M M Bagali, PhD, Research paper, MBA Faculty, HRM, HR, HRD, PhD in HR and Management

22

INTRODUCTION

“Talent is what God gives us, Skill is what we give back to

Him”-Eliel Pierre-

Having a competitive advantage is no longer an all-

inclusive acceptable long-run strategy, especially for

corporate giants aiming at sustainable leadership. A

quick re-look at companies like Blackberry and Nokia who

could not sustain the pace of growth over the years proves

that long-run market leadership demands more than just

having one factor, i.e.; design supremacy or robust

technology (Sharma Chetan, 2013). Organizations today,

struggle to recruit and retain skilled workforce.A fine

balance between generic skills and specific skills are

needed in order to achieve better employee

engagement. Companies have a great need for the

same, as product life cycles get shorter and service

formats get protracted. The demand for specialized

workforce and lately super-specialized workforce is on the

rise and is expected to remain so, with rapidly changing

business needs. We have evolved into an era of

uncertainty in business which also translates to skills

inventory in organizations. Therefore it's not very surprising

that contemporary business houses are eyeing people

with superior skill sets and skill flexibility. Further, the 'skills'

factor could override all the other factors in succession

planning and change management. A skills-centric

culture can lead to great results that translate to market

share revenues and profits of scale for companies.

In the words of Jack Welch, “An organization's ability to

learn, and translate that learning into action rapidly, is the

ultimate competitive advantage.” This translates to the

fact that companies should build a sizeable skills inventory

* Assistant Professor, Human Resources Management, Manipal Global Education Services and India.** Professor, Strategic HRM and Head, Research in Management, CMS Business Annexe, Jain University, Bangalore, India.

Research Scholar, Jain University,

ABSTRACT

The research paper suggests integrated skills based approach for learning organizations based on the findings of the

study. The paper details the integration of the skills approach into the overall business plan and the strategy of

organizations. A feasible model has been suggested in the paper with regard to adapting skills based approach towards

achieving a sustainable competitive advantage. Principal Component analysis has been used to analyze the data

collected from a sample representing ten prominent business sectors. Business entities strive to achieve and sustain

supremacy, of considerable credibility, in order to have continued growth and profits. While some companies have

banked on 'core competencies' like cost leadership, technological advancements and design excellence, the

sustainability issue still prevails and calls for something more radical. Having a competitive advantage is no longer an all-

inclusive acceptable long-run strategy, especially for corporate giants aiming at sustainable leadership. A quick re-look

at companies like Blackberry and Nokia who could not sustain the pace of growth over the years proves that long-run

market leadership demands more than just having one success factor, i.e.; design supremacy or robust technology.

Companies should build a sizeable skills inventory that can be re-skilled in optimal time frames and can be used to

achieve defined growth objectives. We could be looking at skill dominance translating to market dominance and if

companies are able to scale up this concept, they could probably aim at long-run market leadership, a coveted

corporate objective.

Keywords: Skills Supremacy, Sustainable Growth, Market Leadership.

VIJAY. G. PADAGURI *

By

M.M. BAGALI **

ESTABLISHING SKILLS SUPREMACY: WAY FORWARDTO SUSTAIN THE COMPETITIVE ADVANTAGE

RESEARCH PAPERS

i-manager’s Journal o Management, Vol.n l l8 No. 4 March May - 2014

ARTICLES RESEARCH PAPERS

23

that can be re-skilled in optimal time frames and can be

used to achieve set growth objectives. In future, we could

be looking at skill dominance translating to market

dominance and if companies are able to scale up this

concept, they could probably aim at long-run market

leadership, a coveted corporate objective.

1. Literature Review

'Competitive advantage' is an advantage that a firm has

over its competitors, allowing it to generate greater sales

or margins and/or retains more customers than its

competition. There can be many types of competitive

advantages including the firm's cost structure, product

offerings, distribution network and customer support.

Competitive advantage is a management concept that

has been so popular in the contemporary literature of

management nowadays. The reasons behind such

popularity include the rapid change that organizations

face today, the complexity of the business environment,

the impacts of globalization and unstructured markets,

the ever changing consumer needs, competition, the

r e v o l u t i o n o f i n f o r m a t i o n t e c h n o l o g y a n d

communications, and the liberation of global trade (Al-

Rousan and Qawasmeh, 2009). Core competency

needs to be reviewed based on the factors that stand out

as being unique to the organization, Edgar, William B. and

Lockwood, Chris A. (2012).Competitive advantage can

give the business better long term prospects, Porter,

Michael (1987).

