The Role of Human Capital Management: Now and in the Future

Answer

The Role of Human Capital Management: Now and In the Future

Introduction

The significance of the Human Resource Management in an organization has been replaced by the Human Capital Management, to improve work performances for enhanced productivity. Competition is prevalent in the contemporary business environment. The labor market, on the other hand, has become more competitive as business organizations tend to employ professional and skilled individuals to augment their competitive bargaining power in the market. As business organizations strive to ensure their business sustainability, most have resoluted in Human Capital Management to advance their business processes and retain the right workforce for the benefit of the organization. Human Capital Management focuses on the recruitment, training and retaining of talented employees for the benefit of the business.  While HCM is important in the contemporary business world, it will be considered more effective in the future as more organizations are shifting to a contingent workforce, due to the uncertainty of the business environment. The importance of the Human Capital Management is, therefore, relevant in the current business environment and is expected to be more beneficial in the future.

The context of Human Resource Management and its Importance to an Organization

Human Resource Management refers to the process of hiring and training employees, for the benefit of the organization. Human Resource Management entails conducting job analyses, Planning employee requirements, Recruiting the best individuals for the organization, performing job orientation and training as well as providing incentives and monitoring employee performance for the benefit of the organization (Price, 2011). The Human Resource Management has an objective of ensuring the organization is equipped with skilled employees who are willing to enhance the productivity of the organization. The HRM has a personal objective of assisting employees in the achievement of personal goals while assisting the organization to achieve its primary objective.

Importance of the HRM in an Organization

The HRM is important in the effective operation of an organization in various ways. Fundamentally,  the HRM plans, develop and executes Resource Function (PADS) in an organization (Hendry, 2012). Managers of the HRM have a role of identifying human resource requirements in such aspects as planning, recruitment, and selection of employees. The manager also implements training programs, to ensure employees are adequately equipped with the skills needed, to perform their tasks effectively (Price, 2011). Competition is prevalent in the business market. Therefore, enhancing performance is important for the competitive advantage of the employee. However, how can organizations ensure determine their development in their respective industries? The motivation theory advocated for employee motivation for enhanced performance. The HRM, therefore, performs the role of measuring the performance of the employee and employing motivational factors, for increased work performances in the organization (Price, 2011). Conflicts are inevitable in any given organization. The HRM, also, plays a significant role in creating positive employee relationship for organizational and employee beneficence.

Human Capital Management Context

Implementing safety reforms, ensuring policy and reforms and administered in the organizations and ensuring efficiency are among the important aspects considered by organizational leaders in the contemporary business world. Current leaders have, however, identified the importance of people as the most significant assets of the organization (In Ordóñez & In Tennyson, 2014).  Due to the changing needs of the business environment, organizations have shifted from the traditional Human Resource Management to Human Capital Management, to integrate employee resource management in such aspects as recruiting, hiring the right employees, offering training programs, for enhanced performance. According to In Ordóñez & In Tennyson, (2014), HCM bridges the gap between an organization’s human resource and the objective of the business. HCM entails treating employees as an organization’s significant investment, by motivating employees for the benefit of the company as well as the employees of the company.

Components of Human Capital Management

Human Resource Management

Human Resource Management is considered an important component of the HCM. The Human Resource Management plays a significant role in policy making, monitoring budget, employee performance management as well as program evaluation (Ehnert, Harry & Zink, n.d.).

Human Resource Role in Policy Making

Policy making entails the process through which government organizations make and implement strategic policies, that should be adhered to by every individual and organization (Ehnert, Harry & Zink, n.d.). Organizations should adhere to operational policies within their jurisdiction, to ensure their longevity and sustainability in the business industry. The Human Resource plays an important role in ensuring their organizations adhere to government policies and regulations (Ehnert, Harry & Zink, n.d.). The Human Resource, therefore, implements other policies, that must be followed within the organizations for effective performance of the organization.

Human Resource Role in Budgeting

A budget refers to to a document which reconciles organizational priorities, with the projected revenues (Condrey, 2010). Budgets guide organizations on financial, time and other resources needed for the completion of various projects within an organization. The Human Resource uses budgets to prioritize resources for the benefit of the company (Condrey, 2010). For instance, department administrators use their goals and capabilities to specify the important resources, needed to accomplish their departmental goals. Through budgeting, important resources are allocated to various departments, with regards tot heir urgency, for enhanced performance at the departmental level.

Performance Management and Program Evaluation

 Performance Management and Program Evaluation are also important aspects of the HCM. Performance management is important in program evaluation, for future decision making (Salsbury, 2013). Therefore, budget officers work closely with HR managers, to ensure human resources are met within the budget constraints of the organization. For instance, performance appraisal is a basic requirement for organizational success. From performance appraisal, organizations can identify training needs needed to enhance employee skills towards the benefit of the organization.

Talent Management

Talent Management is another important component of HCM (Salsbury, 2013). Talent management concentrates on employee performance on a day to day activities, for the achievement of an organization’s HCM strategy. Talent Management entails employee recruitment, leadership training, and compensation planning in an organization (Salsbury, 2013). Precisely, talent management deals with strategies to recruit, train, promote and retain talented employees to a company.

