Human Capital

Human Capital

Human resource professionals play a significant role in the success of organizations. They are responsible for recruiting, interviewing, and training workers. In addition, they have the responsibility of handling employee relations, benefits, incentives, and payroll. A human resource manager in an organization plans directs and coordinates the administrative functions of the company. Overseeing other specialists in their day-to-day activities and consulting with executives on strategic plans is one of the key duties of human resource professionals. In ensuring that they manage the human capital effectively, human resource managers employ various strategies, which include training and development, recruitment techniques, and compensation incentives (Bossert & Hartog, 2015). These approaches help organizations to be effective as they work towards achieving their goals. Therefore, the paper will assess the term “human capital” and also discuss the role and functions of human resources in relation to human capital. Additionally, strategies that can help an organization to manage human capital effectively will also be addressed.

Human Capital and Its Relevance

Human capital is the intangible asset of an organization that can be described as the measure of the economic value provided by employees through their skills, knowledge, and abilities. According to Pasban and Nojedeh (2016), human capital constitutes about seventy percent of the operating expenses of a company.

Therefore, human capital is relevant to an organization as it helps to increase employee satisfaction. Great job satisfaction is achieved when organizations invest in the professional development of employees. A survey conducted in 2014 by the Society for Human Resource Management indicated that about 42% of employees were satisfied with their jobs as their organizations were committed to professional development (Bossert & Hartog, 2015)..

Similarly, investing in human capital is crucial in improving retention rates. When employees receive professional education and development, they are less likely to look for other opportunities outside the organization. About 44% of workers in the United States complain that the lack of opportunities for growth and advancement is one of the primary sources of stress in work (Pasban&Nojedeh, 2016).

Additionally, when organizations invest in employee development, they increase employee engagement. Employee engagement is one of the critical aspects that contribute to the success of organizations. Engaged employees are considered to be more productive and loyal to the firm. Providing employees with career development opportunities and also investing in developing their skills and knowledge makes them more engaged at work (Bossert & Hartog, 2015). Therefore, organizations must enquire from the workers the areas they need to develop and then provide opportunities.

Also, the management of human capital ensures a smooth flow of information in the organization. Investing in human capital enhances communication by improving the quality and quantity of information shared in the business (Bossert & Hartog, 2015). For instance, a mentorship program can initiate an active line of communication between employees and their superiors that would have never existed.

The Role and Function of Human Resources

Human resources play significant roles within the organizational structure of businesses. They oversee the critical aspects of organizations. For a business to be successful, human resources must view employees as human assets. Just like any other asset, a skillful and talented workforce can be utilized to strategically add value to the organization. Therefore, some of the roles and functions of human resources that relate to human capital include:

Staffing

Staffing focuses on hiring new employees who can either be part-time or full-time workers. Additionally, human resources have the responsibility of hiring contractors and also terminating their contracts. Other staffing activities include:

1. Identifying the talents needed by the organization and recruiting employees who will fill the positions (Parameswari&Yugandhar, 2015).
2. Maintaining ethical practices that align with the regulatory requirement when hiring
3. Determining the contract duration and negotiating the benefits and salary of employees.

Development

Developing the skills and knowledge of employees is one of the key components of human capital. It is the role of human resources to maintain a developmental approach to new employees and the existing ones. The key development activities for human resources include:

1. Developing training approaches that will equip employees with the skills and knowledge required to perform their roles.
2. Offering training opportunities such as educational programs and conferences that would help in ensuring that employees are updated in their respective areas (Parameswari&Yugandhar, 2015).
3. Providing feedback to managers and workers regarding their job performance.

