Human Resource Activities and Competitive Advantage

Subject: Employee Management
Pages: 4
Words: 870
Reading time:
4 min
Study level: College


Competitive advantage is a critical element of present-day organisations. The competitive advantage can either be in services, goods, employee management or internal and external procedures. According to Del Valle and Castillo, “The employees are the assets of the organisation. Competitive advantage in human resources policies can generate an enormous impact on the net profit and overall profitability of the corporation” (2008, p. 140). Human resource activities such as compensation, recruitment and selection process and training contribute to the competitive advantage of an organisation. This paper will discuss how these three activities contribute to the competitive edge of the Corporation.

Employee recruitment

Employee recruitment is, at times, a tasking and costly activity. Additionally, it is an important component of any enterprise because it contributes to competitive advantage and overall success of the enterprise (Hughes & Rog, 2008). If an organisation hires the right people, they yield not only high returns but also are likely to remain in the organisation for long, saving it from the cost associated with employee turnover. Hughes and Rog (2008) argue that in spite of an organisation having the necessary technology, it cannot achieve its goals if it does not recruit the right employees. Therefore, employee recruitment and selection enhance the enterprise’s competitive advantage by ensuring that a business acquires workers who are capable of using the available physical resources and technology.

According to Hughes and Rog (2008), recruitment and selection processes help job seekers to understand the culture and values of an organisation. Consequently, job seekers can decide whether to work in a team or to quit. In this regard, human resource managers use employee reactions during the recruitment process to craft and preserve competencies, which are priceless to the organisation. Recruitment assists in the candidate self-selection since it enlightens them on the requisite skills that portray successful employee in the enterprise. Consequently, human resource managers use the recruitment and selection process to establish an active labour force that offers quality and unique products and services to consumers.

Employee compensation

Employee compensation helps an organisation to retain its top performers and improve its competitiveness. Corporations use financial and nonfinancial rewards to compensate the best performers. It is imperative for human resource to understand that employee compensation adds to the competitive advantage of an organisation (Banker, Lee, Potter, & Srinivasan, 2006). Some organisations have different compensation strategies for different jobs. Such policies encourage competition among employees. In return, they lead to innovations, which are crucial to the competitive edge of an organisation. For a group to be competitive in the modern world, it has to be innovative. A good compensation program encourages employees to develop new products and services. Besides, it makes employees invest their energy in brand development, which makes an organisation stand unique in the market.

Apart from encouraging innovation and brand development, an active compensation program helps an organisation to retain its productive workforce. In return, the corporation is saved from the costs associated with hiring and training new employees. Banker et al. (2006) claim that the lack of experienced workers hinders organisational growth. It is difficult for an organisation to grow if it cannot retain its skilled personnel. Employee compensation makes a business competitive since it contributes to its growth. A good compensation program helps the company to maintain its productive workforce. In response, the workforce helps the enterprise to identify untapped markets and look for ways to harness the markets. Eventually, the business diversifies its market, adding to its competitiveness.

Employee training

Organisations are working in a relentlessly changing global environment, encountering stiff competition. Del Valle and Castillo allege, “In these conditions of fierce competition the competitive advantage of an organisation often rests with its employees” (2008, p. 147). An experienced workforce offers a competitive edge and contributes to the growth of the institution. Employee training equips employees with requisite skills, which are aligned with organisational goals and visions. Hence, employees understand their role in the organisation, and they strive to meet their obligations. What’s more, training encourages employees to be creative and to take their duties seriously. In the long run, it promotes a culture of self-drive within the employees, which is critical to organisational growth. Moreover, training helps employees to become well-rounded (Del Valle & Castillo, 2008). Employees learn how to handle different tasks, saving the company the cost of having to hire new staff whenever there are changes in job descriptions. In most cases, human resource asks employees to give their opinion during training. Hence, the organisations benefit from a vast range of ideas generated by the employees.


Human resource activities contribute to the success or failure of an organisation. Their actions add to the competitive advantage of a corporation. Human resource recruits and retains qualified employees leading to a business offering quality and competitive products and services. In addition, human resource comes up with compensation strategies that encourage innovation within the organisation. Such strategies help the agency to develop superior goods and services, thus becoming competitive. An organisation cannot be competitive if it does not have skilled and competent employees. Therefore, human resource trains employees to equip them with the necessary skills. In return, the employees make the business to be competitive by developing superior products.

Reference List

Banker, R., Lee, S., Potter, G., & Srinivasan, D. (2006). Contextual analysis of performance impacts of outcome-based incentive compensation. Academy of Management Journal, 39(4), 920-948.

Del Valle, I. & Castillo, M. (2008). Human capital and sustainable competitive advantage: an analysis of the relationship between training and performance. International Entrepreneurship and Management Journal, 5(2), 139-163.

Hughes, J. & Rog, E. (2008). Talent management: A strategy for improving employee recruitment, retention and engagement within hospitality organizations. International Journal of Contemporary Hospitality Management, 20(7), 743-757.