In organizational analysis, often, human resources are not given adequate importance because of the perception that these resources do not contribute to organizational success. This perception was valid in pre-liberalized era, when most of the organizations were operating in protected markets. However, post-liberalization, the competitive scenario has changed from sellers’ market to buyers’ market in which organizations are using human resources as a means for developing competitive advantage. In this context, Ghoshal has observed as follows:
A growing number of managers in India and abroad have begun to recognize that the fundamental basis of competition has begun to change. The scarce resource, and the primary source of competitive advantage, is no longer physical or financial capital, but human capital. As large asset based companies like TISCO see the market value of pygmies like Infosys soar past theirs, the notion of competing through people has been transformed from a fashionable and politically correct statement to a serious cause for concern
Similar view has been expressed by leading organizations of the country. For example, Y.C. Deveshwar, Chairman of ITC Limited has viewed that “the secret of creating a winning corporation lies in the appreciation of potential value of human capital and in the ability of the distributed leadership within the company to nurture and mobilize such talent. In fact, one billionaire of Silicon Valley, USA has commented that “my employees are my most important assets. When they go home in the evening, my net worth drops to zero” The importance of analyzing human resources is as follows:
- Human resources handle all physical and financial resources in an organisation. Without their efforts, these nonhuman resources remain idle. In this context, Likert observes that “all the activities of any enterprise are initiated and determined by the persons who make up that institution: plants, offices, computers, automated equipments, and all else that a modem firin uses are unproductive except the human efforts.
- Human resources are the source of creative energy. In today’s dynamic world, creativity is vital to every organisation. Creative thinking is the process of bringing a problem before one’s mind clearly by imagining, visualizing, supposing, musing, contemplating, or the like, and then originating an idea, concept, realization, or picture along new or unconventional lines. People in the organisation are the only source of such creativity. They can produce unlimited ideas. There is no apparent limit to what people can accomplish when they are motivated to use their potential to create new and better ideas. No other resource in the organisation can do that.
Human resources can be used as a means for developing competitive advantage which may be in the form of lower cost of production, development of products for special needs, unique means for marketing the products, developing means for raising funds at lower cost, etc. Since all these are done by human resources, they can be geared to achieve all these.
In analyzing human resources, following factors are taken into consideration:
Quality of Personnel: Quality of personnel employed by an organization is a key determinant of its success. The quality of personnel includes their knowledge, skills, attitudes, and motivation to work. If all these characteristics are favorable, these are strengths as these can be used as a means for translating physical and financial resources into outputs in a better way.
- Personnel Turnover and Absenteeism: Personnel turnover, particularly at managerial and technical levels, is a big problem for organizations in today’s context. In knowledge based industries like information technology, consultancy, etc., this problem is even more acute. Since organizations build their strategies around the personnel available at present or available in future, retention of personnel is a significant issue. To the extent, an organisation is able to retain its key personnel, it has strength. Coupled with personnel turnover is personnel absenteeism. Those organizations which are able to manage personnel turnover and absenteeism have strengths.
- Industrial Relations: Industrial relations are a basic element for the success of the organisation particularly in the age of frequent industrial relations problems. Better industrial relations are strength for the organization. The state of industrial relations can be measured taking into account the breakdown in work because of employee agitation or noncooperation, number of industrial disputes, number of grievances from the employees, employee absenteeism and turnover, and their willingness to accept change in the organisation. On the basis of the above discussion, major strengths and weaknesses in the area of human resources are presented in Table below:
| Strengths and weaknesses In human resources area | |
| Strengths | Weaknesses |
| Highly skilled personnel | Low skilled personnel |
| High learn ability | Low learn ability |
| Favorable attitudes to change | Unfavorable attitudes to change |
| High motivation and morale | Low motivation and morale |
| High personnel retention | High personnel turnover |
| Low personnel absenteeism | High personnel absenteeism |
| Effective industrial relations | Ineffective industrial relations |
