Human Capital Management Meaning and Role

10/12/2020 0 By indiafreenotes

Capital refers to already produced durable goods which further contribute to the production of goods and services. In simpler words, capital refers to any produced good/service which enables an individual/organization to deliver high quality output. Capital acts as a catalyst to increase productivity in organizations.

Human Capital management refers to managing an organization’s employees for them to contribute significantly in the overall productivity of organization. In a layman’s language managing workforce of an organization refers to human capital management.

Human Capital Management is defined as the process of acquiring, training, managing, retaining employees for them to contribute effectively in the processes of the organization.

In simpler words, upgrading the existing skills of an employee and extracting the best out of him/her refers to human capital management.

Do not treat your employees as mere labours. Senior management must ensure timely growth and development of every individual concerned for him/her to contribute efficiently when required.

The key objective of every organization should be to train its employees so that they become efficient resources later on. In human capital management, organizations treat their employees as important resources that play an instrumental role in productivity of the organization.

The development and management of individuals in line with their key responsibility areas not only make them an indispensable resource in the future but also ensure their hundred percent contribution towards the organization.

Human capital management drivers fall into five major categories:

  1. Leadership Practices
  • Communication: Employees must be treated well for them to develop a feeling of attachment and loyalty towards the organization. Managers must understand that their role is not just to sit in closed cabins and impose ideas on others. They ought to communicate well with their subordinates. Employees must have an easy access to the senior management. Communication from management to employees also known as Top down communication is essential for the employees to be aware of their goals and objectives and for them to know what is expected out of them.
  • Inclusiveness: Management ought to sit with employees on a common platform to invite suggestions and feedbacks from them.
  • Supervision: Senior executives and management must reduce the various levels of hierarchy between them and employees’. Management must interact and motivate the employees from time to time for them to give their level best.
  • Leadership: Senior executives should support, lead and influence the workforce so that they contribute effectively towards the organization.
  1. Employee Engagement
  • Key Responsibility Areas: Key responsibility areas of an individual should be designed in line with his education, skills, expertise, experience and also area of interest. This way, work never becomes a burden for him.
  • Commitment: Outstanding efforts of employees must be acknowledged for them to feel motivated and work harder even next time. Employees performing well ought to be suitably rewarded and appreciated in front of others.
  • Time: Time management ensures that no employee is overburdened. Responsibilities must be equally shared among employees.
  • Evaluation: Employee engagement must be evaluated from time to time by the top management.
  1. Knowledge Accessibility
  • Information Availability: Employees must have an easy access to all relevant information required to perform their duties. Organizations must organize various training programs (In house Trainings or Out sourced trainings) to constantly upgrade the existing skills of employees and acquaint them with new learnings.
  • Team Work: Employees must be motivated to work in teams rather than working alone.
  • Information Sharing: Encourage employees to share information with each other.
  1. Workforce Optimization
  • Work processes: Senior management must define work processes of employees well for maximum productivity.
  • Working Conditions: An organization needs to provide excellent working conditions to the employees to expect the best out of them.
  • Accountability: Individuals must be held accountable for their work. Get a commitment from employees and nothing like it, if everything is in writing.
  • Hiring: Individuals responsible for talent acquisition must ensure that they hire the right candidate for the right role. Design a strong induction program for all the newly joined employees.
  • Performance Management: Employee’s performance needs to be strongly monitored and managed.
  1. Learning Capacity
  • Innovation: New ideas should be welcome. Employees must be encouraged to come out with new and innovative ideas which might benefit the organization.
  • Training: Trainings must be practical/relevant and designed to sharpen the skills of employees. Do not design training programs just for the sake of it. They must benefit the employees.
  • Career Development: Employees must be aware of their growth plan in the organization.
  • Learnings: New learnings should be valued by all in the organization.

Human Capital Management is essential for hiring, managing, training and retaining talented and high performing employees.

Human Capital management plays an important role in the recruitment process. It ensures that human resource professionals hire individuals who really deserve to be in the organization. Recruiting the right talent is of utmost importance. An individual who is not fit for a particular role will not be able to contribute much in the long run.

