Introduction
Human capital management has replaced the traditional approach used in human resource management in the view of employees. Human resource is the most important capital resource in any organization.
Human capital management involves the process used by management in operational decisions, strategic investment, and value adding-people management. In human capital management, people are regarded as assets of an organization and companies that conduct human capital management gain competitive advantage because they are able to retain employees as assets of a company.
Human capital management functions
The function of human capital management is to evaluate, analyze, and measure how to value employees through practices and policies. Management of people in human capital management is treated as a high level issue, and it is not left to human resource department. The employees are dealt with in a special way for the purpose of adding their value and retaining them in an organization.
Organizations that conduct human capital management maintain and retain employees as assets through strategic management by holding development programs. Organizations are supposed to have development programs where workers are given an opportunity to develop their talents and knowledge. The talents and knowledge developed during these programs are used by employees in their duties in the organization.
Employees are also retained through talent management which helps them to learn new things and improve on their skills while in workplace. Workers are given responsibilities based on their talents and the most crucial talent in the organization gets the first priority.
The workers with talents that form the basis of the company should be given an opportunity to develop their skills through talent management programs organized by the organization (Paauwe, 2009, p.16). Talent management programs could include training employees to add value and expertise. Training programs that are initiated by organizations determine the skills available to the organization.
Moreover, human capital management enables organizations to retain employees by engaging them in activities and operations of the organization. Workers engagement ensures that the right kind of people get the right information about the organization at the right time.
Employee’s engagement in the operations of an organization results to commitment and loyalty which can be measured through interviews with the workers. It is only through engagement that employees are able to be fully committed to issues related to the organization. An organization with loyal and committed workers maintains competitive advantage over other organizations.
The compensation rates used by organizations determine the rate of turnover, and every employee should be compensated depending on compensation rates that are in the market for this will prevent them from leaving an organization in search of better compensation. Employees’ rewards should match their job performance and reflect their value in the organization.
To attract and retain experienced and qualified employees, the functions of human capital management is to provide employment benefits which include better payment rates, learning opportunities, and give incentives to employees such as holidays and insurance covers.
Conclusion
Employees in an organization are assets to the company because they are used to add value and they should not be treated as costs. This means that they are supposed to be treated as partners in the business and the management should concentrate in ways that add value to the employees.
Through human capital management, employees are accorded with value and dignity because of their position in the organization. Employees in all organizations are (or should be) considered as potential long-term assets and not variable costs.
Reference
Paauwe, J. (2009). HRM and Performance: Achievement, Methodological Issues and Prospects. Journal of Management Studies, 46 (1), 9-18.