The document discusses Google's use of data-based human capital management as a source of sustained competitive advantage. It analyzes this capability through the VRIO framework, finding that Google's ability to manage employees using extensive data is valuable, rare, costly to imitate, and Google is well-organized to capture value from it. Specifically, Google uses data to hire innovative, productive employees and determine the characteristics of great managers. This human capital management approach has allowed Google to take a different strategic path and make objective decisions to strengthen its internal team and competitive position.
The document discusses Google's use of data-based human capital management as a source of sustained competitive advantage. It analyzes this capability through the VRIO framework, finding that Google's ability to manage employees using extensive data is valuable, rare, costly to imitate, and Google is well-organized to capture value from it. Specifically, Google uses data to hire innovative, productive employees and determine the characteristics of great managers. This human capital management approach has allowed Google to take a different strategic path and make objective decisions to strengthen its internal team and competitive position.
The document discusses Google's use of data-based human capital management as a source of sustained competitive advantage. It analyzes this capability through the VRIO framework, finding that Google's ability to manage employees using extensive data is valuable, rare, costly to imitate, and Google is well-organized to capture value from it. Specifically, Google uses data to hire innovative, productive employees and determine the characteristics of great managers. This human capital management approach has allowed Google to take a different strategic path and make objective decisions to strengthen its internal team and competitive position.
The document discusses Google's use of data-based human capital management as a source of sustained competitive advantage. It analyzes this capability through the VRIO framework, finding that Google's ability to manage employees using extensive data is valuable, rare, costly to imitate, and Google is well-organized to capture value from it. Specifically, Google uses data to hire innovative, productive employees and determine the characteristics of great managers. This human capital management approach has allowed Google to take a different strategic path and make objective decisions to strengthen its internal team and competitive position.
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About VRIN/VRIO
The tool was originally developed by Barney, J. B. (1991) in his work
‘Firm Resources and Sustained Competitive Advantage’, where the author identified four attributes that firm’s resources must possess in order to become a source of sustained competitive advantage. According to him, the resources must be valuable, rare, imperfectly imitable and non-substitutable. His original framework was called VRIN. In 1995, in his later work ‘Looking Inside for Competitive Advantage’ Barney has introduced VRIO framework, which was the improvement of VRIN (Valuable, Rare, Imperfectly Imitable, Non- Substitutable )model. VRIO analysis stands for four questions that ask if a resource is: valuable? rare? costly to imitate? And is a firm organized to capture the value of the resources? A resource or capability that meets all four requirements can bring sustained competitive advantage for the company. About google Google’s ability to manage their people effectively is a source of both differentiation and cost advantages. Unlike other companies, which rely on trust and relationship in people management, Google uses data about its employees to manage them. This capability allows making correct (data based) decisions about which people to hire and the best way to use their skills. As a result, Google is able to hire innovative employees that are also very productive ($1 million in revenue per employee). Besides being valuable, it is also a rare capability because no other company uses data based employee management so extensively. Is it costly to imitate? It is costly to imitate, at least, in the near future. First, companies should build the highly sophisticated software, which is both costly and hard to do. Second, HR managers should be trained to make data based decisions and forget their old management methods. Is Google organized to capture value from this capability? Certainly, it has trained HR managers that know how to use the data and manage people accordingly. It also has the needed IT skills to collect and manage the data about its employees. There’s no doubt that Google is one of the most powerful companies in the world, and its success arguably stems from a sustained competitive advantage in human capital management. If we were to break down Google’s VRIO framework from the HR perspective, it might look something like this:
Value: Use human capital management data to hire and retain
innovative, productive employees. These employees consistently create some of the most popular consumer products and services in the world.
Rarity: No other companies are using data-based employee
management so extensively.
Imitability: Data-based human capital management is both costly and
difficult to imitate, at least for the near future. Companies have to build the software and invest in training their HR staff on the new technology and strategy.
Organization: Google is organized to capture value from this
capability. The IT department has the skills to collect and maintain the data, while HR and team leaders are trained on how to use the data to hire, promote, manage, and improve performance of employees.
Having a VRIO framework in place allowed Google to take a
completely different approach to human capital management and make decisions using massive amounts of objective data. For example, Google’s People Operations team set out to identify which characteristics make a great manager. The data used to determine this included surveys, performance evaluations, and great-manager nominations. Google also conducted double-blind interviews with the company's highest- and lowest-rated managers. By determining what qualifies as a great manager, Google strengthens its internal team and the foundation of its sustained competitive advantage.
Iles, P., Chuai, X. and Preece, D. (2010) 'Talent Management and HRM in Multinational Companies in Beijing: Definitions, Differences and Drivers', Journal of