Human Capital
Human capital is a valuable resource that consists of a person’s experience and expertise that could be used by a company to achieve its objectives. Human capital is vital since an enterprise cannot do anything without some degree of human competencies and understanding. Various forms of capital have been deemed inputs in the production of goods and services; however, human capital is not considered a common input because it serves a more complex function in the production of goods and services. Human capital possesses an inherent ability to modify and regulate itself and other resources. This trait contributes to the economy’s eternal dynamism (York, 2009). Awareness, schooling, job competence, and psychometric assessments are all examples of human capital (Randhawa, 2007). The idea of human capital has its origins in economic theory (Becker, 1996). Human capital isn’t the same as either physical or financial capital. In reality, this capital has been described as a person’s individual expertise, ability, innovation, and wellbeing (Becker, 2002). Human capital, physical capital, and financial capital, according to Becker, are three different types of capital; however, the distinction stems from the fact that an individual’s abilities, wellbeing, and principles cannot be differentiated from their assets and properties. As a result, human capital is the most efficient and environmentally friendly form of capital. Formal education and training, according to Schultz (1961), are critical methods for improving production levels. Furthermore, he regards human capital expenditure as a criterion for educational registration. There are several different meanings of human capital, each emphasizing different aspects of human capital. Human capital is now described as a set of characteristics, such as life trade, experience, ingenuity, invention, and effort, which individuals engage in their profession (Weatherly, 2003). The investment in human resources to maximize their productivity is known as human capital. The expenses of this investment are, in fact, set aside for future use. As a result, the learning company continues to invest in individuals because people are important human resources with a variety of characteristics (Becker, 2002). In overall, organizational capital is a set of attributes, such as educational, professional, and cultural, that add value to the business (Randhawa, 2007).
Role and Function of Human Resources
The first job of HR is to figure out what the institution’s potential needs are. What kinds of employees do the organization demand, and how many are deemed necessary? This expertise will influence recruitment, choice, quality management, learning and development, and all other human resource functions. Human resource management is linked to employee development. Both are apprehensive about where the business is now and what it will need to be successful in the years ahead.
The second HR function is bringing in people to apply for the job and selecting the best candidates. When it comes to recruiting fresh talent, workforce recognition is generally the first step. Being a successful boss coincides with a slew of perks, the same as being a valuable employee does. Due to its high tarnished reputation, the cigarette companies, for instance, is having difficulty recruiting workers. If you have a strong company’s image and the right procurement strategy in place, you’re almost there. After candidates apply, the selection process is used by HR to pick the most qualified and high-potential candidates. There are different types of hiring equipment to every stage of the selection process, thanks to rapid technical advances in hiring. Staff must be able to master new techniques they can use in the long run, according to HR. HR plays a critical link between modern workplace and the workplace of the long term.
A well-functioning Human resources department must grow in tandem with the business and community.. By assessing the HR function, the HR department ensures that the company’s strategic success, as well as operational efficiency and assistance, is maintained. Although still operating efficiently, the company must have the required service level. In operation, position evaluation involves comparing and contrasting various elements of the business HR process. Which might include things like worker productivity and reliability, job location, work schedules, the economic system, job responsibilities, and how valuable a task is to the company? Role appraisal is based on the idea that jobs that are almost equivalent should be paid equally.
Another function of Human Resource Management is job planning, support, and development for employees, also regarded as career shaping. Highlighting how employees’ goals can be matched with the company’s success can help with retaining employees. The organization benefits from better transformational leadership, increased productivity, and a strong brand image.
HR has a part to play in helping and having to care for employees who are dealing with personal matters. Personal wellbeing is about aiding employers when events don’t go according to plan. Concerns both inside and beyond the company may affect employee morale, engagement, and performance. As a consequence, the end result is the company suffers. HR-led individual well-being programs must prioritize personal interaction with employees and also group and business knowledge exchange. A company, for example, may provide a worker counseling network where people with mental health issues could receive counselling. On a company level, the corporation could hold a mental health awareness day.
Effective Human Capital Strategy
The first and most important tool in Human Resource department is job security. Irrespective of how unforeseeable human existence is, work is an integral part of most people. People go to work for a variety of reasons, the most important of which is to find a job that allows them to cope with their daily lives. Between the client and the organization, there is a legal agreement (operate for financial support) as well as an unofficial agreement (you put in some extra effort, we maintain you well). Employees who are satisfied with their jobs will return home to provide for oneself and their families. Security is at the heart of about all Human Resource department conducts. When safety at work is threatened, mainly during transformations or structural change, the effects are noticed in the organization immediately. Employment protection helps companies because it allows them to maintain their employees. For example, the company is usually the one who suffers most when employees are discharged. They are those who invest in these employees’ recruitment, training and improvement. This is a cost-effective business. If an organization makes no attempt to preserve its employees, it can leave for competitors more likely. According to research conducted in 2020, workplace cohesion is the third most important job concern. Workplace safety was regarded as a major concern by 28percent of the 1,100 practitioners surveyed in the UK (York, 2009). Work security is a priority in global HRM operations.
The next HR best approach is specific recruitment. This enables a business to employ employees that can actually contribute. You can’t just hire everyone; you have to recruit staff that is good for the job. Outstanding workers add the most value to an organization, so corporations go to considerable extents to hire them. It is also critical to prioritize the implementation of a systematic and inclusive hiring process. This is due to legal requirements, diversity goals set by organizations, and the idea that a more diverse team is more reflective of community. This can be immensely beneficial in getting a greater understanding of overall consumer preferences as well as the desires of different customers.
Contingency compensation is the other Human Resource correct approach. It’s all about compensation and benefits. First and foremost, you will pay employees more than standard if you hire the best. The company needs to retain them and compensate them equally so that they can contribute the most to the business. It really is an illustration of how strategic objectives like proactive recruitment, deferred compensation, and job security can be combined to have more value than they might on their own. There are some disadvantages of paying workers more than the industry average. Employees that aren’t doing well, for example, are discouraged from withdrawing. If you recruit top performers on a regular basis, you’ll have to pay them more than the industry average. Benefits packages will be included in this form of payment scheme, as well as money (base) salary. The city’s industry patterns, as well as those in the local market, must be noted (a lot of the best workers may come from other job areas). Then you should figure out what the standard full-time wage is and how the business fits into the pay structure. Individual rewards, on the other hand, should be linked to the various forms of achievements made by workers. Bonuses are awarded based on performance. Employees are rewarded for achieving this goal by combining organizational performance with personal rewards. It also instills a feeling of ownership in the worker.
Knowledge sharing is important. Many large corporations struggle with this: how do you keep count of who knows what and where to guide your inquiries? Staff members also rank being informed about the organization, as well as having the ability to make a contribution to and determine decisions that affect their work life, as important in attitude surveys. HR objectives are also assist staff in communicating with one another. This can be accomplished by forming segments made up of people from various backgrounds, such as females and LGBT persons. The creation of company newsletters and updates can be aided or led by HR.
References
Becker, R. L. (1996). Transforming employment relationships: Implications for human resource management. Human Resource Management Review, 6(1), 75-88. https://doi.org/10.1016/s1053-4822(96)90005-4
Randhawa, G. (2007). Human resource management. Atlantic Publishers & Dist.
