Human Capital Management

What is Human Capital Management

Human Capital management is a com-prehensive and coherent approach to the employment and development of people”. Moreover, HCM can be seen as a philosophy about how people should be managed, supported by a number of ideas regarding human behavior and organizational structure. But it is, or should be, equally concerned with the ethical aspect – how people should be treated in accordance with a set of moral principles. It is concerned with the contribution it can make to increasing organizational effectiveness through people. Applying policies and practices in the areas of organization design and development, personnel resourcing, learning and development, performance and reward, and the provision of services that improve employee wellbeing are all part of human capital management (HCM). They are based on integrated human resource (HR) strategies that are in line with the company plan. Armstrong, (2014)

 (Figure-1- Human Capital Management)

Functions of HCM

Management of human resources consist of several inter-related function. These functions are common to all organization though every organization may broadly be classified into two categories.  

There are three types of function.

Managerial function
Operative function
Procurement Function 

 Managerial Function

Planning
Organizing
Directing
Controlling

 Operative Function

The operative or service functions of human capital management are concerned with specific activities of procuring, developing, compensating and maintaining an efficient work force.

Procurement Function

It is concerned with securing and employing the right kind and proper number of people required to accomplish the organizational objectives. It consists of the following activities:

 (a) Job analysis: -

                        It is the process of studying in a job so as to identify the nature and level of human resources required to perform the job effectively.

 (b) Human Resource Planning: -

            It is the process of estimating the present and future manpower requirements of the organization, preparing inventory of present manpower and formulating action programmes to bridge the gaps in manpower.

 (c) Recruitment: -

            It is the process of searching for required human resource and stimulating them to apply for jobs in the organization.

 (d) Selection: -

            It implies judging the suitability of different candidates for jobs in the organization and choosing the most appropriate people.

(e) Placement: -

           It means assigning suitable jobs to the selected candidates so as to match employee qualifications with job requirements. 

(f) Induction or orientation: -

 It involves familiarizing the new employees with the company, the work environment and the existing employees so that the new people feel at home and can start work confidently.

Development Function

 Human resource development is the process of improving the knowledge, skills, aptitudes and values of employees so that they can perform the present and future jobs more effectively. This function compromises the following activities:

a. Performance Appraisal :-

It implies systematic evaluation of employees with respect to their performance on the job and their potential for development.

b. Training: -

It is the process by which employees learn knowledge, skills and attitudes to further organizational and personal goals.

c.Succesion Planning :-

It is the process of developing managerial talent through appropriate programmes.

d.Career Planning and Development :-

It involves planning the career of employees and implementing career plans so as to fulfill the career aspirations of people.

Compensation Functions

It refers to providing equitable and fair remuneration to employees for their contribution to the attainment of organizational objectives. It consists of the following activities:

a.Job Evaluation :-

It is the process of determining the relative worth of a job.

b.Wage and Salary Administration :-

It implies developing and operating a suitable wage and salary programme.

c.Bonus :-

It involves payment of bonus under the Payment of Bonus Act,1965 as well as non-statutory bonus and other incentives.

 Integration Function

It is the process of reconciling the goals of the organization with those of its members. Integration involves motivating employees through various financial and non-financial incentives, providing job satisfaction, handling employee grievances through formal grievance procedures, collective bargaining, worker’s participation in management, conflict resolution, developing sound human relation, employee counseling, improving quality of work life, etc. 

 Maintenance Function

It is concerned with protecting and promoting and promoting the physical and mental health of employees for this purpose several types of fringe benefit such as housing, medical aid, educational facilities, conveyance facilities, etc. are provided to employees. Social security measures like provident fund, pension, gratuity, maternity benefits, injury/disablement allowance, group insurance, etc. are also arranged.

 Objectives of HCM

1)To help the organization reach its goals.

2)To ensure effective utilization and maximum development of human resource.

3)To ensure respect for human beings. To identify and satisfy the needs of individuals.

4)To ensure reconciliation of individual goals with those of the organization.

5)To achieve and maintain high moral among employees.

6) To provide the organization with well-trained and well-motivated employees.

7) To increase to the fullest the employee’s job satisfaction and self- actualization.

8) To develop and maintain a quality of work life.

9) To be ethically and socially responsive to the needs of society.

10) To develop overall personality of each employee in its multidimensional aspect.

11) To enhance employee’s capabilities to perform the present job.

12) To equip the employees with precision and clarity in trans-action of business.

 Conclusion

Human Capital Management is a managerial function tries to match an organization’s needs to the skills and abilities of its employees. Attracting developing, motivating and retaining required talent and people in organization carries out this function. 

 Workforce of the organization is also being utilized as a source of competitive advantage by acquiring financial or economic capabilities, product capabilities, technological or process capability, organizational capability function. 

 Workforce of the organization is also being utilized as a source of competitive advantage by acquiring financial or economic capabilities, product capabilities, technological or process capability, organizational capability.

 References 

Armstrong, M. & Tylor, S. (2014) Human Resource Management Practices. 14^th edition. London EC1V 3RS : Ashford Colour Press Ltd.

Human resource management- C. B. Gupta

Human resource management- K. Aswathappa

Human resource management- Dr. Tripathi