Human capital management (HCM)

What is human capital management?

Human capital management is the whole procedure a company applies to acquire, train, retain, and manage employees to achieve organizational goals. It is a company’s blueprint for effectively managing employees to remain profitable. 

Human capital management consists of various administrative processes to manage human resources. These processes start from the recruitment and onboarding phases to the appraisal and reporting stages. The payroll, compliance, and benefits processes are also crucial stages of this scheme.

Adding new employees to a company can be expensive and time-consuming. Human capital management enables you to hire and train employees to reach their potential. These processes make employees more valuable, catching the eye of external employers and competitors. Excellent human capital management allows you to retain your most valuable assets.

Applying technology can help businesses reap the benefits of human capital management. The software used enables companies to perform human capital management operations remotely on electronic devices. 

With this cloud-based technology, you can collect, analyze, and process data while making reports on employee management. It enables you to keep track of employees’ progress, secure your company data, and comply with local legislation.

What is human capital?

Human capital refers to the economic value of an employee’s investment in skill, exposure, and physical and mental health as it contributes to productivity. 

It is an employee’s intangible asset that makes them valuable to any organization. It can determine how much an employer will pay to secure their services. Managing these assets can benefit both employer and employee. 

Human capital combines a set of acquired skills. Thus, it can diminish with time. 

Although it can depreciate, it can also increase. Developing this asset adds value to the employee and benefits the employer eventually. Human capital takes time to hone but helps employees cultivate a sense of accountability.

The economy benefits immensely from an increase in the average human capital of its citizens. High human capital leads to high levels of corporate profitability, resulting in more revenue generation. It also improves the standard of living and quality of life for nationals.

Human capital examples

Human capital manifests in various ways and can be easy to identify. Human capital examples include emotional intelligence, mental health, experience, and technical and communication skills. 

Although essential, it is unnecessary to add types of human capital to the requirements for employment. However, employers expect their workforce to possess them. 

Human capital can become a perishable commodity without development. Managing human capital can help you get the best out of employees. To accomplish this feat, consider the following: 

• Train your staff . Advancement in technology is enough reason to hone employee skills. Virtually every sector thrives on technology. Invest in training employees on the latest developments in the industry and technology trends. 
• Provide incentives . Bonuses and additional benefits motivate employees to upgrade their skills and improve their productivity. You may implement quarterly or yearly incentives to appreciate excellence and encourage better performance.
• Provide a secure work environment . A safe, inclusive, and comfortable work environment can help employees hone their skills. When employees feel safe and valued, they have little to worry about. It makes them focus on performing their duties to the best of their abilities.