Discuss aboiut the Human Capital Management System.
With the increasing dynamic of the global business industries, conflicts remain on the clear difference between the human resource management, personnel management, and the human capital management. Regardless of the major course of the conflicts, it is essential for an organization to adopt strategic business models that will delineate the roles, and responsibilities for the specific areas within the organizational operations according to Chuan (2017). This paper evaluates and identifies the major similarities and differences between the personnel management, human resource management, and the human capital management in the organization. However, the emphasis of the paper is based on the human capital management as an essential factor of the organization. The paper hence examines how the understanding of the renowned and seminal human resource competencies can be integrated into the human resource and human capital management practices. It also presents some of the primary challenges facing the HCM within the organization and the recommended steps that can be adopted to ensure an effective sustainability and visibility in the organizational operations.
Comparison of the management positions
Personnel management is an administrative discipline that is concerned with the development and hiring of employees while ensuring that they become more valuable and relevant to the operations of the organization as pointed out by Varzaru (2016). The functions of the personnel management hence include recruitment, training and orientation, selection of the right individuals for specific duties within the organization, and planning of the needs of the personnel. The personnel management is also responsible for the determination and management of salaries and wages, provision of incentives and benefits, performance appraisal for the employees, resolving disputes, and ensuring effective communication with all the employees at different levels (Varzaru, 2016). According to Sengupta (2011), personnel management is often considered as the old version of the current human resource management. The same study denotes that there are distinct differences that can be identified between the human capital and resource management and the personnel management. However, the differences are often similar in comparison with both HRM and HCM.
As personnel management on the administration of personnel, labor relations, and welfare of employees within the organization, human resource, and capital management focus on development, acquisition, maintenance, and motivation of human and capital resources respectively according to Chuan et al. (2017). The personnel management often assumes employees as inputs for achieving the desired output and its functions are undertaken under the satisfaction of employees. However, human resource management is focused on assuming employees as valuable and important assets of the organizational output achievement, and hence administrative functions are undertaken for goal achievements. Personnel management is also considered a routine function and focuses on increasing the production and satisfying employees while human capital management focuses on culture, effectiveness, employees participation, and productivity.
Human resource management is defined as a term describing the formal systems that are devised for managing people within an organization. The roles and duties of the human resource management fall into three main categories i.e. employee benefits and compensation, staffing, as well as defining the work design. According to Chuan (2017), the main purpose of the human resource management is the maximization of the organizational productivity through the optimization of the employees’ effectiveness. In comparison to the personnel and human capital management, Chuan et al. (2017) point out that the human resource responsibilities are classified into individual, career, and organizational functions. The individual roles aim at assisting employees to identify their weaknesses and strengths so that they can correct their shortfalls and make their best contribution to the organization.
The organizational development aims at fostering an effective system that maximizes human capital and resources as part of the larger strategies of the business. Scapolan and Montanari (2013) denote that the organizational development works with the HCM in creating and maintaining possible changes in the programs of the organization so that it can effectively respond to the evolving internal and external influences. Lastly, the career development responsibility involves matching the employees with the most effective and suitable roles and career paths within the organization depending on their respective skills, qualifications, and requirements of the position. As a result of the roles, there are major similarities required for the personnel, human resource, and human capital management. These include extensive industrial knowledge, effective negotiation skills, as well as leadership capabilities that are required are core qualities for the effective performance of the management positions within an organization as pointed out by Zavydivska, Zavydivska, and Khanikiants (2016).
Human capital is defined as the sum of the abilities, personality, knowledge, values, experiences, motivation, skills, and behaviors owned and offered by the individuals within the working environment of an organization according to Lloyid (2012). With all factors constant, the higher the quality of the human capital of the organization, the more successful the performance despite the global challenges facing different facets of organizational industries. Human capital management is hence focused on managing the human labor force within the organization, an aspect that is essential as a result of the crucial trends of challenges of management. HCM is hence essential in;
- Helping the organization to recognize that HCM is the primary source of a sustainable competitive advantage as it determines the means of production and access to capital within the organization.
- Increasing the importance of the organizations’ intangible assets such as reputation, leadership strategy, and brand that are mainly dependent on the skills and the efforts of the employees within the organization.
- The identification of innovation, knowledge, collaboration, and adaptability as the primary or key factors that drives the success of the organization. In his study, Higgins (2010) also points out that leaders should recognize that the primary source of organization success are the values, believes, and ability that resides within the organizational’ workforce.
- Increasing focus on growth primarily for improving the bottom line of the business, as an aspect that then requires a renewed focus on the leadership and the subordinate for successful performance.
- Understanding the demographic changes affecting the internal and external environment of the organization. For instance, Higgins (2010) denotes that an aging workforce, advanced technological innovations, along with increasing diversity are increasing the war for talent within the workforce.
