Exploring how to utilise Human Capital in a transformation, from a resources-based view-perspective : A case study on human capital through a transformation

Abstract: Firms today are confronting a dynamic business environment such as change of customer preferences, demographics, business and organisational models and the emergence of new technologies. Changes in the business environment can lead to knowledge-based firms transforming their business structure and risking losing their competitive advantage by ignoring their value in human capital. Human capital originates from intellectual capital which consists of both social and organisational capital as well. The combination and utilisation of these capitals is the basis for organisations to achieve higher levels of productivity and competitiveness. However, when facing a transformation, organisations tend to struggle to maintain competitive advantage. Thus, in a knowledge-based industry, human capital along with the other capitals, are essential to manage during a transformation to not risk losing competitive advantage. To address this topic, we chose to investigate a Swedish company in the machine manufacturing industry undergoing a transformation, referred to as Company X. Company X consists of highly educated and competent personnel, who previously have operated as a project-based organisation. They are currently transforming their organisation towards standardising their production and their employees’ competences. This transformation is directly affecting their work methods, competence demand and overall human capital. We found that Company X has a recruitment strategy which acts as a proactive measure which allows them to procure necessary human capital to maintain their competitive advantage and prepare for change. It was also concluded that Company X struggles with communication which affects their social capital, and thus their human capital. The lack of communication affects the vision and goal of the transformation which becomes unclear for the employees, causing confusion. We concluded that Company X lacks a decent strategy of utilising best practices, which is common for project-based organisation, but becomes more problematic as they become product-based and are more dependent on previous experiences.