First published January 2005 in the Michigan Dairy Review

Some dairy farmers look at their employees as a cost factor, which needs to be kept minimal. Others see their employees as a resource. With proper management, employees can help keep a farm successful in the long run. How a farmer looks at his or her employees determines how employees will be managed and what role labor will play on a farm. If you are the kind of farmer who sees employees as a resource, applying the resource-based theory to farm labor offers some suggestions on how to manage employees to best contribute their skills, knowledge, and abilities. The resource-based theory explains how a firm can achieve competitive advantages from its distinct resources. A business is considered a bundle of specialized resources that is used to create a privileged market position. Applied to labor management, the resource-based theory focuses on understanding the relationships among strategy, human resource management practices, and the people (their knowledge, skills, and abilities) to create a competitive advantage. Based on this theory and six case studies with Michigan dairy farms, we suggest management practices, which help dairy farmers develop a system for selecting, training, and motivating their employees to efficiently contribute to farm goals and accomplish superior performance.