linkage combined the concept of core competency and resource-base
essence with strategic thinking and implementation process (Barney and Wright,
1998; Mueller, 1996). This implies that only the resources (hard competencies)
and capabilities transformed (soft competencies) into core competency can
become competitive advantage (De Saa´-Pe´rez and Garcı´a-Falco´n, 2002).
In this context, many organizations such as Pepsi, Walmart etc. are utilizing
their resources as core competency whereas organizations like Microsoft, Ernst
and Young, Polaroid etc. have transformed capabilities as their core
competency. The core competency of Pepsi is mass production and distribution of
bottled drinks which enabled its presence in all the remote areas of India.
Similarly, Wal-Mart is also utilizing its resources and has massive “real time”
information system which distinguishes it from its competitors. There are
organizations, namely, Microsoft, Ernst and Young and Polarid which are
utilizing their capabilities for bringing core competencies. Microsoft’s
capability of designing user friendly software products provides them
competitive advantage in software industry. Similarly, Ernst and Young’s core
competency is the capability to perform audit functions for Fortune 500
Companies and Polarid has core competency of manufacturing self-developing
as Core Competency
point worth mentioning here is that when a firm uses a new technology, it can
create a short run competitive advantage or first mover advantage (Barney,
1991). But is not sustainable because competitors can imitate or purchase the
sources of the advantage. (Amit and Schoemaker, 1993; Barney, 1991; Collis and
Montgomery, 1995). But human resources are the most non-imitable resource of an
organization that are rare and cannot be copied by the competitors (Wright et al.
1994). In addition to it, HR is the only true differentiator between the two
similar organizations in their ability to attract, develop and retain their
high performing workforce (Bandyopadhyay, 2010). Hence, HR department of the
organisation should try to leverage the immense capabilities of company’s HR in
order to convert it into Core competency. The first and foremost step in this
direction is to identify and then to adopt a set of policies and practices of
core competency components which will preserve this valuable asset (Srivastava
2005; Bogner et al. 1999; Javidan 1998 and Bani-Hani and AL-Hawary 2009).
of Core Competency
and academicians have identified set of competencies required by HR in order to
become effective in their roles and ultimately leading to core competency.
Accordingly, functional competencies, behavioural competencies, Generic
Competencies, Generic technical competencies and functional technical HR
Comptencies have been identified (Rao. 1990, 1992; Ramnarayana, 1990; Gupta,
1990, Pareek, 1990; Dixit and Rao, 1992; Dixit and Dixit, 1992). Most of the
discussions and supporting research till date have focused on widely
generalisable core HR competencies. In this direction, HR Compass (2009)
specified some competencies which can be adopted by the organizations in India.
A closer look at these competencies will illustrate that without a combination
of professional qualification, relevant experience and training, it will be
impossible to master those competencies. The agency further states that Core Competencies
can be grouped as:
Behavioural HR Competencies includes service orientation, personal
credibility, execution excellence
- Generic behavioural
HR Competencies includes strategic thinking and alignment, change orientation
and networking management.
- Generic Technical
Competencies includes business knowledge and financial perspective.
Technical HR Competencies include HR planning and staffing, performance
management, training and development, talent management, compensation and
benefit, managing culture, design and change, labour laws, building HR
strategy and international management.
Further an attempt to cluster HR
competencies has been initiated by Bandyopadhyay (2010). He categorised HR
competencies into three broad segments:
- Role Specific HR
Competencies: These are the personal competencies required to perform
critical HR roles like interacting effectively with management and
employees, solve broad organizational problems and represent strategic
importance of HR to the success of organizations.
- Business Specific
HR Competencies: These are the competencies which are required to
understand the overall business of the organization. These are related to
common business management practices. Until HR professionals acquire these
competencies, they cannot design and deliver HR interventions that support
- Industry Specific
HR Competencies: These are the advance set of competencies which are
industry specific and includes business knowledge and financial
Again, Brockbank and Ulrich (2004)
try to summarise different competencies into four major elements which are
essential for every HR department. The elements consist of personal
credibility, business knowledge, HR delivery and HR technology.