Compensation

Salary and benefits are some of the functions entitled to human resources and also relate to human capital. It is the role of human resources to identify the appropriate compensation for every employee based on performance, role, and legal agreement. Compensation functions for human resources include:

1. Setting compensation as required by the legal laws for every job function.
2. Negotiating some of the employee benefits, such as retirement plans and health insurance rates with third-party providers (Parameswari&Yugandhar, 2015).
3. Determining the percentage at which employee salary will be increased or decreased based on performance.
4. Ensuring that employee compensation complies with the legal and cultural requirements of the organization (Parameswari&Yugandhar, 2015).

Safety and Health

Human resources have the responsibility of ensuring that the safety and health concerns of employees are considered. Employees are more productive when they are safe and healthy. Some of the safety and health activities conducted by human resources include:

1. Ensuring that employees comply with the health measures and safety requirements of the organization.
2. Developing current safety measures when laws within the industry change (Parameswari&Yugandhar, 2015).
3. Discussing with relevant government agencies on the appropriate measures for improving the safety and health of employees.

Strategies to Manage Human Capital

Human capital management focuses on managing employees in a way that will enable a company to achieve its strategic goals. Nowadays, organizations have realized that employee skills and knowledge can make or break the performance of an organization. Therefore, human resource professionals have the responsibility of developing strategies that would effectively manage human capital. The key strategies include:

Create Employee Profiles

In large organizations, it becomes difficult for managers to connect employees’ names to their faces. However, by using employee profiles, it becomes easier to know each individual. Therefore, various platforms can be used to create employee profiles that are essential tools in managing human capital (Kucharcikova, Tokarcikova&Blaskova, 2014). The profiles would also allow human resource professionalsto collect and store employee details in one place.

Streamline Employee Onboarding

The onboarding process gives a new employee the first impression of the company. Therefore, it is crucial that an organization develops a smooth onboarding system. Through the use of technology, it becomes easier for human resource professionals to manage new employees (Kucharcikova et al., 2014). Having an automated onboarding process in place can help resource managers to track and monitor the progress of new hire easily.

Performance Review

Performance appraisal is one of the approaches that is used by numerous organizations in managing employees. It is crucial that the performance review is kept as simple as possible. This can be achieved by asking employees the key questions that focus on core competencies. Human resource professionals should strive to create a regular feedback culture that incorporates self-ratings, HR assessment, and peer reviews (Kucharcikova et al., 2014). Encouraging employees to give feedback on their peer’s performance can provide human resource professionals with insights that they might not otherwise get.

Offer Unlimited Paid Time-Off (PTO)

The fourth strategy that can be proposed by a human resource professional is offering unlimited paid-time-off. According to the Society for Human Resource Management, only one percent of companies in the U.S. offer unlimited PTO (Straz, 2015). Setting flexible PTO policies would help human resource professional to eliminate the tedious work of tracking employee absence and calculating vacation accrual.

In conclusion, the key role of human resource professionals is to recruit, interview, and train workers. Additionally, they have the responsibility of managing human capital. Human capital is relevant to organizations as it helps to increase employee satisfaction, improve retention rates, increase employee engagement, and ensurea smooth flow of information. Moreover, the functions of human resources that relate to human capital include staffing, development, compensation, and safety and health. Furthermore, various strategies can be employed in managing human capital. The four key strategies are creating employee profiles, streamlining employee onboarding, reviewing employee performance, and offering unlimited paid-time-off.

References

Bossert, J., & Hartog, E.M. (2015). Managing human capital from an organizational learning perspective. International Conference on Public Administration, 782-789.

Kucharcikova, A., Tokarcikova, E., &Blaskova, M. (2015), Social and Behavioral Sciences, 177, 48-60.

Parameswari, B.N., &Yugandhar, V. (2015). The role of human resource management in organizations. International Journal of Engineering Technology, Management, and Applied Sciences, 3(7), 58-63.

Pasban, M., &Nojedeh, S.H. (2016). A review of the role of human capital in the organization. Social and Behavioral Sciences, 230, 249-253.

Straz, M. (2015). Tips for more easily managing your human capital. Retrieved from https://www.entrepreneur.com/article/241697