The Importance of Human Resources Management
The True Value of Human Capital
“Human capital” is a term used to describe the economic value associated with an employee’s skill level. Aspects that influence labor value include education, experience and training – all items that help quantify an otherwise intangible, yet important, asset. Human capital is critical because it is the business, to a degree, as a revolutionary product without a workforce to create and sell it properly is just an idea. If a CEO has an incredible idea for a new product but no employees to design, manufacture, and sell it, then it remains just an idea in their head. As a result, one of the most important functions of Human Resources is ensuring that individual and divisional objectives and the management of individual performance are aligned with organizational or business goals. Managing individual performance helps both the business and the individual grow and succeed.
Raising Human Capital Value
The value of human capital, like any other investment, is contingent on the employer’s decisions and attitudes. The following aspects can increase human capital value and, as a result, increase business, profit and/or mission-orientation.
Recruitment– Simply put, you can greatly increase the value of human capital from the start by recruiting the best-fit employees. This can be incredibly difficult because the best-fit employees are likely already employed, i.e., are passive candidates. Passive candidates are neither the easiest to locate nor to convince to leave their current employment for the unknown. Additionally, recruiter biases can obstruct an already complex process. Obtaining a workforce of qualified, organization-culture-fitted, and properly vetted employees lays the foundation of a harmonious relationship between employees and management and secures higher morale and productivity.
Training and Development– Proper training and development are very important in ensuring that an employee’s skills and strengths align with the organization’s goals. Training involves new skills development, reinforces existing knowledge and skills, and provides for knowledge transfer amongst employees. By identifying employee’s strengths and areas of opportunity and developing employees accordingly, you are ensuring employee productivity, effectiveness and satisfaction. Truly effective training and development can also aid in creating positive behaviors and attitudes that last long after the training itself, leading to higher quality output, employee self-actuation and increased employee retention rates.
Morale and Engagement– Low morale often cultivates a culture of low productivity and hinders cooperation, which can really hurt profit margins and achievement of missions. You can keep morale high with quality circles and collaborative management practices, and by implementing team-building exercises and creating employee recognition programs. Small gestures like organization-sponsored lunches convey to employees that they are valued. Higher morale and engaged employees greatly increase productivity and the overall quality of their work product.
Organization Development– Performance management is crucial to an organization’s success as managing the performance of the organization, departments, employees or even process increases efficiency and productivity. This is accomplished by measuring performance data, giving feedback and positive reinforcement to ensure quality output and high morale. Change management is similarly important in aligning employee’s goals with those of the organization during periods of transformation. A smooth transition during one of the many changes organizations may face keeps employees working at their highest potential and helps guarantee success for both the organization and employee together. Maintaining a diverse workforce is also critical in that it promotes greater collaboration with a variety of perspectives and ideas, in turn improving individual and organizational performance. Policies and practices that highlight diversity and make employees feel valued, respected and supported increase morale and engagement and can greatly increase the quality of output and productivity.