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TITLE - INVESTING IN THE HUMAN CAPITAL

DISCIPLINE - HRM

SUB THEME – HUMAN CAPITAL

Author

Shaizal Batra

M.B.A. (HRM & OB), M.Com. (Accounts)

Asstt. Professor (Department of Commerce & Management), Extol College,

E-8, Bawadiya Kalan, Bhopal – 462039

Phone -0755-422 5550, +91 900 999 5550 shaizal.batra@gmail.com


About the Author:- Mr. Shaizal Batra holds Master’s Degree in Business Administration from Barkatullah
University, Bhopal (M.P) and Master of Commerce from Barkatullah University, Bhopal (M.P.) He is working as an
Assistant Professor in Extol College, and visiting faculty (MBA) in Institute of Cooperative Management. Previously
he worked as Placement Officer and Director in charge in the Vidyasagar Institute of Management. He has four years
of teaching experience and over 9 years of industrial experience. Prior to joining Extol College, he had been associated
with a Non Profit Organization (Indo European Chamber of Commerce and Industry, Bhopal) as Admin In charge, and
worked as a Manager Trainee in HR Consultancy (Ashkom Media India Pvt. Ltd) in Bhopal. Worked for several
NGO’s which includes UNICEF, Sanket, and LWHRF etc. He is credited with research/articles publications in various
referred journals as well as websites. He is member of various Institutional and professional bodies. His areas of
interest include: - Human Resource Management, Operation Research & Business Policy & Strategic Analysis.
ABSTRACT
Research papers on today’s human resource techniques and strategies are influenced by society and economics and,
with the rapid growth of global commerce and electronic technology, it can be expected, that such techniques will be
based on managing highly knowledgeable workers who provide skilled services.
While executives face strategic, organizational, economic and improved work standard challenges each day, the
organizations are now focusing on human capital as a competitive differentiator.
The organizations must align people with business objectives and provide its employees – the right tools, data and
analytics to derive better decision making and attainment of desired objectives in wise manner.
Best in class HR executives apart from understanding what they have to do and what not, they spread the message to
executives of all departments at all levels to emulate successful strategies for continued success.
The study uncovers the top priorities in Human capital management for an organization and how successful
organizations will pursue them.
This Research papers on HRM focus on techniques that work to benefit the work force as a whole, from highly skilled
to lower skill levels, are sought to benefit the organization as a whole.
Tags: Global Commerce, Competitive Differentiation, Human Capital, Human Capital Management
CONTENTS

1. Introduction

2. Meaning of human capital

3. Objective of human capital management as a separate branch of study.

4. Criteria used in the study

5. Human capital management in business context.

6. Key factors raising the need of Human Capital Management.

7. Barriers to HUMAN CAPITAL MANAGEMENT

8. Strategies for successful HUMAN CAPITAL MANAGEMENT.

9. Recommendations

10. Research methodology.

11. Conclusion

12. Case Study - Career development at THE CLIQUE – Steps 2 Success

13. References
INTRODUCTION
Human capital management is a burning issue not only in the field of human resource management but into every area
of management as human resource management peeps into every department of an organization. Considering
employees as resources for the organization and utilizing them at their best for attainment of the predetermined
objective of the organization if the foremost concern of any organization. HRM executives have to position themselves
aligning other people strategically. HR executives must excel successful strategies for continues success.
This approach enables HR executives to earn their place at the table with the rest of the executive management team by
delivering strategically relevant services that produce quantifiable results. Developed to integrate all the tools and
processes associated with people and performance, the Human Capital Management approach aligns the goals of
employees and the goals of the company to meet specific, measurable, and realistic business objectives.
While the processes associated with Human Capital Management are diverse, the skills component that drives many of
those processes can be managed effectively.

MEANING OF HUMAN CAPITAL MANAGEMENT


It represents the investment into people that enhances their economic productivity. This means, considering human
being as a resource an just like upgradation and installation of a new machinery for better output in terms of quantity
and quality, we invest into upgrading of the skill set (KNOWLEDGE, SKILLS, ATTITUDE) rather than technical
skills of every employee of the organization.
When we have the workforce which is highly talented, focused and motivated, we can now consider them as human
capital.
Human capital theory rests on the assumption that formal education is highly instrumental and even necessary to
improve the production capacity of a population. To conclude we can say that an educated population is productive
population.
Classification
Human capital is an intangible asset as it is not owned by the firm that employs it. Basically, human capital arrives at
9am and leaves at 5pm. Human capital when viewed from a time perspective consumes time in one of key activities:

• Knowledge (activities involving one employee),

• Collaboration (activities involving more than 1 employee),

• Processes (activities specifically focused on the knowledge and collaborative activities generated by
organizational structure - such as silo impacts, internal politics, etc) and

• Absence (annual leave, sick leave, holidays, etc).

