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  • Essay / The Importance of Human Resource Management - 1956

    , 1991). Human capital, as a resource in the form of labor, adds sustainable competitive advantage based on these conditions, in the following ways: becomes valuable to an organization when the demand and supply of labor are divergent; that is, different jobs require different skill sets, which occurs simultaneously with a heterogeneous labor supply. The variance in required and provided capabilities and skills indicates that human capital is capable of creating value for an organization (Wright, McMahan, & McWilliams, 1994). High-quality human capital resources are scarce, as evidenced by the “war for talent” (Frame, 2013), whereby highly skilled employees are the currency of a knowledge economy and cognitive abilities are seen as the one of the best indicators of individual professional performance. (Schmidt, 2002). The scarcity of human capital is therefore demonstrated within human capital by the nature of its presence in one organization, at the expense of another. For a human capital resource to be imitated, it must first be absolutely identified as the specific element of the resource pool that provides the competitive advantage and, therefore, replicated exactly in terms of the resource pool and element itself. Dierickx and Cool (1989) argue that skills and organizational codes are aggregated through organizational culture, as well as on-the-job learning and development; these tacitly accumulated skills are distinctive of the organization, making them less replicable to external sources due to their causal ambiguity, social complexity, and historical timing. The inability to determine and understand exactly the source is causal ambiguity, whereas social complexity refers to the network of relationships created between individuals in organizations, providing unique work.