Producing sustainable competitive advantage through
the effective management of people
To earn tremendous economic returns, companies should have some sustainable compettve
advantage. Something that distnguishes them from their compettors, provides positve economic
benefts and is not readily duplicated.
According to the 5-forces framework threat of new entry , threat of substtutes, bargaining power of
buy ers, bargaining power of suppliers and the existng rivalry determines the frmms ability to earn
above normal returns.
The importance of workforce and how it is managed
As other sources of compettve success have become less important, what remains ass a crucial,
differentatng factor is the organiaaton, its employ ees, and how they work.
Culture, how people are managed, and the effects of this on their behaviour and skills are sometmes
seen as the ‘msofmm side of business, occasionally dismissed. (ven when they are not dismissed, it is
ofen hard to comprehend the dy namics of a company and how it operates because the way s people
are managed ofen fts together in a sy stem.
Thirteen practices for managing people
1. (mploy ment security
a. (mploy ment security enhances employ ee involvement because employ ees are more
willing to contribute to the work process when they need not to fear losing their job
2. Selectvity in recruitng
a. Besides getng the right people in the door, recruitng has an important sy mbolic
aspect. If someone goes through a rigorous selecton process, the person feels that he
or she is joining an elite organiaaton.
3. High wages
a. High wages tend to atract more applicants, permitng the organiaaton to be more
selectve in fnding people
4. Incentve pay
a. People are motvated by more than money , things like recogniton, security and fair
treatment mater a great deal
5. (mploy ee ownership
a. (mploy ee ownership motvates employ ees as they share in company profts
6. Informaton sharing
a. Sharing informaton shows trust and enables employ ees to perform their tasks beter
7. Partcipaton and empowerment
a. Give employ ees the feeling that the can partcipate and that their opinions are taken
into account
8. Self-managed teams
a. Teams that oversee hiring, purchasing, job assignment and producton
9. Training and skill development
a. (mploy ees are more skilled and will be able to do their job more effectvely
10. Cross-utliaaton and cross-training
a. (mploy ees can perform multple jobs, ensuring job safety
11. Sy mbolic egalitarianism
the effective management of people
To earn tremendous economic returns, companies should have some sustainable compettve
advantage. Something that distnguishes them from their compettors, provides positve economic
benefts and is not readily duplicated.
According to the 5-forces framework threat of new entry , threat of substtutes, bargaining power of
buy ers, bargaining power of suppliers and the existng rivalry determines the frmms ability to earn
above normal returns.
The importance of workforce and how it is managed
As other sources of compettve success have become less important, what remains ass a crucial,
differentatng factor is the organiaaton, its employ ees, and how they work.
Culture, how people are managed, and the effects of this on their behaviour and skills are sometmes
seen as the ‘msofmm side of business, occasionally dismissed. (ven when they are not dismissed, it is
ofen hard to comprehend the dy namics of a company and how it operates because the way s people
are managed ofen fts together in a sy stem.
Thirteen practices for managing people
1. (mploy ment security
a. (mploy ment security enhances employ ee involvement because employ ees are more
willing to contribute to the work process when they need not to fear losing their job
2. Selectvity in recruitng
a. Besides getng the right people in the door, recruitng has an important sy mbolic
aspect. If someone goes through a rigorous selecton process, the person feels that he
or she is joining an elite organiaaton.
3. High wages
a. High wages tend to atract more applicants, permitng the organiaaton to be more
selectve in fnding people
4. Incentve pay
a. People are motvated by more than money , things like recogniton, security and fair
treatment mater a great deal
5. (mploy ee ownership
a. (mploy ee ownership motvates employ ees as they share in company profts
6. Informaton sharing
a. Sharing informaton shows trust and enables employ ees to perform their tasks beter
7. Partcipaton and empowerment
a. Give employ ees the feeling that the can partcipate and that their opinions are taken
into account
8. Self-managed teams
a. Teams that oversee hiring, purchasing, job assignment and producton
9. Training and skill development
a. (mploy ees are more skilled and will be able to do their job more effectvely
10. Cross-utliaaton and cross-training
a. (mploy ees can perform multple jobs, ensuring job safety
11. Sy mbolic egalitarianism
