What Is Human Capital

Human capital

Employees are the real assets of an organization. This is very true take in any form. Managing human force towards the right direction to achieve the desired goals is a greatest task for any organization. The set of abilities which an employee obtains from training and education and puts the same to use as per the value in the market place, which increases the value of the employees is known as Human Capital.

Any employee is a pack of capabilities that needs to be valued. The human capital can be broadly classified into five categories, area, expertise, task management, creativity and headship. This is particularly true is IT and software industries. Where the specialist is requires in their areas of expertise showing some amount of leadership qualities as well.

As said earlier an employee has a set of capabilities and every capability is assigned a value. The total of all these values of an employee is human capital of an organization. It is this human capital along with the customers of the firm produces income for an organization. So when an employee wants to leave the organization it loses that much of human capital, so the firm reaction to such situation will be shown by the worth being lost.

Human capital estimate is mandatory for any firm to give them more gears to accurately access the company’s capability. Human capital asset is like any other physical asset that exists in a company which is very hard evaluate. Since it deals with handling people from different background and mind set. The traits and behavior of each and every employee differs from the other.

Today’s organization has gone a bit more in developing something called the Human Capital Strategy. This involves six steps:

  • Proficiency improvement
  • Organization augmentation
  • Procedure improvement
  • Performance appraisal
  • Knowledge management
  • Organization assimilation

For the human capital strategy to be successful the organization must not only consider the current strategy that is in force but also the future strategy that can be brought into effect with greater quality. Every company resorts to some kind of work force planning and has their own process to value the human capital. But the economic turn down has affected the firm as well as employee’s value. Keeping these things in mind the organization should keep updating its strategies.

The new trend in human capital strategies has helped both the employees and companies, like supervision of ability, allied leadership, organization culture and revamping the same from time to time. That organization’s who can perfectly interpret this strategy can have a competitive edge over other companies.