Indigo Business Ideas

This article is focused on the human capital in a business and the concept
of core competences of an organisation. The core competences refer to the collective know-how a company has or wants to develop in a particular aspect of delivering its product or service. It is these “competences” which make it better able to compete in the marketplace.
The collective skills of various people in an organisation are usually a central
part of any core competences it may have developed; these, combined with
any technologies that may underpin it, form the competences. What makes
them “core” is the fact that the competences are a crucial part of the
company’s ability to deliver its customer solution and compete in the
market. The concept of the core competences of a business was articulated and given currency by CK Prahalad and Gary Hamel in the Harvard Business
Review, May-June 1990.
Their research sought to explain why companies outperformed and overtook their often much larger competitors despite fewer resources.
Their work showed that companies need to think about what competences
they need and how they are going to develop them.
Because core competences rely so much on the skills and know-how of
people, it brings so called “human capital” into strategic focus. No longer can decisions be taken on pure financial terms, like cutting costs, if they damage a core competence which is underpinning a business’s success or being developed for the future.
It is often said that “business is all about people”. Let’s define that a bit
more precisely. A business depends on the attitudes and skills of its people.
You need both. Hiring people purely on their attitudes will not give you the skills you need. Hire people first and foremost for the right skills.

Attitude comes second, important though it is. Management sets the lead
on the attitudes it wants. If it is grumpy, unfriendly, and unhelpful to those with whom it works, it can expect the same behaviour amongst the rest of the organisation. So set the tone you want for your organisation.

Nurturing the skills you want is just as important. The concept of core
competences now takes on a strategic importance. Investing in the skills base of your organisation is of equal importance as investing in buildings,
plant and machinery, technology and systems.
So in framing your HR policy, you should add in the strategic dimension
of what your core competences need to be, to make the business successful. A good place to start to do this is in a SWOT analysis.
Your core competences should come out of strengths and weaknesses.
These are internal and only concerned with your organisation. External issues are dealt with by opportunities and threats.
If you need certain competences and have not got them, they should be
listed under weaknesses. Out of this list should come a clear plan
of action as to how you will obtain them. Under strengths will be listed
those competences which you feel you have and which matter to your
competitiveness. You will find your SWOT analysis far more meaningful if you use this approach. You will also find on a practical basis, that by understanding your core competences, day to day decisions become much easier.
When you recruit, the decision should be framed around the competences
you are seeking as part of your overall strategy. Recruitment now takes on a whole new dimension, with strategic fulfilment a part of it.

This article was first published in the UKBA House Magazine “Boost Your Business” in August 2013.  Clink the link to download your copy.