The Role of Human Capital

Human resource management is defined as the process of managing human talent to achieve an organization’s goals. In order for an organization to function properly and reach those overall goals, they must invest much time and money into their greatest asset, human capital, or in layman’s terms, human talent in employees that can be economically valued. Human capital is not like physical labor in that the knowledge a person can gain is expandable and self-generating when more and more experience is gained. It is also transportable and shareable. This transfer does not prevent its use by the original holder. However, the transfer of knowledge may reduce its scarcity-value to its original possessor.

It is well known that human capital is intangible and is not easily organized the same way an organization manages jobs, products, and technologies. It is because of this that managers must tap into each and every individual employee on some level to gain understanding and figure out ways to help each in their own needed area of improvement. Many times, an employee will come into a new workplace with many skills already acquired and ready to use. At other times, managers must train employees and use knowledge that the company considers important to teach them. Sometimes, knowledge is gained but never used in a particular field of work because many managers may be unaware of their employees’ duties and objectives. Managers and employees must be on the same page in order for their organization to run as smoothly and efficiently as possible. Effective communication is key and has come quite a long way in the past few decades. Through effective understanding, training techniques and other managerial exercises, human capital can be effectively fine tuned to have many employees organized and working in the best possible field for them. Efficient organizations with strong human capital have a direct relationship with overall productivity of an organization.

Enhancing the value of employees is a win-in goal for employers and employees alike. The more an organization recognizes the true value of each employee, the more it recognizes that this value can be modified with nurturing and investment, the more it recognizes that employees vary in their talents and motivations, and that a variety of incentive strategies and working arrangements can be created to enhance each employee’s contributions to organizational performance, the more likely the organization will be able to appreciate the variety of employee needs and circumstances and to act in ways that will make sense in both business and human terms.

Technology plays a big role in maintaining human capital to its fullest. As computer based business become more and more common, so do the requirements to