Why Human Capital so vital to organisation

Essay by nono11 June 2004

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The onset of globalisation has caused many organisations to find themselves dealing with an increasingly competitive business environment. In general, almost all organisations in global are increasingly becoming more aware of the importance and the value of human capital. Generally, human capital entails great expense on company's expenditure. Research shown that most organisations believed human capital can bring them success and sustainable competitive advantages.

Human Resource (HR) departments are responsible in the development of human capital, whereas Human Resource Management (HRM) professionals are responsible to develop and implement strategies to foster human capital within the organisation. Eventually, to foster human capital will lead to better performance and more positive outcomes. This involves leveraging workforce for better organisational performance such as positive reputation effects, avoid cost of poor or inappropriate training, ability to expand their diverse skills and knowledge to a diverse customer base, and achieve greater organisational creativity, innovation and flexibility.

HRM professionals can foster human capital in several ways. The two approaches that are highlighted in this report are "forming cross functional teams" and "enforcing tolerance and valuing human capital" with greater extent of flexibility working arrangements.

Effective and efficient use of human capital recognises that people inherit with different knowledge, skills, and experiences can bring new ideas to the workplace. In order to develop a competitive advantage over its competitors, there are four approaches which HRM professionals can apply within organisation. These approaches are redefining leadership, training and development, creating a common organisation culture and remuneration system which enable the HR department to develop a more effective and efficient organisation.


2.The Research Problem

This report is to investigate the issue of human capital in the context of an increasingly globalise and competitive workforce. It has been demonstrated that organisations have gained more...