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What is Human Capital Management?
Home » Human Resources » Human Capital Management » What is Human Capital Management?When considering or discussing
capitalwe generally think in purely financial terms. The capital required to start, maintain and grow a business, for example. However, over the last few decades business leaders have increased their focus on an entirely different type of capital: human capital. Sometimes referred to as “warm” capital, human capital encompasses the attributes, talents, and skills of the employees (or future employees) of an organization. Although it may seem intuitive, many organizations seem unaware that those attributes, talents and skills represent, at least potentially, the most important asset within any company. As businesses wage increasingly competitive battles for talented employees, the importance of developing a strategic plan for human capital management has thus grown exponentially.
Business leaders who recognize the importance of human capital management understand that the value an employee brings to a business lies not only in the special abilities of that employee, but also includes the education, work atmosphere and benefits provided to the employee by an employer. In its simplest expression, then, human capital management involves: the recruitment and hiring of talented individuals; sustained training and education for employees; the deployment of employees into jobs that match their talent and training; the development and maintenance of a work atmosphere that encourages employee creativity and accountability, and the availability of employee compensation and benefits packages which promote maximum effort from employees. Additionally, businesses familiar with human capital management recognize that, as with other company assets, the human capital of an employee has a life cycle – one that the company should strive to identify, encourage and maximize.
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