In the general function and operation of an organization, Human Capital Management (HCM) and the Human Resource Management (HRM) often have many similarities and differences. For instance, both HRM and human capital management deal with the human resource department of an organization. Both HRM and HCM form the foremost solidarity department that has the responsibility of carrying out the organizational responsibilities within the business environment (Higgins, 2010). They both deal with terms and functions related to training, recruitment, orientation, performance analysis, and payroll for the employees of an organization.
In his study, Higgins (2010) denotes that employees are often an essential aspect of the management of an organization and hence should be framed by the human resource department within the organization so as to obtain the quality of work as per the objectives of the organization. However, HCM is adopted as a software program and a core element of the human resource management of the organization. Human capital management associates with elements and provides an ambiguous response with different human resource elements such as the organizational management and the personnel management Sengupta (2011). It is also related to the strategy of the employees’ development as well as other operational objectives hence defined as a tactical approach aimed at the systems, processes, and essential organizational practices. Despite the difference between human resource management and human capital management shown in Table 1, both their functions hold the significance of their impact on the operation of the organization in carrying out the actual business processes with its internal and external environments.
Table 1: The differences between the human resource management and human capital management in an organization (Adopted from Higgins, 2010)
Human Resource Management functions
Human Capital Management functions
HRM never defines its true objectives
HCM defines its true goals and objectives with a perfect reputation
Has functions that often delivers perfect ended major solutions within the organization
Is not effective in delivering solutions for minor organizational instances
Its functions are regularly driven by the availability of human resources within the organization
Its functions are often driven only under special or specific cases affecting the performance of the organization
The human resources department ensures that its functions are performed as per the laws and regulations governing the operation of the company.
Human resource capital is often related to all issues affecting the employees with a focus on elements such as utilization, employment, developmental agendas, and compensation of employee amongst other elements.
Uses simple bench-marking techniques to execute its functions
Adopts the use of complicated evaluation techniques
Steps of ensuring the realization and optimization of the HCM practices
The major question should be what are the leaders and managers of businesses and organizations expected to do in the attempt of realizing and optimizing the HCM practices. Carmeli (2017) points out that the first major step is making the working environment and the whole organization a talent magnet for employment. The same study presents a thought experiment that can be adopted by any organization with the desire of increasing its employment preference for the workforce despite the challenges in the market. These include; a) Listing the primary three characteristics that are unique and sets the organization apart as a perfect place of employment; b) Listing of the top three primary employee attributes needed by the organization to execute the set business strategies; c) finding answers to the extent at which the characteristics in #a allow the organization to employees with the #b values and attributes. It hence means that the step taken by the organization will depend on the answer in #c as it will help the management to understand the internal factors affecting the human capital aspects of the organization.
In other words, the above thought experiment is essential in illustrating the importance of the employer brand of the organization, an aspect that Lloyid (2012) points out as the primary determinant of the human capital management practices within the organization. The realization and optimization of the HMC needs to focus on the realization of the employer brand that determines how the organization builds or packages its identity. Depending the industry of operation of the organization, the promises the organization focus on delivering will motivate an emotional connection with the employees who will then work towards achieving what the organization promises to deliver to its customers. According to Zavydivska, Zavydivska, and Khanikiants (2016), HCM practices need to focus on an employment brand that shares what is differentiating and compelling about working within the organization, passes across the message of what it offers, and provide a true recruitment story. The realization and optimization of the HCM practices hence require the organization to focus on the employer brand that will;
- Attract the skillful and right candidates
- Increase the employers’ reputation
- Effectively communicate vision, mission, and values to the employees and the customers
- Increase vacancy or employment acceptances
- Increase employees’ retention and skills
- Develop a reputation of being the employer of choice
Integrating the understanding of renowned and seminal HR competency models into HCM and HRM practices
According to Schlitte (2016), the concept of the organizational Human Capital Management has been transformed through a many aspects as a result of the constant dynamics of the human resource functions as well as the ever-changing global business environment. The same study denotes that the transformation has occurred based on different analytical models from normative, prescriptive, to the competency-based models. The understanding of these models can be integrated into different ways within the human resource and human capital management. One such model is the Ulrich theory that defined different aspects within the functionality of the human resource management as pointed out by Olofsson and Ohman (2007). Ulrich was a known human resource professional who had great ideas in many human resource aspects such as corporate growth and company leadership. He was the author of the Ulrich model is mainly focused on the role of the human resource management in an organization, ideas that are still influencing the thoughts surrounding the general concept of human resource management as pointed out by Schlitte (2016).
