Human Capital Importance in an Organization

Capital is defined as resource or the input into a business. Human capital can therefore be defined as an input in employees, the ability to perform a task with the aim of producing economic value. Human skills are needed to implement a business idea. Hence human capital importance is non -ignorable in a business. The ability to perform a task is gained by an individual through learning and experience.

The company can organize training for the employees and in this way improve on the skills such as presentation, telephone manner, time management and self evaluation towards set goals, and in this way have them get updated on new technologies and thus keep them on top of the game. The company can also opt to hire competent personnel.

Use of tests, also helps a company monitor the performance of its employees and in this way it is able to know whether they need to advised on certain matters. Use of incentives also helps the employees to give their best; this involves offering prizes to the best performing employee. Boosting their morale by letting them know that they are important assets in the company is also important.

Human capital can also be defined as the workforce. The processes of workforce formation can be defined as the transformation of raw man power resource into productive resource. This leads to improvement in the quantity of production. It also leads to customer loyalty, as the customers get to receive better services.

The transformation requires an organization to input education, health, moral values and also enhanced benefits. This workforce is classified as intangible capital. The human capital importance makes the individual undergoing the transformation build a feeling of respect, personal growth and hence leads to better output. Whether in a small or a very large business investing in human capital is very important.

Human capital officers also known as the human resource officers are important people in the business, as they are the link between employees and the organization. These officers are therefore the most important people in an organization as are familiar with the strategic objectives of the organization, and they also know how to achieve them. They report directly to the chief executive officer.

Their tasks include: making better hiring decisions as they are good at identifying the job tasks they want to be done by an employee and by holding interviews, and are able to identify a candidate most fit for the vacancy. They also play a role in helping new employees adapt in the organization. They also organize for retirement benefits for employees who have been working for the company. They also make sure that the companies’ human capital adds value to the company. They therefore have the capability of influencing the laying down of non performing employees. They are also responsible for the company’s good relation with the surrounding community.

Therefore if you want your business to prosper, human capital importance is something you can not ignore. It is therefore good for you to invest in your employees.

The Highest Value Capital in Any Business – Human Capital – Financial People Just Seem to Miss It

Peter Drucker comments about business structure and management emphases tickle me. They tickle me because the very statements he makes run absolutely counter to the widely held beliefs of today’s “experts.” The difference is staggering. In Managing in the Next Society, Drucker makes comment about the problem “financial people” have managing business. “There’s an enormous challenge ahead to educate the owners of business, many of whom, as I’ve noted, are financial people. I once was a securities analyst, so that gives me license to say that it is virtually impossible to make a financial person understand business. I am not being facetious. Financial people don’t deal with the issue of balance between often conflicting elements – short versus long term, continuity versus change, improving today versus creating tomorrow. Corporate leaders who wrestle with these issues every day know the amount of struggle involved, but it’s difficult for financial people to understand this.” This ought to shake you to your core.

Why all the emphasis on managing by financials? It happened simply and innocently enough. We began to confuse the financial statements with the business, itself. Human capital is thought to be either non-existent, or of little real value. For more than 50 years the relative stability of technology and demographics paved the way for repetitive, mechanical hierarchical business models to succeed. They had predictable structure, and outcome based on repetition of mechanical practices, which then yielded predictability in financial results, creating the false association. Good financials were erroneously equated with good business. The two patterned so closely that the difference would be difficult to discern. Market Hyper-Dynamics Defies Management by Financials

Today’s technological landscape is no longer as stable and predictable. The demographics are also nothing like those characteristic of the last 50 years. The entire landscape is in constant and accelerating change. In this new world, it is now necessary to see a business for what it really is, and to recognize that financial statements are merely the report card for how the business is working. That is their only relationship. A Business is not a Machine, it is more like a life. A business is a complex web of conversations and social relationships. Out of these comes the continuous ebb and flow of the menagerie of products and services, which are developed, created, communicated, delivered, and serviced by provider companies to their customers.

In this hyper-dynamic marketplace, it is far less important what a company thinks they do as much as why, for whom, and for what betterment of the customer and the world itself. Conversations and relationships are characteristics of a different dynamic than a machine. They are characteristic of people, humans, living things. They are organic in their very nature, and require organic processes and organizations to endure. People are the very soul of business. Human Capital produces the value of all other capital. I heard the CEO of an energy related firm make this very interesting statement. “When we consider the human relationships as critical in my enterprise, we have a struggle as our material “assets” as shown on our financials represent $BB, while our people “assets.” even as costs represent only $MM. It seems that the larger assets are the most important.

We are coming to recognize that the real value of the material “asset” is totally dependent on the performance of the people, and this is leading us to realize that the people “asset” is of greater significance to the company performance, rendering the material asset as valuable, or potentially, value-less.” Which “assets”, which “capital,” do you value most? I guarantee, if you think like a financial person, you’ll answer incorrectly. If you think like a traditional business person, you’ll risk the same error. Consider thinking more like Peter Drucker. Then you can begin to place more of your energy and investment into the things that produce your greatest ROI. These, of course, are your people, your Human Capital, and if you’re like most of today’s managers, you are well under equipped to do much to make improvements. It is time to get some help for your organization. I wouldn’t wait. I might even call a PEO.

Six Sigma and Its Use in Human Resources (HRD)

Not often do you hear the words ‘six sigma process’ in relation to the human resources department! Although traditionally used within the manufacturing realm, this business philosophy can greatly impact the HR office. Within the workplace, there are various people who can make a substantial contribution to the company through Six Sigma management. This concept applies to the human resources department which consists of professional and well-trained business people who are hired specifically for hiring others.

Human Resource employees are adept at handling regular company procedures as it concerns the other employees within a company. These individuals are perfect for the team as a result of their abilities. These professionals are given the responsibility of placing employees within the proper roles in a company, as well as defining their job description and ensuring their place within the business.

Human resource experts are able to aid the fostering of a professional team and help manage conflicts within the workplace. All this is done amongst a Six Sigma business environment. As a result, this process provides HR professionals with the proper tools and mind-set to take on difficult tasks. The trained Black Belt or Master Black Belt measures each individual’s performance to help figure out which area best suits them or which aspect of business they need to improve on.

HR professionals are specifically trained in project management in order to analyze people and their purpose within the company. Project management training fits perfectly into Six Sigma training, and as a result, the HR team is better equipped to allocate responsibilities and oversee operational activities when coordinating projects.

Throughout these processes, employees are equipped with special tools that help them to document practices and locate, analyze, and define statistics or problems. Additionally, HR personnel will be familiar with several aspects of Six Sigma as a result of their training, one aspect being scorecards. The human resource department is given the responsibility of overseeing the employees within a business, ensuring they are continuously working and further aiding the growth of the company. As a result, they are able to help team members better understand certain project management concepts how best to analyze them.

Lastly, both Six Sigma and the HR department are similar in these rights; their project management backgrounds. This training successfully teaches employees about change management. Human resource professionals are able to better serve the companies they are hired by as a result of their knowledge in project management and 6 sigma methodology.