Final answer:
The HR department needs to align with the business strategy to leverage its potential as a source of competitive advantage
Step-by-step explanation:
The statement that HR is a source of competitive advantage that many firms have yet to fully leverage because it is not aligned with business strategy is correct. The HR department plays a critical role in aligning the employees' skills and capabilities with the overall business goals and objectives. When HR practices are closely aligned with the strategic goals of the organization, it can lead to improved performance and a competitive edge in the market.
For example, if a company aims to be the leader in innovation, the HR department can develop recruitment and training strategies to attract and retain top talent with expertise in research and development. By aligning HR practices with the business strategy, the company can foster a culture of innovation and gain a competitive advantage.
On the other hand, if HR practices and policies are not aligned with the business strategy, it can hinder the organization's ability to achieve its goals. For instance, if a company emphasizes cost reduction as its strategic priority and the HR department focuses solely on hiring high-priced talent, it can lead to increased costs and a misalignment with the overall business strategy.