The following questions comes to mind based on the relationship between value-chain and across the value network as regards business competitiveness and HR services:
What are the HR implication of these complex networks of organizational relationship?
Which issues require collaboration and which competition?
What types of organization reporting make sense in these relationship?
What types of policies and practices on training, career training, rewards, and HR practices?
Value is essentially what something is worth, the amount customers willing to pay for a product or service. Added-value is the difference between the amount customers are willing to pay for a product minus the cost of input and transformational activities used to create that product or service (offering).
There are three main factors influence the value equation: input cost (supply side), transformation cost and the amount the buyer is willing to pay for product or service on the demand side (based on perceived product benefits).
The value chain describes the categories of activities within and around an organization, which together create a product or service. The concept was developed in relation to competitive strategy by Michael Porter.
Porter identified the ‘value chain’ as a means of analysis an organization’s strategically-relevant activities. Value Chain Analysis help the organization identify core competence and distinguish those activities driving competitive advantage.
A value-chain is a chain of activities. Product pass through all primary activities of the chain in order and at each activity the product gain some value. The chain of activities gives the products more added value than the sum of added values of all activities.
Thus the value chain presents a tool to decompose organizations into their part and then focus attention on these decomposed activities. The value chain concept has been extended beyond individual organization. An organization’s value chain is part of a larger system including the value chains of upstream suppliers and downstream channels and customers.
David Ulrich in his book titled, Human Resource Champions: The Next Agenda for Adding Value and Delivering Results. He said a consistent theme for the competitive future is building and operating organizations that will be more customer responsive. Responsiveness includes innovation, faster decision making, leading an industry in price or value, and effectively linking with supplier and vendor to build a value chain for customers. To support the value-chain argument, research indicates that employee attitude correlate highly with customer attitude.
Refocusing HR practices more on value chain (supplier and customers) and less on activities within the firm has profound implications. For year, HR professionals and theorists have emphasized building the practices within the firm. The shift to a customer focus redirect attention from the firm the value chain in which it embedded. HR practices within a firm should consequently be applied to supplied and customer outside the firm. Training with a value-chain perspective weaves suppliers, employees, and customers into value-chain team.
Value-chain compensation program focusses on using supplier and customer as evaluators and distributors of economics value within the firm. By shifting the focus from firm to value chain, all the activities are rigorously redefined according to customer criteria.
HR professionals and Managers must learn to create organizations that work along the value chain and across the value relationship.
Rotarian TM Akeem Gbadamosi, M.Sc. Industrial Relations and Human Resources Management.
*Chief Executive Officer, First-Goldmine Consulting (An Human Resource Management and Development Services Firm)
*Convener, Centre for Human Resources Emancipation (C4HRE)- (An NGO focusing on SDG 8- Decent Job and Economy Growth
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