Human Resource Management – The resource-based approach

The resource-based approach

The fundamental aim of resource-based HR strategy is to develop strategic capability leading to achieve strategic fit between resources and opportunities and obtaining added value from the effective allocation of resources. A resource-based approach will consider methods of increasing the organization's strategic capability by the development of managers and other staff who can think and plan strategically and also understand the key strategic issues.

Resource-based theory emphasizes that investment made by the firm in people adds to their value in the firm. The long run goal will be to ‘create firms which are more intelligent and flexible than their competitors’. This strategy is therefore concerned with the enhancement of the human or intellectual capital of the organization. ‘Knowledge has become a direct competitive advantage for companies selling ideas and relationships. The challenge to organizations is to ensure that they have the capability to find, assimilate, compensate and retain the talented individuals they need to meet their strategic objectives.

When the external environment is in a state of flux, the firm's own resources and capabilities may be on a much more stable basis on which to define its identity. Hence, a definition of a business in terms of what it is capable of doing may offer a more durable basis for strategy than a definition based upon the needs (eg markets) which the business seeks to satisfy.

Unique talents among employees, including superior performance, productivity, flexibility, innovation, adaptability and the ability to deliver high levels of personal customer service, are ways in which people provide critical ingredients in developing an organization's competitive position. People also provide the key to managing the pivotal interdependencies across functional activities and the important external relationships to deliver delight to customers and clients.

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