Human capital and management

skills and expertise that gives the organization its distinctive character. W. . the combined intelligence. Human capital is the part of intellectual capital. Lewis in “Economic Development with Unlimited Supplies of Labour”.Human Capital Human capital represents the human factor in the organization. The word “Human Capital” was introduced by A.

INTELLECTUAL CAPITAL Human capital Structural capital Relationship capital What is intellectual capital? .

These can be regarded as the intangible resources associated with people which.Intellectual capital • The stocks and flows of knowledge available to an organization. comprise the market or total value of a business. Total value of the firm = Intangible resources(intellectual capital) + Tangible resources(financial and physical assets) . together with tangible resources (financial and physical assets).

trade marks. IT systems etc.Intellectual capital = Human capital+ structural capital +relationship capital 1.Relationship capital includes: Customer relationships . . competencies and the experience and expertise of staffs.brand images.Structural capital includes: Information systems and databases . 3. copy right. 2. supplier relationships.customer satifaction.R $ D. patent. franchising agreements.Human capital includes: knowledge.

In other words human capital is the set of skills which an employee acquires on the job. through training and experience and which increase that employee’s value in the market place . capabilities and skills . knowledge.Let’s discuss the first part of intellectual capital ie :Human capital What is Human capital? Human capital represents the value that each employee brings according to his studies.

.Human capital advantage • 1.sustainable competitive advantage is attained when the firm has a human resource pool that cannot be imitated or substituted by its rivals.

The surplus labour in these countries is the human resource available in more abundance than the tangible capital resource. .• 2. health and moral values. This human resource can be transformed into Human capital with effective inputs of education.The concept of Human capital has relatively more importance in labour-surplus countries.

is an instrument of promoting comprehensive development of the nation because human capital is directly related to human development.• 3. on the other hand. . The intangible human capital. The tangible financial capital is an effective instrument of promoting economic growth of the nation.The problem of scarcity of tangible capital in the labour surplus countries can be resolved by accelerating the rate of human capital formation with both private and public investment in education and health sectors of their National economies.

. Similarly. there is higher rate of human capital formation in response to higher standard of education and health. Therefore. HDI is indicator of positive correlation between human capital formation and economic development. if HDI increases. per capita income of the nation also increases. If HDI increases.The Human Capital is developed by health. education and quality of Standard of living.• 4. the components of HDI are directly related to Human Capital formation within the nation.

In the second decade of 21st century. the third generation of India's population is active in the workforce of India. . It has developed the service sector of India with the export of financial services.• An example in India • In India. This third generation is qualitatively most superior human resource in India. tourism services and improved the Invisible balance of India's Balance of payments. rate of human capital formation has consistently increased after Independence due to qualitative improvement in each generation. software services. The rapid growth of Indian economy in response to improvement in the service sector is an evidence of cumulative growth of Human Capital in India.

research. • Knowledge Activities are related to time expenditures by a single person and include finding/retrieving information. etc. industrial action. and • Process activities are knowledge and collaborative activities that result due to organizational context such as errors/rework. etc.. • Collaborative activities are related to the expenditure of time between more than one employee within an organizational context.• HUMAN CAPITAL RISK • Human capital risk accumulates in four primary categories: • Absence activities (activities related to employees not showing up for work such as sick leave. information analysis. stress. instructor led training. email. Examples include: meetings. politics. phone calls.. blogging.). . Unavoidable absence is referred to as Statutory Absence. messaging. manual data transformation. All other categories of absence are termed "Controllable Absence". etc. etc.

develop and make the best use of its human capital. • Measurements can be used to monitor progress in achieving strategic HR goals and generally to evaluate the effectiveness of HR practices. keep.• Human capital constitutes a key element of the market worth of a company. • The process of identifying measures and collecting and analyzing information relating to them will focus the attention of the organization on what needs to be done to find. • People in organizations add value and there is a case for assessing this value to provide a basis for HR planning and for monitoring the effectiveness and impact of HR policies and practices. Why measuring the value and impact of human capital . • You cannot manage unless you measure. A research study conducted in 2003 (CFO Research Studies) estimated that the value of human capital represented over 36 per cent of total revenue in a typical organization.

constant training 2.motivation .Ways for Organizations to Increase Human Capital • • • • • 1.Direct communication 4.monitoring performance 3.define job responsibilities 5.

.• Human Capital Management HCM refers to the management of an organization’s employees for them to contribute significantly in the overall productivity of organization. Every employee tries his level best to utilize his knowledge and skills to benefit his organization and become an indispensable resource in due course of time.

• To demonstrate that HR practices produce value for money in terms (e. .g. • To provide data that will inform strategies and practices designed to improve the effectiveness of HRM in the organization.Aims of HCM • To determine the impact of people on the business and their contribution to value. ROI). • To provide guidance on future HR and business strategies.

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