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Human Resource is the Most Important Asset of an Organization Essay

I agree with the statement that “Human Resource is the most important asset of an organization.” Human resource is “the set of individuals who make up the workforce of an organization, business sector or an economy.” (“Human resource definition”). Human resource is the least mobile of the four factors of production, which are resources required for generation of goods and services. The other factors of production are natural resources, capital (including all man-made resources) and enterprise. (“Factors of production definition”).

The most important aspects of human resource are the knowledge, skills, creativity and motivation possessed by people. These aspects of human resource improve with age and experience, which no other resource can do. Thus, human resource is often regarded as the scarcest and most important asset that creates the largest and longest lasting competitive advantage for an organization.

The idea that human resource is the most important asset of an organization is particularly relevant to the business landscape of the 21st century. In developed and even developing countries, their economies are moving away from being manufacturing-based into being knowledge-based. To quote Peter F. Drucker, the famous management guru, educator and author: “The most important, and indeed the truly unique, contribution of management in the 20th century was the fifty-fold increase in the productivity of the manual worker in manufacturing. The most important contribution management needs to make in the 21st century is similarly to increase the productivity of knowledge work and the knowledge worker.” (Drucker, 1999, p135).

Knowledge has become the key factor of productivity and competitive advantage for organizations in today’s economy. Since knowledge can only be created, utilized and transferred by human beings, it is clear that human resource is the most important asset of a modern organization. Other resources such as capital and raw materials are also necessary and have different functions in an organization. However, human resource is still the most important because only people can plan the usage of these resources as a whole to create maximum value for the organization.

Starbucks, the highly successful Seattle-based coffee store, is a great example of a company that believes that its human resource is its most important asset. Starbucks’ employees, called partners, are the key to their customers’ experience and the success of the company (Noe, Hollenbeck, Gerhart and Wright, 2012, pp. 3-4). Starbucks wants its baristas to have good coffee knowledge, product expertise, and provide excellent customer service. Thus, Starbucks invests heavily in the training of its baristas. For example, Starbucks shut down most of its stores in 2008 for a full-day training event called “Perfect the Art of Expresso” to train its baristas make high-quality expresso for customers. To reward and retain its partners (“Facts About Starbucks and Our Partners (Employees)”), Starbucks offers its partners a Total Pay package including a fair and competitive wage, a 401(K) savings plan, stock options, an employee stock purchase plan and other perks. Starbucks offers comprehensive health benefits to partners who work part time, unlike most companies which offer health benefits only to full-time staff. Finally, Starbucks offer its partners flexible work hours so that they can enjoy better work-life balance.

In the modern knowledge-based economy, many companies seek to gain a competitive advantage in the market. Human resource is the most important element to build the competitive advantage of a company. The knowledge, skills, experience and creativity of each individual contribute to the development of new products and services, which ultimately impact the profitability and growth of the company.

The Minnesota Mining and Manufacturing Company (3M), a manufacturing conglomerate based in Minnesota, is a great example of a company which empowers its human resource to develop innovations that contribute to its profitability and sustained competitive advantage. 3M is famous for offering the “15 Percent Rule” program to its employees to encourage their creativity and innovation efforts (“The 15 Percent Solution”). For decades, 3M employees can spend up to 15 percent of work hours on their own projects which may not be directly related to their job’s mission. The “15 Percent Rule” program has spawned many of 3M’s successful products. For example, 3M scientist Art Fry developed the famous Post-It Note, which became one of the 3M’s best-selling products, during his “15 percent time”.

Since human resource contribute directly to a company’s bottom line, it is very important to keep retain good employees. It is well known that when a company loses good employees, it is a costly and time-consuming process to recruit and train new employees to replace the ones who left. Thus, companies should value their human resource, which is their most important asset. It makes sense for companies to be great places to work at, because happy employees will directly contribute to their bottom line.

Google has been ranked first in Fortune Magazine’s annual Best Companies to Work For in 2013 (“100 Best Companies to Work For”). Google is well known for its lavish perks for employees such as free gourmet food, free massages, on-site laundry, Wi-Fi commuting shuttles, etc. In fact, Google monitors its employees’ well-being to a great degree. Google’s HR department, called People Operations (or POPS), collects and monitors data on how employees respond to benefits (“Here’s How Google Became Such a Great Place to Work”). A few years ago, POPS noticed a problem that the departure rate of women who had recently gave birth was leaving Google at twice the average departure rate of the company. They rectified the problem by improving the maternity leave plan to give new Google mothers five flexible months off with full pay and benefits. After this plan was implemented, the attrition rate for new mothers was reduced by 50 percent.

In conclusion, human resource is the most important asset of an organization. We have discussed the importance of human resource. We also provided several examples of how great companies like Starbucks, 3M and Google recognize the value of human resource and create competitive advantages by effective management of various aspects of their human resource.

(Total: 998 words)

Human resource definition. Retrieved June 1, 2013, from

Factors of production definition. Retrieved June 1, 2013, from http://www.businessdictionary.com/definition/factors-of-production.html

Drucker, P. F. (1999). Management Challenges for the 21st Century, pp. 135, Butterworth-Heinemann.

Noe, R. A., Hollenbeck, J. R., Gerhart, B. and Wright, P. M. (2012). Human Resource Management: Gaining a Competitive Advantage, 8th Edition, McGraw-Hill.

Facts About Starbucks and Our Partners (Employees). Retrieved June 1, 2013, from

The 15 Percent Solution. Retrieved June 1, 2013, from

100 Best Companies to Work For. Retrieved June 1, 2013, from

Here’s How Google Became Such A Great Place to Work. Retrieved June 1, 2013, from

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