• That good human resource practice leads to improved corporate performance.
• That the human resource systems and practices are integrated and hence contribute to corporate performance without any attrition.
• The alignment of human resource systems and practices with the strategy of the company will improve corporate performance on a sustainable basis.
• Leveraging human potential is not the same as leveraging human resources.
• Human potential can create competitive advantage These are briefly discussed in the following as propositions.

Proposition I: Good human resource practice leads to improved corporate performance

Several organisations have been progressively revising their Human Resource systems and processes drawing upon the publicised best practices. In many ways, changes in human resource policies, systems and practices arise from this belief. The BPR and change management that companies are rushing through are largely based on the assumed connectivity between best practices and "World-class" performance. Best practices are normally announced through popular media and research publications asserting that the practice of one method or approach has resulted in improved performance. Such progress could have been in the human resource variables (like satisfaction, morale, reduced turnover etc.,); efficiency/effectiveness of the human resource function, corporate performance ratios or at least factors contributing to corporate performance. The validity of these best practices have been in doubt as they are often based on a limited sample or a few case studies - the approach of some popular issues such as the Harvard Business Review typifies the propagation of limited observations as "best practitioner even as theory" (these have been termed as occasional academics). Consequently, we have organisations which have adopted modern techniques such as: 360-degree appraisals; performance management systems; self-managed teams; assessment centers; competence mapping and the like.

These practices have assumedly contributed to enhanced performance of the business directly or indirectly. However, it is not certain whether companies which have failed have also used similar techniques and yet lost out. Research has not been conclusive whether best practices indeed are contributory to business success. Even if there is an evident correlation between the two, there is a causal confusion or, the difficulty in saying what the cause is and what has been its effect. For instance, it is possible, that companies will adopt best practices only when they are doing well. If this is so, there is a difficult choice for the human resources professional to assert the efficacy of adopting best practices for superior performance of the organisation.

The best practices approach is with the implicit objective that there will be higher returns for the investment associated with this change. Higher returns would accrue due to increased creativity amongst people, reduced turnover and higher morale or a combination thereof. These positive benefits are expected to contribute to higher performance of the company. For various reasons, it has been difficult to measure the impact of best practices in cost-benefit terms. Consequently, best practices are being adopted as a matter of faith rather than as commercially sound judgements. Despite the lack of validation, the best practice approach is important and would continue to dominate the human resource profession because the alternatives are even worse. The alternatives, which are: (a) waiting for years for proper research validation or (b) adopting those which are not accepted as the best practices, are possibly fraught with even greater risk.

Proposition II: That the human resource systems and practices are integrated and hence contribute to corporate performance without attrition.

The human resource function has two dynamic situations to cope in real life whenever best practices are being adopted. The first is the challenge of dynamically altering or integrating the legacy systems and policies with the new best practices. There are transitional issues and costs associated with this change. The benefits and costs are obviously inestimable. The second dynamism is due to the divergence of the human resource practices and the objectives behind these. An ideal situation is when there is a high degree of integration amongst various human resource policies, systems and practices. In such an ideal situation, there will be evident synergies. However, in reality, most of the systems have been functioning as independently chosen best practices. Integration has not been a demand from theoreticians, top management or practitioners and hence the lack of it is hardly noticed, let alone challenged. Consequently, we have the traditional selection process co-existing with sophisticated assessment methodology for development purposes. Similarly, a dynamic performance management system may co-exist with traditional fixed pay systems. Like wise, the organisational design may demand matrix relationships but co-exist with the Confidential Report system of appraisal. The lack of integration is compounded by the fact that some sub-systems - like pay and performance - receive attention even at the neglect of, say, selection, succession planning and culture. This uneven attention is true of research as well as practice. These kinds of dynamic situations have an in-built cost for the company which may not necessarily add up to enhancing the corporate performance. It is possible that greater the divergence in these practices, the greater would be the chances of the company being insulated in its competitive advantage, from the human resources - that is, human resources may have little impact on corporate future or fortunes. On the other hand, the divergence may indicate attrition of time, energy and cost for the company thus contributing to disadvantage. The need for integration is possibly well captured on the following: "In this strategic environment, an organisation could be perceived as an engine with a number of wheels. Some of the wheels are the prime ones directly helping the movement of the vehicle, while others generate necessary momentum in an indirect fashion. There would be some wheels among these, which are frequently slipping or rotating by themselves, without necessarily halting the engine but wastefully consuming resources - it is these wheels that must either be shed totally or re-aligned to help in gaining the momentum. (Y. R. K. Reddy(1990), Strategic Approach to HRM; Wiley Eastern Limited, New Delhi.

Proposition III : The alignment of human resource systems and practices with the strategy of the company will improve the corporate performance on a sustainable basis.

