Human
capital management (HCM) provides an overall strategy to guide talent
acquisition, recruitment, employee training and development, performance
appraisal, and feedback.
What is the Role of Human Capital Management in an
Organization?
Human Capital Management primarily focuses on core administrative HR functions and transforms the traditional administrative functions of human resource management - HR planning, recruitment, training, payroll, compensation, and performance appraisal and development - into opportunities to drive engagement, productivity and business value.
What is Human Capital in
Economics?
Human
capital is a way of valuing the workforce that a company, organization, or
country has, thus being the most basic and important resource to generate
economic growth accompanied by increases in productivity and efficiency.
Human
capital is crucial to improve the competitiveness of the company in the market.
It, therefore, depends on the habits, experience, skills, social and
personality attributes, and efficiency of the workers to produce goods and
services for the market.
Human
capital is important because it is seen to increase productivity and therefore
profitability. Human capital affects economic growth and can help develop the
economy by expanding the knowledge and skills of its people. So the more a
company invests in its employees, the more productive and profitable it could
be.
A good HR
team structure is one of the company's successes factors. Hence, in recent
times the Human Resources Department has a decisive importance in
decision-making and design of strategies in the company.
To carry out
effective human capital management, HR managers have to carry out actions in
different areas. Let us see the functions of human capital management in the
company.
If you
belong to a Human Resources Department, or you are a manager or director of a company
and you want to correctly guide the activity of your HR area, we recommend that
you take into account the 5 fundamental functions in which HR should work.
5 Key Functions of Human
Capital Management in the Company
In the 21st
century, companies are increasingly betting on the automation of administrative
tasks.
The role of
human resources is now decisive in talent management so that the company can
meet its objectives.
In this
sense, considerable technological advances have been made in the development of
human capital management software, giving rise to tools that prioritize
planning, measurement, control and participation operations over the mere
counting of data.
When talking
about the basic functions of human capital management in the company, we refer
mainly to five areas:
1. Personnel selection
Personnel
selection is a methodical process of making decisions about the individuals to
be hired to fill vacancies within the organization. New trends in HR make the
personnel selection process one of the decisive areas in business management.
Developing
and implementing an effective talent management strategic plan helps in finding
the best suitable candidates for the organization.
Talent
Management is concerned with attracting and retaining high-quality employees,
developing their skills, and continually motivating them to improve their
performance.
Talent
management encompasses all tasks related to participation, performance,
development, compensation, benefits, and depart stages of the employee life
cycle. It also includes all tasks related to tracking employee time and
attendance.
Increasingly,
HR software provides us with ways to build and analyze company needs, as well
as find candidates who meet expectations, leaving less scope for decisions based
on speculation.
2. Training
A company
needs to be constantly updated, so training is another area on which the Human
Resources Department must work in depth.
If you want
to manage human capital effectively, you must anticipate new technologies,
changes in the market and new performance needs in a constantly changing
environment.
In this
sense, the head of HR administration must promote and guarantee the growth and
potential development of the human capital of his company, as a key strategic
factor of productivity and competitiveness.
3. Professional development
The
objective of professional development is to seek the confluence between the
interests of the workers and the global interests of the company.
By
facilitating an objective system of incentives, promotions and changes in the
organization chart, the growth and development of the workforce, HR sees
possibilities for improvement and use of talent to reach new heights of success
in the company.
The actions
carried out by HR to promote professional development are key to achieving a
good working environment and motivation of the staff.
4. Performance analysis
What are the
areas of the company that need improvement? How can the skills of the workforce
be improved? Are we professionally and effectively measuring and detecting
employee performance indicators?
To achieve
good results, human resources managers now have advanced tools in attendance
control and management, recording systems, and performance control, which allow
taking the necessary measures to achieve the objectives set by the company.
5. Compensation systems
Finally, it
is worth mentioning the role of compensation or reward systems to reward
achievements and encourage productivity and excellence at work.
The
compensation system includes the total rewards that are given to the employees
for the work and services they provide to the organization.
Today,
companies that are seriously committed to human resources are clear that human
capital is not simply a cost or an expense, but a strategic asset of the
company that has a decisive influence on the achievement of objectives.
What are the main areas
that the HR department will develop strategies for?
If you are
responsible for Human Resources or you are looking for information on what are
the functions that human capital management must fulfill in your company, the
next step you should take is to ask yourself how to enhance these 5 fundamental
areas so that your company can achieve its business objectives.
The
measurement and analysis of data, as well as the development of internal
communication mechanisms and channels, are key in decision-making and the
development of human resources plans.
If you want
to delve into these areas, it is essential to have a human capital management
software adapted to the needs of an HR Department.
HRM Software
focuses on measuring, monitoring, planning and improving the workforce based on
data and information that you can collect and manage from centralized programs
to reduce the weight of the trial-error method in decision-making.
This type of management will help your company to reduce costs, increase productivity and enhance profitability.