I: HR Competencies (Brockbank and Ulrich Model)
Boselie and Paauwe (2004).
research on HR competencies clearly point out important competencies for HR
department. These competencies are relevant regardless of business size,
industry, job titles, hierarchical level, or functional responsibilities but
not all the competencies can yield same results in different types of
organization (Brockbank and Ulrich, 2003; Stemberger, 2002; and Walker and
Reif, 1999). They further mentioned that the key for HR department is to
understand the importance of the strategic nature of their job and to tie the
HR system clearly to the organizational strategy. Further, HR needs to identify
and adopt the set of competencies relevant for their organization which should be
aligned with Organizational objective and can craft HR as Core Competency. A
closer look at the impact of HR competencies on the organizations adopting those
competencies will justify the need and importance of crafting HR as core
of crafting HR as Core Competency
Competencies can be used to “raise the bar” of employee performance. In human
resources development, competencies are used to identify and close the gaps in
individuals’ capabilities. In performance management, competencies and results
are appraised to connect how a job was done to the results achieved.
Competencies will also help HR to communicate desired behaviours, control costs
and increase customer satisfaction (employee satisfaction). A closer look at
the benefits derived by various organizations will further strengthen the need
of crafting HR as Core competency of the organization by providing competitive
this direction, it is important to quote an initiative that has been taken by
HPCL. It has an exclusive competency management team at its head quarter and
one exclusive member at each of its different zones. A total of 10 members’
team is working on a dedicated portal “e-care” for the benefit of all employees.
There employees can upload their individual development plans referred to the
behavioural and technical competency framework. This has enabled the
organization to control attrition rate by considering employees’ vision of
their growth in the organization (Agarwal, 2010). Similarly, RPG Group follows
the philosophy of nurturing leadership pipeline through developing internal
talent which act as a glue to the diverse set of business. One of the
significant interventions is the constitution of HR- Business Review Board
comprising HR heads of all the companies together with president HR. The board
focuses on HR competency framework and design the “role competency requirement
matrix” for each role. The procedure aims at Development Action Plans (DAP)
which assist HR in managing internal talent pool and preparing them to take
higher responsibilities in future through succession planning (Rao, 2010).
Likewise, 3M has adopted leadership competency framework. The process started
with creation of global leadership competency framework that would describe and
drive the type of leadership required by the company. In the face of complex
competitive pressures, 3M keep their leadership model up-to date to guide
targeted leadership development across its diverse businesses and a strong
succession planning process to secure future corporate leadership. The framework
identifies competency areas and behavioural anchors which facilitates
leadership assessment and development along with executive succession planning
process. This has enabled HR to retain competent manpower and preparing them
for taking higher level of responsibilities thereby controlling turnover (http://highered.mcgraw-hill.com/sites/dl/free/0073530476/782078/Chapter_One.pdf).
Similarly, Honeywell India engages in competency assessment called skill
assessment only for the shop floor employees for technical competency. Their
process of skill development takes place on the basis of identified competency
gaps (Rao, 2010). Another effort has been made by General Motors (GM) through
“mysocrates”, an E-HR portal to save time, distribution and printing cost thereby
enhancing speedy decision making process. The idea behind mysocrates is to
create an employee friendly one-stop shop for providing them support for taking
decisions, accessing information about rules, regulations, policies and
ATandT is also leveraging upon Workforce Career Management initiative as a
source of competitive advantage. This initiative enabled HR to develop and
implement training curriculum in order to enhance employees to handle diverse
and additional responsibilities. This has facilitated the organization to
utilize its human resources for diverse projects efficiently (Higgins, 2006).
