The Role of Human Resources in Competitive Advantage

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A Firm as a Cohesive Organism

A firm can be considered as a cohesive organism that learns how to find good means of creating or doing things through adoption basically in response towards its setting. In this environment, an organisation is aligned to using all means to maintain and optimise its status. The organisation has to put its focus on valuable resources like either financial situation, technology, or human resource activities. However, before selecting which type of resource to incorporate in the firm, it is worth noting that a good resource, which sustains the competitive advantage, is that which will add substantial value to the organisation, is inimitable, rare, and non-substitutable (Bailey et al., 2018, p.30). Based on various analysis human resources are sources of organisation competitive advantage. It is asserted that human assets are an essential source of justifiable advantage due to their casual uncertainty and organised information that makes them incomparable. As part of organisational resources, employees play a vital role in sustaining the firm’s competitive advantage. Management that puts trust in their employees while giving them inspiring tasks makes them reciprocate with high levels of commitments, motivations, and performance (Armstrong & Taylor, 2014, p.50).

Factors of Success and the Shift to Human Capital

It is noted that the factors of success include top management commitment; aspirations and motivation of recruits; management team core abilities; aspiration of the team; alliance creation and development; and international market business integration. From these factors, it is clear that the sources of competitive advantage have changed to human capital from the traditional financial and technological sources. These factors imply that the achievement of a company does not rely basically on its budget size or the commodities that back at technologies but instead it depends on the attitude, competence, and skills of employees as well as their level of commitment and communication relationships. Therefore, it is depicted that employees form the major source of achieving competitive advantage in an organisation. An organisation is said to have a competitive advantage if it implements a strategic plan that is not concurrently executed by the existing probable competitor. Sustainable competitive advantage, on the other hand, can be defined regarding an organisation that implements a strategic value that is not concurrently being implemented by probable competitors, and other firms are not in a position to duplicate the strategic plan of your firm (Noe et al., 2006, p.29).

Human Resource Activities for Competitive Advantage

Employees are a significant source of competitive advantage, and the human resource activities greatly influence it. The following human resource activities contribute to employees’ competitive advantage in an organisation:

i. Performance Appraisal/Management

Performance appraisal is defined as a method by which a business measures and evaluates the behaviour of every worker and achievement for a predetermined period. Any manager is enrolled in reviewing and evaluating worker's performance since critical ideas base on a precise assessment of the behaviour of employees. Confusion avoidance and underperformance in an organisation are achieved by managers setting performance reviews very often in the firm. To realise effective performance appraisal, managers employ a performance management approach, which entails planning of performance, managing, and performance appraising plan (Buller & McEvoy, 2012, p.47).

Performance planning involves goals specification through both employees and managers and determining the appropriate standards or performance and development activities to function as required. The human resource through performance planning will ensure that the result of each is appealing and that any development strategy required by employees to secure the available resources is provided (Buller & McEvoy, 2012, p.48).

Performance managing refers to the day-to-day activities of functioning in line with the expectations created in the planning stage. Managers and employees periodically review the performance and if everything is moving according to the plan, they reinforce positively to maintain the high levels of performance. Managers coach employees on occasion where the performance is defective (Macey et al., 2011, p.88).

Lastly, performance appraisal is done at the end of planning and managing period to ascertain whether the goal has been achieved based on agreeable terms of both the manager and employees for the past years. An appraisal is an objective based on ongoing feedback that motivates and increases the productivity of employees in the future. Analyzing the past performance helps plan for the expectations of the following year while concurrently closing the feedback loop of the present cycle. Therefore, performance management enables the employees to know what to expect and what they have to do to realise the set target (Khan, 2010, p.6).

ii. Training & Development

Training is done to ensure continuous growth and development of employees for subsequent growth and development of the organisation. Training imparts some specific skills to the employees leading to increased efficiency and skills of employees in doing the job. On the other hand, development forms the overall improvement of employee interrelationship, ability to make independent decisions and performing the task. The development aims at improving the employee's potential. Well-trained individuals require less supervision and make their decisions independently. Training helps employees be prepared for a future promotion or temporary responsibilities of an organisation (Elnaga & Imran, 2013, p.31). Training needs can be identified from the following areas:

  • Organization analysis, which is done by identifying the areas where training needs to be emphasised and making a list of departments.
  • Task analysis by identifying the details of each job about its various operations.
  • Main analysis is done by analysing the individual capabilities of the employees against the requirements of the job.

Training of employees can be done either by on-job training methods (such as mentoring, position rotation, apprenticeship, and individual experience as he/she works) and off-job training (through conferences, special courses, and vestibule training) (Elnaga & Imran, 2013, p.31).

iii. Employee Motivation

Employees are motivated through rewards. Rewarding can be either through financial or non-monetary values. Rewards portray a powerful message among employees of an organisation as it depicts the kind of management it seeks to maintain, create and the behaviour or attitude of employees required by the management. The reward is thus important since it defines the goal-directed character of an individual if it is impeded or about to be blocked. Rewards make an important tool of reinforcing an organisation influence towards goal achievement (Urbancova, 2013, p.5).

The purpose of the reward system is to motivate the performance of employees and has to be timely tied to performance effectiveness. The human resource and the management motivate employees through the fact that employees have believed ineffective performance, they feel the reward is attracting, and believe in individual efforts towards better performance.


In conclusion, it is depicted that an organisation's main aim is to utilise the available resources and achieve the set goals. However, the organisation needs to maintain the competition experienced in the environment from existing competitors. For the firm to have the sustainable competitive advantage, it is realized that human resource can influence the employees towards its achievement. The activities that human resource does to influence the employees and attain a competitive advantage environment include performance appraisal and performance management, training and development, and lastly motivating the employees. Performance management helps the employees to predict what to expect as they work thereby leading to having organised plans. During training and development, the employees receive specialised skills that suit the task in performance while offering rewards to potential employees motivates them increasing the firm productivity. Therefore, it can be reaffirmed that the activities of human resource greatly influence the employee's effectiveness leading to a more competitive advantage firm.


Armstrong, M. and Taylor, S., 2014. Armstrong's handbook of human resource management practice. Kogan Page Publishers.

Bailey, C., Mankin, D., Kelliher, C. and Garavan, T., 2018. Strategic human resource management. Oxford University Press.

Buller, P.F. and McEvoy, G.M., 2012. Strategy, human resource management, and performance: Sharpening line of sight. Human resource management review, 22(1), pp.43-56.

Elnaga, A. and Imran, A., 2013. The effect of training on employee performance. European Journal of Business and Management, 5(4), pp.137-147.

Khan, M.A., 2010. Effects of human resource management practices on organizational performance–an empirical study of oil and gas industry in Pakistan. European Journal of Economics, Finance and Administrative Sciences, 24(157-174), p.6.

Macey, W.H., Schneider, B., Barbera, K.M. and Young, S.A., 2011. Employee engagement: Tools for analysis, practice, and competitive advantage (Vol. 31). John Wiley & Sons.

Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M., 2006. Human resource management. China People's University Press.

Urbancova, H., 2013. Competitive advantage achievement through innovation and knowledge. Journal of Competitiveness, 5(1).

October 24, 2023

Business Economics

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