Kotler also defined competitive advantage as an

organizational capability to perform in one or many ways

that competitors find difficult to imitate now and in the

future (Kotler, 1997:53; Kotler, 2000). Nevertheless, Porter

recognized competitive advantage as a strategic goal;

that is a dependent variable and the reason behind this is

that the good performance is related to achieving a

competitive advantage (Read &Difillipi, 1990:90). Others

see competitive advantage as an ability to produce

products or offer services different to what competitors

do, by utilizing the strengths that organizations possess so

as to add value in a way that competitors find it difficult to

imitate (Pitts & Lei, 1968:68). Customer satisfaction can

definitely be employee driven initiative for an

organization, Bearden WO, Teel JE. (1983). Innovation

capability can act as a pre-cursor to organizational

success, AlbaladejoM, Romijn H (2001).

We then can assume that competitive advantage is a

relative quality that organizations claim to possess

through which organizations can exceed their rivals'

performance, and achieve long lasting benefits as

perceived by clients. It is believed that the framework

presented by Michael Porter is one of the most well-known

tools that are used in theoretical as well as empirical

research, since it pays attention to all activities carried out

by an organization with respect to its external environment

(Al-Rousan and Qawasmeh, 2009). The impact of

workplace practices on bottomline results can be

measured, Lisa M. Lynch & Sandra E. Black, (1995).The

development of small business depends on a wide range

of factors relating to growth, profitability, pricing and

strategy, Reid G C (2000).

One of the organizations' major concerns is to care about

customers' needs and wants and transform such needs

and wants into targeted aptitudes or areas called

"competitive dimensions". These dimensions that

organizations focus on and show great interest, while

providing services and products so as to meet market

demand, can help organizations achieve competitive

advantage (Krajewski&Ritzman, 1999). These competitive

dimensions, as we claim, are four: cost, quality, time, and

flexibility, innovation and Responsiveness which are

defined and explained in the following sections. Johnson,

Scoles, Whittington (2005), in their work*, pointed out that

corporate strategy as a framework is a complex process

and involves several constituents. Researchers have

studied leadership skills directly or indirectly for anumber

of years (see Bass, 1990, pp. 97–109). However, the

impetus forresearch on skills was a classic article

published by Robert Katz in theHarvard Business Review in

1955, titled “Skills of an Effective Administrator.”Katz's

article appeared at a time when researchers were trying

toidentify a definitive set of leadership traits. Katz's

approach was an attemptto transcend the trait problem

by addressing leadership as a set of developableskills.

li-manager’s Journal o Management, Vol. No. 4 ln 8 March May - 2014


24

*'Exploring Corporate Strategy: Text and Cases', Prentice

Hall-Financial Times, Essex

When looking at the evidence linking skills to

organizational outcomes, we are in fact nearly always

looking at evidence which uses qualifications or

educational attainment as a proxy for skills because it is

very difficult to measure or monitor skills per se.

Nonetheless there is considerable positive evidence

linking educational attainment to organizational

performance. For example the most productive

manufacturing organizations tend to have a more highly

educated workforce than the least productive equivalent

on average, to an extra qualification level (Haskel and

Hawkes, 2003). This kind of relationship has also been

found in US where it has been estimated that the

equivalent of an extra year of schooling raised

productivity by between 4.9 and 8.5 per cent in the

manufacturing sector and between 5.9 and 12.7 per

cent in services (Lynch and Black, 1995). These results

have been supported by Mason and Wilson in 2003 for the

UK.

A series of hugely influential and robust research projects

has also strongly indicated a link between skills and

business productivity. A number of well-known 'matched

plant' studies (see for example, Keep, Mayhew, Corney;

2002) by the National Institute for Economic and Social

Research (NIESR) considered the impact of workforce skills

and development on productivity alongside a range of

other factors such as investment in capital equipment

and maintenance practices for matched comparator

establishments. A clear connection between higher skills

and higher productivity was identified particularly at the

intermediate skills level. All the studies found that the

higher average levels of labour productivity in firms in

continental Europe were closely related to the greater

skills and knowledge of their workforces, especially

intermediate skills. Skill levels were also shown to be

associated with the uptake of new equipment and to

maintenance activity. These studies mostly took place in

the mid to late 80s and early 90s but the findings have

been replicated very recently (Mason and Wagner, 2002)

with similar results. There are several arguments that

human resources management could play a key role in

ensuring better business results (Bowen, Lawler, 1992).