Ulrich’s framed human resource model has formed a big part of a virtual method of predicting the future performance of an organization, and the ideas are adopted in different organizations to keep the workforce hardworking, happy, and dialed-in to the long and short-term goals and objectives of the company. According to the model, it is essential that the human resource managers integrate the idea of viewing the employees as a vital part of the success of the organization according to Scapolan and Montanari (2013). The model focuses on four main roles as the key components that are essential for every human capital and resource department. These roles include;
Business partners- As a business partner, the HR department has the responsibility for ensuring effective communication with the people who have a direct connection with the organization such as the creditors, shareholder, employees, and employees among others. The department is hence the point of contact and the channel used by most internal members of the business. As a business partner, the HR gives feedback to the internal partners concerning the quality of their performance and experience, helping in filling job vacancies, sharing HR goals, with the employees so as to ensure their implementation across the organization. The department as well promotes harmony and overall productivity within the workplace.
Change agent- in case the organization requires evolving, expansion, or alteration of its objectives and goals, the human resource becomes the change agent that internally communicates the organizational challenges. Integrating this concept within the HR and the HCM requires the responsible managers to organizer training opportunities that will help the employees to learn new skills that can help in achieving the desired changes as pointed out by Engelhard (2012). Preparing the employees for the required change helps them to adapt to the new roles for its next level of evolution or stage of growth (Audea, Teo, & Crawford, 2015).
Administration expert- according to the model, this is an administrative role that helps in executing different tasks. While performing the administration expert role, the human resource department follows any change in the regulation, legislation, or occupational safety rules; they help the organization adapt to the changes so as to remain compliant with the relevant laws. Olofsson and Ohman (2011) point out that it is an aspect that should be adopted by the human resource and human capital managers so as to ensure the organization remains compliant.
Employee champion or employee advocate- according to the Ulrich Model, the human resource should stay aware of the interests of the employees and ensure the interests are protected so as to ensure moral satisfactions and positive image of the organization. Integrating this aspect hence requires the organization to adopts strategies that will help in measuring the employee's performance so as to sport any possible outcomes to ensure equity and effective performance.
Challenges facing HCM and recommended steps for viability and sustainability in the organizational operations
According to Lloyid (2012), it is often clear for leaders and managers of organizations that a successful operation of a business or organization requires clear strategies that will enable the business to meet the set goals and objectives. The strategy adopted by the leadership should also have clear plans that can be used to solve different organizational challenges facing the business while capitalizing on the strength of the labor force. However, as pointed out by Jones et al. (2017) in his review, even the best strategy often fail when the organization has not placed the right people in different responsibilities for ensuring a successful execution of the strategies. It is hence a clear aspect that one of the major challenges leaders face in organizations is the human capital challenge.
In their study, Zavydivska, Zavydivska, and Khanikiants (2016) denote that there are three major challenges the human capital management within an organization. These include developing leaders, sustaining the organizational competitive advantage, the attraction and retaining of good and skillful employees. Carmeli (2017) also points out that many organizational HCM have challenges with developing strategies that will effectively manage the talents of the organization. The failure of recognizing these factors leads to the following challenges;
- Insufficient supply of skillful candidates
- Recruitment and integrations challenges when dealing with younger employees
- Challenges from competitors recruiting the best candidates
- Provision of attractive career paths within the respective industries of operation of the organization
- It is difficult to deploy experienced talents worldwide
- Lack of creativity and flexibility among the talents with the right and relevant technical skills
- The focusing, identification, and understanding of the talent availability within the internal and external global emerging markets.
Boyun (2016) points out that for an organization to successfully increase its sustainability and operational visibility, the stakeholders of the organizations e need to realize that the human capital can only be increased within the organization when it focuses on other factors. These include the increase of more non-financial rewards for the employees’ motivations, working with the government systems and agency bodies to increase the knowledge and skills of the organizational talent pool. Exposing the employees to a more challenging environment such as deploying more staff to international assignments can also boost the HCM. Varzaru (2016) also points out that the organization should focus on expanding its workforce skills and enhancing the expertise on different aspects of its operation.
The organization hence needs to focus on developing organizational change for increased productivity, quality, and employees’ satisfaction (Vaiman, & Brewster, 2015). It will hence involve the construction of an effective training program, design a motivational compensation system for employees, structuring benefits packages while measuring their success, and the identification of the principles for utilizing, developing, and conserving human capital resources. Chuan (2017) also identifies the need of using statistics and data in making informed HCM decisions while leveraging technology aimed at enhancing the contribution of human capital management functions within the organization.
With the rapid transformation of the global business landscape, organizations are facing tough human resource, operational, and capital challenges that still continue to be more complex due to the evolution of the technological business landscape. It is hence required that HCM, HRM, and operational management focus on the identifying and adding real values within the business. With the continued realization of the need of retaining the workforce, there is a need for increasing the emphasis on increasing engagement programs and training. Personnel management, HCM, and HRM are all concerned with productivity and are vital aspects of the organizational performance. The aspect can be achieved when businesses and organizations invest in areas that will primarily optimize expenditure such as improving candidate attraction schemes and integrating technological systems. Adopting such strategies will not only foster the growth of the human capital within the organization but will be a sign that the primary managerial departments of the organization are in the preparation of maximizing its staff and resources with the focus of growth of the company.
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