OBJECTIVE OF HUMAN CAPITAL MANAGEMENT AS A SEPARATE BRANCH OF STUDY


The sensibility or need of human capital lies sin the fact that

• New generation must be given appropriate parts of the knowledge which has already been accumulated by
previous generations.

• The new generation should be taught how existing knowledge should be used to develop new products, to
introduce new processes and production methods and social services.
• People must be encouraged and motivated to develop entirely new ideas, products, processes and methods
through which creative approaches can be developed.
Creation of human capital was responsible for both differences in productivity of workforce and the differences in
overall levels of technology that we observe in the world.
CRITERIA USED IN THE STUDY
Key performance criteria to distinguish employees of organization included
• HIGHLY ENGAGED – Employees who are highly engaged into the organizational affairs and they are
actually proactive for taking initiatives for something new that helps for the betterment of the organization.

• COMMITTED – Employees who are loyal and keep their work up to date leaving any pendency behind. They
always perform the task in the predefined manner and never give a chance to management about complaints.

• WILLING SUCCESSOR – The members of the organization who are keen about their own growth as well as
organizational growth and they possess the qualities to be a good successor of the higher post because of their
commitment towards growth.

• SATISFIED EMPLOYEE- Employees of this category are satisfied with their job and have no long term
plans. They feel that whatever had to be done in terms of career growth has been done by them. They feel happy
with their current position in the organization and are always there for the organization.

• LINGERER – They are considered as the category where working is like hell. They consider themselves as
facilitator rather than taking responsibility for performance of the task. Continuous monitoring is needed if the
task has to be performed by them. These people always remain in their own engagements rather than
completion of the given job and most of the times they are dissatisfied with the organizational policies. The
management also neglects them but don’t fire them because they know that some working hands are needed for
the job.
COMMON CHARACTERISTICS BETWEEN INDIVIDUALS ENJOYING BEST IN CLASS
PERFORMANCE AT VARIOUS LEVELS

• Strong alignment between HUMAN CAPITAL MANAGEMENT strategy and business or situational priorities.

• Business heads held accountable for critical talent processes.

• Standardization of human resources and talent process to improve efficiency for strategic initiatives.
TO ACHIEVE BEST IN CLASS PERFORMANCE INDIVIDUALS AT ALL LEVELS MUST

• Know the job roles that enhance and drives business performance.

• Initiate and automate in each and every area to improve efficiency.

• Have access to and know how to utilize human capital management data to make better decisions.

HUMAN CAPITAL MANAGEMENT IN BUSINESS CONTEXT


It is impossible to know between two people in an organization that how one activity will affects the other
person’s activity towards the productivity of organization. Whether it will move towards positive or negative
direction.
In trying to understand the new reality of today it is easy to lose sight of where things may be headed in the
future and too much focus on unknown future may result in negletion of today’s realities.
Leaders and individuals at all levels of organizations must have to learn to balance the location and direction of
their organization.
HUMAN CAPITAL MANAGEMENT DESIGN

ORGANIZATIONAL DESIGN— it provides a base of consistent and pre-defined skills requirements and
descriptions. This feature can dramatically accelerate the development of competency models and help
companies adapt them quickly to meet changing job requirements.

WORKFORCE PLANNING AND DEPLOYMENT—Skills metrics provide a roll-up view of skill levels
across the organization, clearly revealing skills gaps so that managers can focus their training and development
resources. Detailed assessment scores in key skills can help companies quickly identify and prepare employees
with the competencies needed to fill in key job roles as proven performers move or retire. Finally, skills metrics
can help employees move within the company by establishing skills milestones for career advancement and
requirements for new positions.

RECRUITMENT—Recruitment is the most common process yet but the most crucial activity in any
organization. Companies can improve their screening processes by creating direct links from job postings to
tests and scored questionnaires. Skills metrics can be included as part of an applicant tracking system to support
recruiting decisions throughout the hiring cycle. For pre-employment screening, online skills assessments can
validate candidate qualifications and identify candidates for advancement in the hiring process, quickly and
effectively.