Investment in focused training could lead to better

business results, Bishop J (1994).There is clear evidence of

significant return on investment when it comes to

employee training, Keep E, Mayhew K, Corney M (2002).

Other studies have explored if there is a relationship

between skills and other organizational outcomes. Haskel

and Hawkes (2003) found that higher skill (qualification)

levels support innovation and more sophisticated

production processes and were associated with the

production of higher quality products. Green et al. (2003)

has also found a strong relationship between different

levels of UK workforce skills and the sophistication of

products. An OECD (Organization For Economic Co-

operation and development) study looked at innovation

in UK SMEs and found that higher qualification levels of

both managers and staff boosted innovation (Albaladejo

and Romijn, 2001) and was associated with higher

technological complexity and originality. Others have

shown a link to company survival (Reid, 2000). Successful

administration appears to rest on three basic skills, which

we will call technical, human, and conceptual. It would

be unrealistic to assert that these skills are not interrelated,

yet there may be real merit in examining each one

separately, and in developing them independently, Katz

Robert, (1955).

2. Research Gap

Most of the major studies on competitive advantage

have considered and accredited different facets like

cost, time, profitability etc. as the reason for the sustained

growth of a business. In some studies the emphasis has

been on the product offering, packaging etc. But the skills

aspect as an entity has not been examined in terms of

being a distinct competitive advantage. Considering the

above studies, it is very clear that competitive advantage

as such is subjective and varied in the way it can manifest

itself. However, it's a very pertinent issue that needs to be

examined and analyzed. Therefore there is very clear

need that the “skills” factor needs to be accounted for

and that the competitive advantage argument is

incomplete without factoring in the “skills” part. Therefore,



25

this research gap has been identified as the core issue in

this research paper.

3. Objectives of the Study

The study pursues multiple objectives with one important

agenda and also a need for crystallization of views on the

topic of skills as being the market differentiator probably

cascading into revenue benefits for the company or the

organization. The 'skills' factor takes center stage.

However, the primary objectives of the study are as

follows:

·To understand the concept of 'skills' in the perspective

of a competitive advantage.

·To analyze the skills perspective to fulfilling manpower

needs of a company.

·To establish the need for skills emphasis in the light of

changing business needs.

·To suggest a model of skills supremacy for sustaining

the competitive advantage.

Traditionally the concept of skills was considered as being

a standard business requirement and a pre-cursor to

employment. However, with changing business needs

and demographics, skills sets have become dynamic

and are now considered a pre-cursor to not only

employment but also growth and cross-vertical

movement.

4. Research Design

4.1 Method of Sampling

Stratified Random Sampling was used for the study to

ensure better representation of the different sectors. The

data was collected from employees working in the IT/ITES,

BPO/KPO, and manufacturing, education and training,

FMCG, banking and finance, Retail, telecom, healthcare

and infrastructure sectors. Further, to have better

representation across, the responses were collected from

employees working across different levels (Operational,

tactical, strategic) roles in their organizations. A sample

size of 100 was considered for this study since it deals with

a cross-sector/cross segment. Proportionate allocation

using a sampling fraction in each of the strata justified the

sample size used for the study.

4.2 Statistical Tools used

Z-test and T-test were used in order to compare the means

of the factors of skills supremacy. Principal Component

analysis was used to understand key influencers in terms of

skills background since the principle components can be

used to find clusters in a set of data.

Source: Author Research based on Primary data collected

Age: <20-25 yrs 26-30 yrs 31-35 yrs 36-40 yrs 41yrs and above

No. of Respondents 27 29 17 15 12

Sex: Male Female

No. of Respondents 61 39

Education: SSLC/10th PUC/12th Graduate Post-Graduate Doctorate


Experience 1-5 yrs 5-10 yrs 10-15 yrs 15- 20 yrs 20 yrs and above


Sector-Wise Split IT /ITES BPO/KPO Manufacturing Education and Training Banking and Finance