The statement assumes that each firm has a unique position and environmental conditions. It entails modeling of human resource practices in such a way that they are uniquely addressed to the external environment of the organisation. Under this proposition, organisations will need to achieve an internal integrity and an external alignment. The internal integrity should arise out of systematic and logical existence of various systems and practices. The external alignment should arise from unique customisation of the practices and systems for each organisation that will address competitive and environmental conditions, risks and contingency. It is rather difficult to think of a company which is in a position to achieve such an alignment dynamically, though it would be the ideal. There are several challenges here primary of which are (a) reconciliation between best practice methods, legacy practices and a situational fit (b) deriving the imperatives for human resource systems from the strategy of the firm and its competitive and environmental conditions.

Proposition IV: Leveraging on human potential is not the same as leveraging on human resources:

Potential connotes a degree of the unknown amongst human resources, which should be estimated, paid for and managed to derive positive benefits. Efficiency of human resources is normally estimated on the basis of their measurable performance on a historical basis or against a benchmark. Where such a performance is below that of a competitor or the industry norm one can attribute the gap as potential for improved efficiency. However, this interpretation of potential is actually a measure of competitive disadvantage. Potential which would contribute to competitive advantage is that which can, through creative and innovative solutions, create a distance between the competitors and the company. Thus, potential goes beyond such estimates into the realm of speculation and faith. Potential can only be estimated by comparing relevant incidents in other organisations or through heuristics.

The investment in drawing upon the potential could be presumably in the areas of making people learn; management of their knowledge; creating environments where creativity and innovation thrive and utilisation of the creative and innovative energies in generating wealth for the company and for the share-holder. Such an approach is sound in a philosophical sense and yet difficult in practice, precisely because of the imponderables in the process of estimating and effectively managing this potential. Yet, competitive advantage would arise not so much from the traditional approach of maintaining human resources, but by managing the unknown for targeted organisational outcome. Potential is the invisible part of an iceberg while the evident part is historical performance. Knowing that potential exists has no meaning for the organisation unless effort is made to draw this out, manage it and achieve targeted value addition. In this process, the aim of the human resources function should be to define the kind of organisational outcome that will give the competitive advantage, followed by the actual practice of managing this unknown latent power.

Proposition V: Human potential can create competitive advantage.

Theory, during the last decade, has been replete with assertions that human resources can indeed create a strategic advantage for the corporation. This view has, in fact, generated the theory of strategic human resources in management along with broad approaches to describing and practicing the same. One approach which has an intimate relation with strategy is that of resource-based view of human resources. This view assumes that human resources can be of strategic advantage if they are: (a) heterogeneous and (b) immobile.

If the resource is dissimilar across the industry, there is a prospect of creating a competitive advantage. If such differentiation is not possible, then, obviously no company can create a greater advantage than the current or potential competitor. (Take the case of an inanimate resource like coal or water - if the resource available is the same for all companies, none would have a special advantage over the other. It there is scope for variations, at source or through some treatments/mixing, the resource can create competitive advantage). The second condition here is that such resources should be relatively bound to the company and not be mobile (that is, the company should have a low turnover of people). If the company can purchase or create resources held by competing firms without barriers, then, no company would probably have a distinctive advantage. The premise of competitive advantage is that the firm is adopting a value creating strategy, which is not, at that point in time, being implemented by the competitors. However, as most organisations imitate the best practices and catch up with the competitors, the advantage is normally not sustainable.

Sustained competitive advantage arises when the competing companies have given up efforts to compete or the company has such an advantage, which cannot be attained at reasonable costs by the competitors. Creating such a sustained advantage through people requires that human resources enjoy the benefit of four criteria:

a) The resource must add positive value to the firm;
b) The resource must be unique or rare among current and potential competitors;
c) The resource must be imperfectly imitable;
d) The resource cannot be substituted with another resource.

It is presumably difficult for most organisations to make human resources so distinctive as to give a sustained competitive advantage, particularly due to the mobility of the resources and also the possibilities of near-perfect imitation. Nevertheless, it appears not an impossible task for corporations to create such a competitive advantage through unique cultures, creative compensations, creating brand equity for employment itself, and other normally known good "soft" practices. Aimed at managing the potential and reaching beyond known standards of performance. Companies which are global leaders have been able to achieve such a position. (For example, HSBC, 3M, Citi bank, GE, Infosys, may figure in this cluster).

A competitive company can create uniqueness for the human resources through higher ability to manage potential. It will be able to move up in the scale of competition. As already mentioned, management of potential may connote a) mere increase in efficiencies so that a company is competitive enough or b) refer to the unique proposition of managing the latent and invisible potential for a sustained competitive advantage.

The first order of managing potential involves better practices throughout and increasing the human efficiency under known conditions and work design. This could lead to competitive advantage especially if the strategy of the company rests on low cost. However, such a position may be short-lived but is probably the first wave of managing potential. On the other hand, if the company is looking for sustained competitive advantage and is seeking a unique position through differentiation and focus strategies, the company should be aiming to work on the potential of the higher order. The higher order potential requires managing creativity and innovation and leveraging meta-competences such as learning and managing tacit knowledge.

Considering the diversity of challenges for the company in attaining competitive advantage, a diverse source of knowledge and information would be necessary. This book has a diverse range of papers which probably touch some aspect of this challenge or the other, for companies which want to join the race for leadership in the coming decades. A race which has become a global one due to increased number of players, cutting across nations.