DEVELOPMENT— by implementing human capital management systems, organizations can dramatically


accelerate employee skills development. Skills assessments can help companies quickly identify employees
who need training in a particular skill, as well as those who don’t need training, helping to avoid unnecessary
training costs. Pre- and post-training assessment scores also provide data for the precise measurement of
training effectiveness.

PERFORMANCE—Skills measurement systems provide key advantages for managing and improving
performance, particularly in relation to balanced scorecard initiatives and in the employee evaluation process.
For the employee evaluation, performance can be determined by a multitude of factor. However, many
performance determinants, such as manager or peer reviews, depend on subjective feedback. Skills assessment
scores provide a valuable source of objective data to support the employee evaluation process, with a level of
detail that enables employees to track improvement in existing skills, as well as to validate the acquisition of
new skills.
KEY FACTORS RAISING THE NEED OF HUMAN CAPITAL MANAGEMENT
Business leaders today are realizing that talent and workforce management play a critical role in enabling the growth of
organization. One of the most successful human capital management initiatives was established of internal academics
to develop, groom and nurture internal talent. It helps in managing experienced and skilled workforce too. The key
factors raising the need of human capital management are:
• Economic uncertainty.

• Organization growth goals.

• Scarcity of key skills in the marketplace.

• New entrants in the market.

• Development of grey market.

• Decreasing profit margins.

• Increase in competition.

• High government intervention.


BARRIERS TO HUMAN CAPITAL MANAGEMENT

It requires strategic investments in acquisition and the development of talent to support the business.
The basic challenge towards human capital leaders is to position them to guide this growth from a talent perspective
and ensure that human resource and talent management processes align with organizational growth goals. The major
barriers are:

• Time – People and the top management thinks that it takes a lot of time for executives to be groomed and
nurtured because their mentality supports that the executives can learn by doing doing ht job on a continual
basis and professional people does not have a separate time schedule as it will affect their productivity at the
time of performance of the job.

• Lack of support from business leaders for human capital management initiative – As this concept is not so
much familiar in industry only selected entrepreneurs encourage the concept and rest of the others thinks human
capital management is waste of time, resources, efforts and money. They think that in the time when we can
make executives train, at the same time we can go for capsule courses concerned with the task only.

• Lack of awareness – More emphasis has to be given on the need and importance of the concept as it stills holds
the key concern regarding the improved efficiency and organizational productivity.

• Lack of commitment – The executives or employees at different levels still thinks that when we are into the
job and performance is OK then it is a mere waste of time and they develop a feeling that management is not
confident on us.
STRATEGIES FOR SUCCESSFUL HUMAN CAPITAL MANAGEMENT
The challenges are great, barriers are many but despite them many organizations are finding ways to push forward with
organizational and human capital goals. These strategies start with

• Alignment of business and talent strategy.


• Connecting human resource initiatives to strategic priorities of organization.

• Identifying gaps between workforce supply and business demand.

• Foster a culture of innovation and creativity.


RECOMMENDATIONS
When anybody is trying to move its performers in human capital management the following steps will help for the
necessary performance improvement:
• Know the roles that drive the business.

• Making gap identification, a repeatable process rather than single shot event.

• Automate workforce management processes.

• Integration of data for clearer picture.

• Self accountability.

• Focus on long term effects.

• Practice innovative ideas.

• Communicate frequently.

RESEARCH METHODOLOGY

The study aimed to identify best practices for talent and workforce management in industry and provide a framework
by which readers could access their own capabilities in this critical function. A case study is being analyzed so that the
critical factors for successful implementation of human capital management can be assured.

The study has emphasized to assess and to determine the:

• The perceived challenges that impact the human capital management efforts.

• Planning of the workforce and their core talent strategy.

• The organizational and process capabilities that allow them to execute on their strategies.

• The quantitative results that have been achieved by executing the human capital management strategy.

CONCLUSION
After the study we can conclude that with change in time and change in external environment the need of human capital
management is being increasing day by day to attain the organizational objectives efficiently. Even the concept of
human capital management can be implemented into educational institutes, specially engaged into professional
education so as to enhance the productivity of the students by providing them the balanced training and education of
various theoretical and practical tools and techniques. It will help students to get good jobs immediately after
completion of their degree.