Sector-Wise Split-2 Retail Telecom Healthcare Infrastructure

No. of Respondents 10 10 10 10

Table 1. Demographic Profile


Pro Defer

Skills Supremacy is a competitive advantage 74% 5%

Skills supremacy is a product/service differentiator 56% 44%

Superior Skills sets facilitating sustained business growth 84% 16%

Advocacy of Skills emphasis in hiring 69% 31%

Ability of people with better skill sets toovercome market uncertainties

55% 45%

Posssibility of better skills sets giving organizationsa performance edge over competitors 57% 43%

Table 2. Comprehensive Table on Skills Supremacy-Key Findings

Strategic Level-56%

Tactical Level-72%

Operational Level-81%


Figure 1. Comprehensive Table on Skills weightage for succeedingat different levels in Organizations-Key Findings



26

5. Analysis

The questionnaire concentrated on factors like skills

inventory, role of skills supremacy for sustained business

growth, the relevance of skills sets at various levels in

organizations and so on. The data was analyzed using the

z test, t test as well as principal component analysis. The

key variables include skills sets, business growth, and

competitive advantage. The relevance of skill sets in the

background of the dynamic business environment and

also the sustainable competitive advantage aspect of

the same.

Most of the respondents felt that skills supremacy was a

competitive advantage for organizations. Several

respondents felt that skills supremacy could act as a

product/service differentiator. A majority of the

respondents said that they would advocate a skills

emphasis approach in hiring. Some of the respondents

felt that people with better skill sets had the ability to help

the organization overcome market uncertainty and also

gave them a performance edge over competition.

Different levels in organizations have a distinctive needs in

terms of the knowledge, skills, attitude and decision

making matrices. The emphasis on skills is more at the

operational and the tactical levels. However, with niche

work profiles and rapid market innovation ie; disruptive

innovation, skills emphasis is now being considered as a

primary focus area. Most of the respondents felt that right

skills were the key for succeeding at the operational level.

Several respondents felt that having the right skills was

necessary to succeed at the tactical level. However, a

marginal majority of respondents felt that the right skills

could contribute to your success at the strategic level.

The above findings definitely indicate a change in the

importance given to “skills sets” in the hierarchy. It can also

be inferred that a vast majority of a company's workforce

needs to have a skills focus to succeed at the existing

levels in the organization and also have a skills approach

to reach leadership levels in the organization.

PCA was done using the XLSTAT 2013 tool for all the factors

in the study, considering the skills background. An

illustration of the analysis is given below. Principal

component analysis was carried out for three factors ie;

business growth, sustainability and competition.

Figure 2. Principal Component Analysis Chart for business growth,differentiation and sustainability in the skills background

F1

F2

F3

-1

-0.75

-0.5

-0.25

0

0.25

0.5

0.75

1

-1 -0.75 -0.5 -0.25 0 0.25 0.5 0.75 1

Variables (axes F1 and F2: 99.67 %)

F2 (8

.08

%)

F1 (91.58 %)

Table 3. Contribution of the variables (%)

Table 4. Squared cosines of the variables

F1 F2 F3

F1 34.021 25.233 40.746

F2 35.549 7.232 57.219

F3 30.430 67.535 2.035

*F1 relates to importance of skills sets in product/service differentiation*F2 relates to facilitation of business growth by employees with superior skills sets*F3 relates to sustainability of business growth with a skills emphasis

-Values in bold correspond for each variable to the factor for which thesquared cosine is the largest

F1 F2 F3

F1 0.935 0.061 0.004

F2 0.977 0.018 0.006

F3 0.836 0.164 0.000

Figure 3. Model: An Integrated Skill BasedApproach For Learning Organizations

Source: Author Research at Jain University between November 2013and March 2014



27

The data clearly reveals that skills emphasis is necessary

towards achieving better business growth and is also

instrumental in ensuring sustained achievement of

business goals and targets. In an era of headstrong

competition in almost every sector, it's very much

necessary that business houses need to work out a

competitive advantage plan. And skills emphasis can

definitely act as a feasible competitive advantage plan in

this regard.

Based on the analysis of the data collected, it's imminent

that business houses need a feasible model in order to

achieve sustainable growth on the long run. An integrated

skills based approach for organizations could act as a

clear road map towards achieving the above said

objective. In this regard, adapting a skills based business

plan could be the first step. As business houses look at

expanding, growing, diversifying and acquiring projects,

a skills based business plan could complement the long

term strategy of the organization. Further, a skills based

approach to the learning and development plans of the

company is also needed. The L and D calendar of the

company needs to have a weightage set for the skills

component in the learning and development plans of the

organization. This could mean more emphasis on skills

development at each level in the organization. The

constitution of key teams and levels in organizations could

be challenging and detail-oriented (Finkelstein, S. 1992).

