Section Twoon the basis of market responsiveness, product and service
quality, differentiated products, and technological innovation,
instead of reliance on low costs.^3 An example of human
resource–based competitive advantage is provided by John
Deere’s efforts to automate its factories. As a result of the
development of exceptional talent and expertise in factory
automation, the company established a technology division.^4
Another example is provided by ARCO’s increased emphasis on
human resource management issues in its executive
development program.^5 Examples such as these indicate the
broader responsibilities and importance of today’s more
strategically oriented human resource management.
Aside from its role in providing competitive advantage
through a quality workforce, the necessity of controlling labor
costs also has elevated the role of human resource
management. As a result of intense pressure to control costs,
general managers have gained a greater awareness of the
impact of inefficient use of human resources. Managers need
look no further than underutilized workers, lack of trust,
resistance to change, antagonistic labor–management relations,
motivational problems, and restrictive work practices to find
causes of lower productivity. Interestingly, resources allocated
toward better utilization of human resources may prove to be
more cost efficient than investments in plant and equipment.
Because of potential cost efficiencies, improved human