It is the need of the hour that innovative techniques are to be followed for remaining ahead in the completion. This will
only be possible through grooming the workforce.
CASE STUDY

HUMAN CAPITAL MANAGEMENT


Career development at THE CLIQUE – Steps 2 Success
Background
The Clique provides training and consultancy services to companies and individuals. This firm is engaged into
classroom sessions for English language, personality development classes and providing training to executives of
various organizations.
‘Steps 2 Success’ is a suite of development programmes for employees of different organizations, to enhance their
skills at key stages in their career. This program focuses on enhancing the key skills that executives and employees at
different levels require for getting success throughout their career. It includes continuous off the job as well as on the
job training with support and coaching from trainers and other designated people.
Before Steps 2 Success was conceived, there was a tendency to focus learning opportunities on the enhancement of
technical excellence, with some ad hoc skills development. With the continued growth of The Clique after entering
into metro cities, however, the company required a fresh focus on the skills needed to meet the new challenges of an
ambitious and dynamic business and as well as a bigger market environment.
Research highlighted the key competencies employees needed in order to excel as business advisers and, through this,
the importance of formal business skills development, better line management support and coaching, and clearer career
paths for employees. The business also needed a means by which talent could be identified and succession planned.

Designing and developing the programme


The programme has different durations; the modules within each programme take place once a month. The modules
are arranged across four competency streams (growth delivery, people delivery, task delivery and client delivery).
These streams aim to develop those competencies that The Clique considers critical for success.
Each candidate signs a learning contract and agrees to participate fully in the modules and to undertake pre- and post-
course work; the business unit or location head agrees to support the candidate, and the senior agrees to coach the
candidate. A separate programme is available for those candidates with few or no formal communication skills. The
programmes have an assessment element so that post-course work is marked and written feedback given to the center
head. The modules are delivered as intensive and challenging workshops. Simulations, case studies, role plays, and
active participation with real clients provide a stimulating learning experience, which candidates find memorable and
which has practical application.
Following each module, candidates are encouraged to create an action plan, using a personal development planning
tool, and to implement what they have learnt with the support and coaching of their faculties. Other senior members
have been used as assessors and advisory partners for some modules.

Implementing and operating the programme


While the need for development was recognized at a senior level, it was also critical to establish line management and
to demonstrate the value of the development versus the loss of chargeable time. This has been achieved in a number of
ways: through the appointment of a programme sponsor from within the business for each programme; a
communications strategy for business unit leaders, line managers and employees; feedback; and data analysis.
The role of the programme sponsor is to work with the assigned learning and development professional on programme
development, to introduce the programme, to be available as a support to participants, to consider issues that may arise,
to review programme feedback and to discuss participants’ personal development plans through one-to-one
Development review meetings held at the end of the programme.
Communication about the programmes takes place at board level and through group and one-to-one meetings with
managers and employees.
During the programme, line managers are sent periodical reminders of their employee’s attendance at modules, and
copies of their assessments. Gradually, this is helping line managers to understand better their role in the development
of their employees, and importantly, the role of formal development as one element in the learning journey.
Participants are expected to be proactive in managing their own learning, both through the ‘Steps 2 Success’
programme and on the job, and to use the resources and support available to achieve this.
A post-course reception is held at the end of each programme to celebrate the commitment that employees have
demonstrated to their continued learning and development, and the value that The Clique places on this. At past
receptions, presentations have been given by both motivational speakers and members of the board.
Celebrating success and planning the future
The value of ‘Steps 2 Success’ has been quickly realized – employees are motivated by their development and have a
better understanding of career opportunities in their own field and how to progress, and managers have been able to see
real benefits to the business. The ‘Steps 2 Success’ programmes have helped to reduce the attrition rate, with a number
of the participants being promoted within their organization.

The key benefits of the programme were:


• It makes it easier to identify talent pool.
• Networking and cross-selling have been more effective
• More internal promotions.
• Improved retention.
• More of a ‘buzz’ about the need to learn – a definite ‘feel good’ factor
• Greater understanding of the need to develop holistic (not just technical!) skills
• Improved ability to attract good-quality candidates to The Clique.

References

1. Book reference - PC Tripathi, P N Reddy (2009), Principles of management, Tata McGraw Hill Companies,
India.
2. VSP Rao (2010), Human Resource Management, Excel Books, India.
3. http://en.wikipedia.org/wiki/Human_capital