On its basic level, human capital views the people working in a company as a valuable resource that needs to be properly managed. Like physical assets or finances, the employees of a company are vital to the company’s success.
Rather than view people as random individuals, human capital sees them as a collective resource that must analyzed, quantified, organized, and measured to ensure business success.
Here are nine ways human capital management works to support the company and its workers.
- Recruiting. Human capital management begins with the recruiting process. Companies must have a clear understanding of the needs of the workforce in order to hire people who will fit smoothly into the job. They must regularly assess their succession plan in order to know exactly who fits where, and where gaps exist. They need to be conscious of the current crisis in human capital and the lack of qualified workers in many categories. Steps must be taken to work around shortages in many areas.
- Staffing. This is what most people see as human capital. It’s keeping track of who is in what position. Where are the vacancies that need to be filled? Are they happy and fulfilled in work? What are the grievances and how are they being dealt with? This is the day-to-day work of the human resources department.
- Organization. As companies assess the overall effectiveness of their company they need to check their organization. Are people reporting to multiple bosses? Are there redundancies where two or more teams are doing the same thing? Is this redundancy needed for good control, or would the company be more effective without it? Best management practices come when the organization is streamlined and effective.
- Payroll. Money is the oil in the gears. Smooth payments and accurate pay for work performed all contribute to good talent management. Great importance is placed on hiring talent and paying competitive salaries. Overinflated salaries reduce the bottom line. Too low salaries make people move to better paying jobs and again, the cost of new hires cuts into profits.
- Time tracking. With hourly employees, it’s critical to have an accurate accounting of hours spent working. Human resources must create an inexpensive and effective way to keep track of time spent working. Time clocks, punch cards, online tracking devices all work to keep employees honest and companies accurate in payments.
- Analytics. As departments collect and organize that data pertaining to their people, it is useless unless it is analyzed. Within the analyzing of data come the opportunities to streamline, upgrade, and better manage employees.
- Benefits. Benefits are crucial to employee satisfaction. Human resources controls and manages the disbursement of benefits. They are used in addition to salaries to retain top talent. The way employees understand their benefits and access them is also a part of this management.
- Talent management. Human resources need to understand the skills of their employees and put them to their best use. This benefits the company by enabling it to keep its top talent satisfied and avoid losing star employees to the competition. It contributes to employees’ satisfaction when they know their essential skills are valued.
- Plan leadership succession. To continue smooth operations of a company you can’t have gaps in leadership. Wise businesses examine potential transitions and then work to insure a qualified person is ready to step into the position when it becomes vacant. It’s a continuous process to groom people to move up into selected slots.
A company’s workforce is as critical to its success as financial soundness or physical assets. More and more companies are managing their human resources with the same planning, oversight, and care. Staying on top of trends in human capital will help keep the business running smoothly not just in these nine areas, but throughout the entire organization.
Are you looking to better manage your human capital? Contact Joel for methods and strategies to lead to better success.
Copyright ©2005-2016 Joel Garfinkle, All Rights Reserved.
Joel Garfinkle is recognized as one of the top 50 coaches in the U.S., and the author of 7 books, including Getting Ahead: Three Steps to Take Your Career to the Next Level. He has worked with many of the world's leading companies, including Google, Deloitte, Amazon, Ritz-Carlton, Gap, Cisco, Oracle, and many more. Visit Joel online at Garfinkle Executive Coaching. Subscribe to his Fulfillment@Work Newsletter and receive the FREE e-book, 40 Proven Strategies to Get Promoted Now!
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