Talent acquisition is one of the most crucial responsibilities of human resource professionals, often neglected in most organizations. Do not hire someone just because you need to fill a vacant position or your superiors have asked you to do so. Analyze the background of an individual thoroughly. Try to find out why someone really wants to join your organization? Remember money should not be the only criterion why someone wants to change and join a new organization. An individual who has been assigned the role of acquiring new talents should not forget to check an applicant’s past experience, interests, professional qualification and reasons for changing previous job. If you really like someone, try to do some reference check as well. Do discuss with the applicant before calling up his previous organization or boss, else it might land him/her in trouble.

Human Capital management plays an important role in orienting a new employee to the system. Boring and meaningless induction programs lead to confusions and an employee eventually loses interest in the organization. Do not load someone with unnecessary information, the very first day he steps into the organization. Believe me, he will run away. Make him feel comfortable. Ask him/her not to bring lunch from home. Order lunch from outside and ask all his team members to have lunch together. Such small initiatives go a long way in breaking ice among team members.

It is essential for employees to upgrade their knowledge with time to cope up with the changing situations. Human Capital Management helps in training the employees and making them indispensable resource for the organization. Motivate employees to take up special courses or online programs which would help them in their job. Employees who do not brush up on their skills from time to time find it difficult to survive in the long run. Inculcate the habit of reading. Internet is also one of the good options to keep oneself abreast with the latest developments.

Human Capital management plays an important role in increasing the efficiency of employees. Individuals are in a position to contribute more towards the system, eventually increasing the overall productivity of the organization.

To conclude, human capital management is important for:

  • Hiring the right talent
  • Orienting him/her to the organization
  • Making a new employee feel comfortable
  • Training employees in order to constantly upgrade their skills
  • Retaining employees
  • Making employees self-sufficient and prepare them for adverse conditions.

Benefits

Human capital management helps in extracting the best out of employees. It also plays an instrumental role in increasing the efficiency of employees, making them an indispensable resource for the organization.

Human Capital Management enables the human resource professionals to hire the right candidate for the right role. Talent Acquisition is one of the most crucial functions of an individual representing human resource vertical.

Remember one wrong employee can lead to problems, confusions within the system. Superiors and management do not have to spend much of their time and energy in training someone who already is aware of his roles and responsibilities. Human Capital Management is beneficial in recruiting the right talent for the organization. Hire employees who really deserve to be in the system. The process of Human Capital management involves hiring the right candidate; orienting him to the system and making him comfortable for him to deliver his/her level best. It is generally observed that boring induction programs are a mere waste of time and energy. Human resource professionals should not design induction programs just because protocol demands the same. Induction programs should be interactive sessions where the trainer should acquaint the new employee with the policies of the organization. Human resource professionals should act as a bridge between senior management and employees.

Human Capital management enables free flow of information between superiors and subordinates. Employees have an easy access to the senior management and hence there is no room for confusion or misunderstandings. Half of the problems evaporate when colleagues discuss matters amongst themselves.

Trainings and skill development activities are essential for upgrading the existing knowledge of employees. Training program increases the efficiency of employees and eventually increases the overall productivity of organization. It is essential for every employee to keep himself/herself abreast with the latest developments in his/her field. Human Capital management makes an employee self-sufficient. It enables employees to adapt to changing situations easily. A well-trained employee can bring better productivity than someone who is not trained.

The performances of employees must be evaluated from time to time. Superiors ought to keep a track on subordinate’s work. Proper feedback is essential. Human Capital management helps in monitoring employee’s performance. Special online reporting systems help senior management to have a direct access on the work of their juniors. Employees are aware as to what is expected out of them.

Human Capital Management highlights the importance of soft skills and personality development for employees. An employee who can speak well is always considered as a trouble shooter by his fellow workers. Do not hire someone who has poor communication skills. Someone with average communication skills can still be considered.

Human Capital management helps the employees to improve in areas where they feel they are lacking. It not only benefits the employees but also the entire organization.