Role of Human Capital Management in the Contemporary Business Environment

The HCM is an important aspect of an organization, since it ensures increased performances, through talented employees. Employees can either break or build an organization. Organizations should, therefore, emphasize on employee selection and performance appraisal, to ensure skilled and appropriate employees are recruited and retained in the organization. The HCM, therefore, plays a significant role in enhancing organizational sustainability.

Employee Hiring, Training, and Recruitment

The HCM plays an important role in employee recruitment (Salsbury, 2013). Recruitment does not entail picking any individual to fill the gap in the organization. Therefore, the management system ensures qualified and talented employees are recruited into an organization, by identifying the required needs of the organization.

Employee Orientation

Organizational culture is an important component of the organization, which guides its employees, towards the achievement of organizational goals. An organization’s vision and mission statement act as a guide towards the achievement of organizational goals. On the contrary, organizational missions, visions and cultures differ among different organizations. According to Salsbury, (2013) employee, orientation is important, to ensure new employees are familiar with the organization’s mission, vision, and objectives, to enhance their performances, towards the achievement of organizational goals.

Training, Education, and Staff Development

Employee motivation is important in increasing organizational performance (Salsbury, 2013). Employees can be motivated through both financial and non-financial strategies. While financial motivation entails compensation, salaries, bonuses and many more financial incentives, non-financial motivation entails skill development, to enhance employee efficiency in the organization. The HCM management plays a significant role in employee skill development, through various programs, such as on-job training (Salsbury, 2013). Through skill enhancement, employees are more likely to equip themselves with adequate skills necessary in the job market. Motivation also plays a significant role in employee retention. Fundamentally, organizations strive to retain the best talents, for organizational benefits. However, organizations need to achieve the competitive bargaining power of the employees by creating a sense of belonging among the employees. Skill enhancement is one of the most important factors, which motivates employees. The HCM is, therefore, important in training employees to enhance their professional skills.

Guiding Future Business Strategies

The HCM aims to provide future guidelines on effective Human Resource and other effective business strategies (Salsbury, 2013). The labor market keeps changing on a daily basis. Market demands are also uncertain in the business environment. The HCM, however, plays a significant role in determining the best skills for the sustainability of a company in the future.

The Future of Human Capital Management

The survival of the fittest and evolution theories as advocated by Charles Darwin are undoubtedly evidenced in the contemporary business world. Pressure to expand into emerging markets, and gaining competitive power over customers and employees are expected in the future. While the HRM manages people in the organization, HCM manages people and strategy in an organization. Fundamentally, the HCM of an organization helps in employing the right people for the right job and measuring performance towards the HCM strategy. Moreover, HCM provides a framework, through which organizations use latest data, to improve its business processes and concentrate on employee recruitment and retention, to optimize the organization’s workforce. The HCM is, however, more likely to change in the future due to various trends in the business environment including such changes as:

Strategic Workforce Optimization

Recruiting, training and retaining highly skilled employees for the organization is an important component of an HCM strategy. Fundamentally, businesses are currently investing retaining the most talented employees for the organization. The future if HCM is, however, more likely to change as organizations would want to access on-time analytics, to enhance their decision-making process (Ward, Tripp & Maki, 2013). Technology keeps changing day after day. Therefore, new technologies and concepts are emerging to allow businesses to engage and optimize their workforce strategically.

Integrated Systems

Businesses gather information needed to deploy HCM strategies, through the help of technological systems. However, the current technological systems are inefficient since they present a potential HCM strategy (Ward, Tripp & Maki, 2013). Businesses face technological challenges such as data duplication and errors, leading to information inconsistencies. Business organizations are, however, implementing strategies to counter technological errors, for the benefit of the organization. Through such strategies, organizations that emphasize on HCM are more likely to thrive in the future, through well managed and effective workforce.

Rise of Contingent Workforce

The business environment is gradually changing with technology. Freelancing and business consultancy firms have emerged, to provide business information regarding future trends. Contingent workers are becoming prevalent in the labor market (Ward, Tripp & Maki, 2013). Due to changes in the workforce, business organization seek to identify strategies for meeting the needs of the organization, while controlling the operating costs in conjunction with benefits and compensation. The HCM is, therefore, allowing business organizations to identify and develop appropriate systems and processes, to adapt to diverse changes in the labor market.

HCM for Small and Medium-Sized Business Enterprises

Small companies have now adopted the use of HCM in managing payrolls, employee attendance and employee benefits (Wapshott & Mallett, 2015). As a result, small and middle-sized businesses can now compete effectively in the market. Due to changes in the global economy, such small businesses are more likely to change in the future, forcing business leaders to implement changes in the HCM to adapt to future business trends.

Conclusion

Overall, the HRM is significant for the recruitment of employees in an organization. However, organizations have adopted the Human Capital Management system, to work along with the human capital for enhanced performances. Just like any other stakeholder, employees are important assets of any business organizations. Precisely, employees can foster the sustainability or downfall of the organization. Business organizations should, therefore, invest in recruiting the best employees for enhanced business performance. The HCM system provides a strategy for which organizations recruit the best employees for the organization. Motivation is important for enhanced employee performance. The HCM, is, therefore, important since it motivates such aspects as employee training and skill development, for increased performance and employee retention. The HCM is, however, likely to change in future due to changes in the workforce, strategic workforce optimization as well as HCM adoption for small businesses. Business leaders should, therefore, implement changes in the HCM, to adapt to business trends in the future.