Introduction

The concept ‘human capital management’ (HCM) is based on the

concept of human capital as explained in the first part of this chapter.
The next three sections describe the processes of human capital
management – measurement, internal and external reporting. The
chapter concludes with a note on introducing HCM.

Human capital Human capital consists of the knowledge, skills and

abilities of the people employed in an organization. The term was
originated by Schultz (1961) who elaborated his concept in 1981 as
follows: ‘Consider all human abilities to be either innate or acquired.
Attributes… which are valuable and can be augmented by appropriate
investment will be human capital.’ A more detailed defi nition was put
forward by Bontis et al (1999), as follows.
The constituents of human capital

Human capital consists of intellectual, social and organizational capital.

Intellectual capital The concept of human capital is associated with the
overarching concept of intellectual capital, which is defined as the
stocks and flows of knowledge available to an organization. These can
be regarded as the intangible resources associated with people which,
together with tangible resources (money and physical assets), comprise
the market or total value of a business. Bontis (1998) defines intangible
resources as the factors other than financial and physical assets that
contribute to the value-generating processes of a fi rm and are under
its control. Social capital Social capital is another element of intellectual
capital. It consists of the knowledge derived from networks of
relationships within and outside the organization. The concept of social
capital has been defined by Putnam (1996) as ‘the features of social life
– networks, norms and trust – that enable participants to act together
more effectively to pursue shared objectives’. It is important to take
into account social capital considerations, that is the ways in which
knowledge is developed through interaction between people. Bontis et
al (1999) point out that it is flows as well as stocks that matter.
Intellectual capital develops and changes over time and a significant
part is played in these processes by people acting together.

What are the elements of human capital management?

Human capital management is made up of a series of

administrative and strategic applications that include:

 Recruitment
 Onboarding
 Payroll
 Time and attendance
 Benefits and retirement services
 Talent management
 Training
 Reporting and analytics
 Compliance

Human capital management (HCM) challenges

If you’re like most business owners, you might be concerned

about overcoming today’s obstacles and anticipating
tomorrow’s needs. Here are some common challenges that
human capital management can help you address:
  Talent strategy
There are many opportunities throughout the employee
lifecycle to engage your people and align their
performance with your business goals.
 User experience
Technology that’s intuitive and easy to use can increase
workforce productivity and improve morale.
 Big data
From optimized schedules to competitive compensation
packages, data can power better decisions.
 Administrative burdens
Tools and resources that save time allow you to focus
more attention on business strategy.
 Systems integration
Integrated systems may save you time, resources and
money. They also help maintain visibility across borders.
 Compliance
Sound data and proactive approaches to changing
regulations can help you maintain compliance.

What is HCM software?

HCM (human capital management) software, sometimes called an HRIS

(human resources information system), or an HRMS (human resources
management system), is a technology application that can help
employers manage and nurture their employees. The software
may bring talent planning, management and analytics together in a
single system.
HCM software deals w+
ith companywide HR processes, aimed at increasing human capital ROI.
An HRIS focuses on data and processes for individual staff members
rather than an entire workforce, while an HRMS can provide a
comprehensive suite of HR software features. This suite can include a
full HRIS along with HCM capabilities, time management and payroll
— with the option of integrating all HR and HCM processes in the
HRMS.

References:

1- https://www.ibm.com/topics/human-capital-management
2- https://www.adp.com/resources/articles-and-insights/articles/
w/what-is-human-capital-management.aspx
3- Human resources handbook

Done by: Ali Emad Reg. Number: 21220045

For Advanced HR.