One of the HR core competency of Oracle is to provide continuous development
opportunities to its manpower by creating new kinds of job assignments, namely,
cross functional job postings, job rotation through HR specialties , special
project that require new skills which ultimately reduces cost, provides
holistic view about the organization. This has also encouraged internal harmony
among employees and reduces conflicts with in the organization (Yeung, 1996). A
significant step has also been taken by LG Electronics to adopt certain
policies and practices for making LG a better place to work. It has a
comprehensive online recruitment management system which enables the organizations
for screening candidates. The system also provides an overall view about the
mindset and psychology of the candidate through a series of psychometric tests
which helps in finding out the fit between candidate’s mindset and
organizational requirements about candidate’s mind set. It also includes
negative interview to access the capability of candidate to perform in case of
high stress situation. LG has ambassador programme where a dedicated mentor
goes to the worker’ house and talks to his family and discuss their problems
etc. and tries to make their situation better. LG has formed some informal
clubs for de-stressing employees and every employee has to be a part of one or
the other informal club. All this has enhanced employee productivity, reduced
absenteeism and turnover, control cost and reduced conflict within the
organization. Infact, LG has been benchmarked in terms of lowest manpower cost
respond to the increased demands, Human Resource must define, delineate,
assess, and improve their performance. Wanting to contribute to the business is
not enough they need to know how to contribute. A number of HR professionals
are busy benchmarking with other companies to find best practices which they
can replicate in their organisation. While it is good to have an external
orientation but one should not blindly adopt the successful practices. The need
is to consider the excellence of the practice with respect to their own context
and adapt it with suitable modifications. It has been observed, after
reviewing different competencies adopted by the organizations, that HR
department which holds certain core competencies have a competitive edge over
those who don’t and can give the business a competitive advantage in their
industry. Organizations in India have started taking steps in this direction by
identifying and then adopting certain competencies with respect to one or more
policies and practices. Some of them includes, Leadership competency adopted by
HPCL, RPG and 3M; comprehensive online recruitment initiative taken by LG etc.
Those organizations that have started executing the process of identifying and
adopting different competencies are enjoying the benefits of having competitive
advantage over its competitors though they have not inculcated competencies in
all the HR policies and practices. The point here worth mentioning is that if organisations
are achieving better results like controlled cost, less attrition rate by just
inculcating one or two such practices then surely they can achieve competitive
advantage if they adopt more such practices. These results will justify HR
relevance and presence and ultimately provide competitive advantage to the
organization. Therefore, HR should start with defining their core competencies
to obtain competitive advantage. For example, recruitment is not a core
competency but recruiting efficiently and in a more effective way than the
competitors can be a core competency. If HR draws attention to this point, they
can both define set of core competencies and improve their current
competencies. In order to create a competency-led strategy, it is firstly
expected from HR to define their core competences. Secondly, it is expected
from them to find out whether their skills are truly superior and sustainable, thirdly,
how much value that core competency will add to the organization and lastly, is
the core competency integral to their value proposition (Ipcioglu and Uysal,
1997). Though some efforts have been made by various organizations to
differentiate the critical HR competencies needed in their own context (e.g.,
Lawler, 2003), yet there is a need for more research on part of the
organizations. The organizations, thus, focus on identifying the competencies
for all the HR activities by recognising various contextual factors likely to
influence the relative importance of the various competencies and the ease with
which they can be applied (Roehling et al. 2005). The reality is that
organizations are starting from different positions and will need to structure
their HR functions in different ways. However, there is no “one size fits all”
solution. According to the California Strategic Human Resource Partnership (2000),
a consortium of senior HR business executives, the competencies needed by
senior HR generalists are very different, for example, from those required of
HR specialists at other parts of the organization structure. The Partnership
commissioned a study and identified that the overall list of competencies is
fairly consistent among companies from various industries, although different
competencies are emphasized in different HR roles. Researchers support the
value of developing competencies that are both generic (applicable to companies
in different industries) and specific (i.e., highlighting the competency
differences in different HR roles and structural levels) which will facilitate
HR in emerging as core competent component of the organization. Once the major
components are in place, organizations will be able to build structure-based
competencies to meet the requirements of the organization. The organizations in
India need to focus on assessment of internal factors, such as organizational
culture and climate, organizational objectives and strategies, size of
business, hierarchical level, cost involved, resources required and functional
responsibilities, as well as on external factors such as political, legal,
social and technological environment. All these factors affect the decision of
choosing the competencies directly or indirectly (Brockbank and Ulrich, 2003)
as a fit between these factors and the kind of competencies adopted can only
yield fruitful results. These competencies are beneficial not only at
organizational but also at individual level. At organizational level, the
benefits includes reduced cost, high retention rate, low turnover, high
productivity and at individual level, benefits includes increased knowledge
through training, overall development of employees, etc. Hence, HR in the
Organizations should start identifying and adopt competencies for all the HR
practices after considering internal and external factors. It is also important
that the competencies applied by HR should be consistently applied within the
organizations. Moreover, continuous improvement is also an important aspect in
order to maintain that core competency. This will not only benefit the individual
and organization but also craft HR as core competency of the organization and
finally, justify its present of being as creator and source of competitive
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