In order to succeed in this initiative, the learning and

development teams will have to take cognizance of the

vertical heads and team leaders. The next level in this

model would be skills based approach to competition,

wherein, companies can look at achieving a competitive

edge over other players in the market by hiring people with

better skill sets at different levels, building formidable skills

inventory and ensuring retention of the top notch skills in

the organization.

Finally, the last level in this model would be skill based

market differentiation wherein prospective and current

clients would recognize brands and experiences based

on the skill sets of the employees. This could be a

formidable long term strategy for any company to survive

the odds and grow at all times. This would also mean

deployment of a dedicated team and continued efforts

in this regard.

5.1 Skill –Based Approach: Action Plan Illustration

To illustrate the implementation of the proposed model,

automobile sales domain can be taken as a case in point.

An analysis of the key skills needed for a successful

automobile sales career can help us understand the

implications in terms of a skills based approach to fulfilling

an organizational resource requirement. The below

mentioned table details some of the key skills needed for

automobile sales. The NSDC report “Human Resource and

Skill Requirements in the Auto and Auto Components

Sector(2022)” also mentions some of these key skills.

The above mentioned skills refer to a progressive set,

wherein an employee progresses from one level to the

next by acquiring the necessary skill sets. For lateral hires

from other sectors, there is a need to acquire the

necessary skill sets specific to the role. The HR function in

organizations can take steps to ensure that skills inventory

is in order at all times. Some measures that can be taken in

this regard are:

·Adapting periodic and monitored skills based training

approach.

·Having a dedicated resource for skills mapping and

skills acquisition in the HR team.

·Formulating a skills gap report and working towards

reducing the skills gap.

·Involve skills acquisition targets in KRA sheets of

employees.

·Having a review mechanism for skills acquisition and

skills updating.

Source: NSDC report “Human Resource and Skill Requirements in the Auto andAuto Components Sector (2022)” and Author Research**

Experience Frame Key Skills Needed (Including, but not limited to)

1 year - 5 yearsListening, Tele-calling, Presentation,

Basic technical Skills, Local Language.

5 years - 10 yearsNegotiation, Documentation,

Collaboration and Basic Finance.

10 years - 15 yearsDatabase Management, Reporting,

Delegation and Motivation.

15 years - 20 yearsRelationship Management,

Team handling and Mentoring.

20 years and above Sales Strategy, Leadership and Analytics.

Table 5. Skills Framework for Automobile Sales



28

Conclusion

Companies no longer aim for just short term gains and

windfall returns. Most business houses are looking at a long

term game plan in order to grow at all times and in all

ways. In this context, it would be a gainful long term

strategy for companies in order to ensure sustainability.

Ensuring a skills emphasis in the overall business strategy

can give companies an edge over competition and also

act as an inherent employer branding tool. Though there

are challenges in this regard, smart action and evolution

in this regard can help companies sail through

challenging environments and periods alike.

The 'skills emphasis' component can be effectively

integrated into the overall business plan, the strategic

management aspect as well as the human resources

planning process with due consideration to the values

and vision of the organization. 'Integrated skill-based

approach for learning organizations' model can be

customized to meet the business framework of the

company, effectively. Further scope for study in this area

exists in terms of measuring ROI on investments towards

supremacy, skill based succession planning and skill-

based market differentiation.

National Skills Development Corporation Report “Human

Resource and Skill Requirements in the Auto and Auto

Components Sector (2022)”

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ABOUT THE AUTHORS

Prof Vijay G Padaguri is currently a Faculty in Management Studies at Manipal Global Education Services and Research Scholar, JAIN University. He is also a certified trainer and facilitator. His areas of research include employability, skills enhancement, learning and leadership. He is a member of several professional bodies in the Human Resources Management domain. Currently he is involved in content creation and delivery of general management courses for the corporate education wing at Manipal Academy of Banking

Dr M M Bagali is currenly working as Professor of HRM, Head- Research in Management, JAIN University. He is LIFE member for more than 35 different Professional Organizations in India and Overseas. He has been awarded the First BOLT-Best Teacher Award instituted by Air India-Deccan Herald and visited Singapore and addressed SHRI Senior HR Managers. His teaching assignment presently includes taking courses in HR, OB, and Leadership for Management and Executives.
