HRM and Sustainable Competitive Advantage: Lessons from Delta Air Lines
Swiercz, Paul Michael, Spencer, Barbara A., Human Resource Planning
What does top management need to know about human resource management (HRM)? The traditional response to this question has been "very little." At best, managers have recognized that HRM consists of a handful of tools useful for addressing specific administrative needs. Very few have seen it as anything more than a staff activity that serves to maintain employee records and to avoid "people problems" ranging from turnover to discrimination suits (Fulmer, 1990).
Over the past decade these attitudes have been slowly changing. HRM has gained stature as it increasingly comes to be seen as contributing to the overall effectiveness of the organization (Ferris, Russ, Albanese, and Martocchio, 1991). HRM managers, taking advantage of this belated recognition, have begun to move beyond their traditional administrative responsibilities to assume a greater strategic role in the organization. The primary thrust of these new activities, however, has been on implementing strategic designs that have already been decided (Lengnick-Hall and Lengnick-Hall, 1988); most corporate strategies are still formulated without full consideration of potential HRM contributions.
Despite the positive changes, the most we are able to say with confidence is that organizations with motivated and committed employees can implement strategies better than those without them. We still know very little about how HRM policies and practices (the HRM system)(1) translate into sustainable competitive advantage.
Discussions of competitive advantage typically take place within the context of strategic planning where questions of customer needs, product/service attributes, manufacturing capabilities, and industry and competitor analysis are emphasized. Human resource issues tend to reside in the background. For example, Michael Porter (1985), in his popular value chain approach to competitive advantage, describes human resource management as a support activity, that along with technology development and procurement, serves to sustain higher priority primary activities.
But is it possible that HRM serves a much more important function? Should the HRM system be considered a primary value-adding activity, one deserving a CEO's focused attention? The answer will depend on the extent to which HRM activities can contribute to the development of sustainable competitive advantage. If it can be shown that the HRM system can promote real advantage, then HRM should be fully integrated into both the formulation and implementation stages of the strategic management process.
The purpose of this paper is to clarify the links between HRM and sustainable competitive advantage. To do this, we will first consider the definition of sustainable competitive advantage as developed in the literature on resource-based models of the firm. We will then illustrate its connection to the HRM system by recounting some of the specific actions of Delta Air Lines in response to industry deregulation.
Sustainable Competitive Advantage
Sustainable competitive advantage is the unique position that an organization develops in relation to competitors that allows it to outperform them consistently (Hofer and Schendel, 1978). As this definition suggests, advantage can only be achieved by establishing a clear and favorable differentiation from competitors. This difference must be tangible and measurable, and it must be preservable over time (South, 1981).
According to Coyne (1986), competitive advantage is meaningful only if it is felt in the marketplace; that is, the differentiation must be perceived as an important buying criterion to a substantial customer base. Such an advantage will be sustainable, only if it cannot be imitated (Barney, 1991). In essence, a gap in the capability underlying the differentiation must distinguish the producer from its competitors; otherwise, competitors can erase the differentiation at will (Coyne, 1086).
In order to create such a gap, the organization must deploy its unique combination of skills and resources to exploit environmental opportunities and neutralize threats. …