Human Capital- Emerging trend in the field of Human Resource Management
Managing Human Capital is one the challenges for most of the multi-national companies. Thanks to the changing tradition in the late 20th century as well as beginning of the 21st century that has witnessed a radical change in managing Human Capital. Let’s discuss what the Human Capital is. Human Capital comprises all the intangible assets that people bring to their jobs. It was first used by Noble Prize winning economist Mr. Theodore W. Schultz. This human capital can be broken into five elements which are of great importance, such as, Knowledge, Skill, Talent, Behaviour and Experience. People nurture Human Capital by various means- formal education, on-the-job training and learning etc. Human Capital is managed by two kinds of person- The Owner of Human Capital and The Investor Human Capital. Owner of Human Capital is Employer as he owns Human Capital for a certain period of time. And Investor of Human Capital is Employee, who invests his Knowledge, Skill, Talent, Experience and Behaviour not only for performing the required task, but also for achieving organisation’s goals. From here comes the concept of Return on Human Capital Investment, which employees receive in the form of monetary and non – monetary rewards, for investing his Knowledge, Skill, Talent, Experience and Behaviour. Monetary Rewards mean pay, compensation and benefits and stock options. Equally non-financial forms of rewards are also important such as intrinsic job satisfaction, recognition for good performance, opportunities to learn through the job etc. If investor (Employees) gets lower return from Owner (Employee), there will a lesser possibility that investor would be inclined to invest again and human capital will be moved to another investment and it will be going to be the big risk for the companies. In short, employees will leave the company and take up other jobs to perform.
So, it’s the duty of companies to put new hires on that kind of jobs that match with their respective knowledge, skill and abilities. If they are given a job that is in sync with their profiles and expectations, they will take up the job with enthusiasm. If he is given a job which is not in line with what has been promised at the time of recruitment and selection, he will automatically lose interests in the job and it will lead to such a situation where it will be difficult to earn a return on human capital investment. For example, if you put a guy with degree and diploma from IIM or XLRI on a job where there are less possibilities in the advancement of career, read clerical job, there are little chances that he will remain loyal to jobs. So right man for the right job should be the agenda for Multi National Companies.
Encouraging participation of employees in the decision making processes of the management also boosts the confidence of the employees and it helps companies to achieve whatever it wants to achieve. Also the concept of allowing employees practice, practice and practice facilitates the development and behavior of the employees and skills are also being facilitated through this repetition of practices. Skills that are practiced in a regular manner cannot be forgotten and are better learned. People remember 90% of what they say as they perform the task. And fast and frequent feedback for the lower level of jobs improves the performance of employees which in turn, increases the investment of human capital.