Every human resources function is a collection of activities, which help an individual to settle down in an organization and perform to his fullest extent. All these activities can be represented using the value chain. In competitive terms, value is the worth of an individual or the human capital. A firm is profitable if it has a collection of human capital that performs in creating a product.

The value chain displays total value and consists of value activities and potential. Value activities are the basic building blocks by which a human resources function builds up an employee in terms of motivation and learning. Potential is the inherent capability of the individual, which has been developed, with the help of the value activities.

Value activities can be divided into two broad categories, primary activities and support activities. The primary activities in a HR value chain are – Recruitment process, Settling In (Familiarization process), On the job experience, Performance Management and Career Planning. The support activities are – Communication, Training & Management development, Compensation (Lifestyle) management and Facilities and Administration.

How each of these value activities are performed will largely determine the quality of the human capital in an organisation and the competitive advantage in terms of human capital vis-vis other industries.