Human Capital Managemeng

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them effectively to achieve and maintain competitive advantage.

2 IMPORTANCE OF HUMAN CAPITAL MANAGEMENT (HCM)

Globalisation is leading today’s organisation, especially in large organisation to the point where vibrant workforce, worksite flexibility and information technology will make intangible the actual physical location where job is done. Hence, any successful organisation will regard employees as their most valuable asset and biggest investment. To cope with such development, HCM is definitely a system that not only can meet the needs of the present, it is also able to meet the needs of the future generations.

HCM, in short, focuses on the value of an employee. It views people as asset rather than mere labour that fill in the given perspective job within an organisation by having a broader spectrum of staffing solution. This simply means that an employee is essentially a human capital, which has an intrinsic measurable value as well as future measurable value.

The importance of HCM is that the system allows management to recruit the right and best fit candidates for the organisation based on a framework that can analyse, visualise and manage the candidate’s abilities, skills, work experience, and career motivations. The management needs not make decision regarding the candidate purely based on their first perception anymore; and HCM allows the candidate an opportunity to express their value based on their skills, competencies required to achieve the organisation’s objectives and goals. This could improve the recruitment process in comparison to the traditional framework, where it could be an unfair judgment and decision-making. This is utmost important, because a right candidate being hired can ensure the efficient contribution to the organisation in the long term, as well as develop the candidate’s talents and skills even further for the mutual benefits of both parties.

With the right people recruited into the organisation, HCM then plays its role to orientate the employee to the organisation. It is one of the important steps to make the newly recruited employee feel comfortable with the organisation and its members. It will make the employee feel more comfortable and confident to handle his perspective job, as well as breaking the ice within the organisation. This is an essential first step to retain an employee in the long run.

Further to that, HCM also plays an important role to cope up with the changing environment by training respective employees to improve their skills and knowledge in their respective fields. This could make their roles more relevant to the organisation’s objectives and goals, as well as keep motivating and building their interest in continuous contribution to the organisation.

To sustain development and high performance, an organisation needs to identify and understand the trend that are affecting the growth of employees and leverage the insights to develop approaches that could positively impact the organisation’s objectives and goals. HCM has an importance of analytic tools for strategic business decision-making. With HCM, measurable human capital indicators can be developed regarding the performance within a time frame. This could ensure that all organisational strategy complements each other, rather than competing, which is important in sustaining the overall management efficiency.

In short, HCM plays an important role in recruiting the right person into the organisation; orientating the newly hired employee into the organisation by making them feel comfortable; constantly provide training programmes to further develop their skills for sustaining the growth of the organisation. This is essentially based on the belief that as the employee grows, the organisation will grow too.

3 BENEFITS OF HUMAN CAPITAL MANAGEMENT (HCM)

HCM refers to the management of the employees in an organisation, by hiring the right candidate to the right position, providing training, upgrading their skills, utilising their skills and knowledge to the fullest for the mutual benefits of both parties.

The benefits of the HCM are:

3.1 Extracting the best out of employees

HCM plays an instrumental role in increasing the efficiency of employees, making them an indispensable resource for the organisation.

3.2 Hire the right candidate

It enables the human resource professionals to hire the right candidate for the right role. Talent acquisition is one of the most crucial functions of human resource management. If one wrong candidate is hired leading to problems, that creates confusion within the system. With the right candidate, superiors and management do not have to spend much of their time and energy in training someone who is already well aware of his/her roles and responsibilities. HCM is focusing on recruiting ‘the right talent’ for the organisation. It helps recruit employees who really deserve to be in the system, orientating them to the system and making them feel comfortable to contribute and deliver their level best in their assigned roles.

3.3 Flow of information

HCM enables free-flow of information between superiors and subordinates. There will be no confusion or misunderstanding when employees have easy access to their superiors. Information channels up or down will be cleared and smoothed as the person is very clear on his/her roles and duties. Half of the problems would evaporate when fellow colleagues discuss matters and resolve issues amongst themselves, leading to a more effective and efficient workforce.

3.4 Training and skills development

Training and skills development activities are essential for upgrading the existing knowledge of employees. Training program increases the efficiency of employees and eventually increases the overall productivity of the organisation. It is essential for every employee to keep himself/herself abreast with the latest developments in his/her field. HCM encourages employees to be self-sufficient and seek to equip them with the relevant skills set to adapt to changing situations so that they can function effectively and efficiently within the organisation.

That being said, the performance of employees must be evaluated from time to time. HCM, in this aspect, helps the superiors to keep track of the subordinate’s performance level, identifying any needs for training and skills