Human Capital Managemeng

TABLE OF CONTENTS

Page

1. Introduction ………………………………………………………………….. 2

1.1 Definitions and concepts …………………………………………….. 2 – 3

2. Importance of Human Capital Management (HCM) ………………………... 4 – 5

3. Benefits of Human Capital Management (HCM) …………………………… 6

3.1 Extracting the best out of employee …………………………………. 6

3.2 Hire the right candidate ……………………………………………… 6

3.3 Flow of information …………………………………………………. 6

3.4 Training and skills development …………………………………….. 7

3.5 Importance of soft skills and personal development ………………… 7

4. Differences between Human Capital Management (HCM) and

Human Resource Management (HRM) ……………………………………… 8

4.1 Nature of relationships ……………………………………………….. 8

4.2 Relation of power and management ………………………………….. 9

4.3 Leadership and management role …………………………………….. 9

4.4 Contract of employment ……………………………………………… 9

4.5 Pay policies and job design …………………………………………... 10 – 11

5. Human Capital Management (HCM) drivers …………………………………. 12 – 13

6. Human Capital Management – A global context ……………………………… 14 – 15

7. Human capital in Malaysia – A government effort ……………………………. 16

7.1 Workplace transformation ……………………………………………. 16 – 17

7.2 Workforce transformation ……………………………………………. 17 – 19

8. Conclusion ……………………………………………………………………... 20

9. List of references ………………………………………………………………. 21

10. Appendices …………………………………………………………………… 22

1 INTRODUCTION

Today's business environment requires a complete re-think of the traditional human resource (HR) practices. Over the years, technological innovations have changed a lot in the corporate world. Thus it becomes imperative to be abreast with tomorrow, especially in the workplace where the workforce is highly interconnected and shares information instantaneously.

1.1 Definitions and concepts

Human Capital Management (HCM) is an approach to employee staffing that perceives people as ‘assets’ (human capital) whose current value can be measured and whose future value can be enhanced through investment.

Capital, in a nutshell, refers to already produced durable goods or services which further contribute to the production of goods and services. In simpler words, capital refers to any produced good/service which enables an individual/organisation to deliver high quality output. Capital, in this context, acts as a catalyst to increase the productivity in the organisations. Along similar context, we see employee as being a catalyst to increase the productivity of the organisation.

So HCM builds on the concept that employees are the lifeline of an organisation because an organisation cannot survive if there are no employees. Organisation runs with the help of individuals who contribute in their own way in its success and productivity. Employees ought to be motivated from time to time so that they develop a sense of attachment towards their organisation and also deliver their best. Every employee in his/her tenure acquires some set of skills through his experience, exposure, training and so on which further increase his/her productivity, and eventually benefiting the organisation. Knowledge and expertise which employees develop in due course of time to further increase the productivity and output of the organisation refer to ‘human capital’. The word ‘human capital’ was introduced by A. W. Lewis in “Economic Development with Unlimited Supplies of Labour”.

As with other aspects of management in any organisation, ‘human capital’ needs to be managed. Thus, Human Capital Management (HCM) comes into picture and it is primarily referring to the managing of the organisation’s employees for them to contribute significantly in the overall productivity of the organisation. In simpler words, it is the management of the organisation’s workforce. HCM is also commonly referred to as Human Resource Management (HRM) or Workforce Management.

HCM is defined as the process of acquiring, training, managing, upgrading, and retaining employees for them to contribute effectively in the various processes of the organisation. HCM has more to do with how organisations treat their employees. The concept evolves around acknowledging your employees as being more than mere labour. The organisation must acknowledge and ensure timely growth and development of every individual concerned for him/her to contribute effectively and efficiently to the organisation’s goals when required.

An organisation that supports HCM provides employees with clearly defined and consistently communicated performance expectations. Managers are responsible for rating, rewarding and holding employees accountable for achieving specific business goals, creating innovation and supporting continuous improvement. As a result, companies are increasingly recognising the need to transform the traditional human resources function and establish a HCM environment that leverages the workforce as a competitive tool in the marketplace.

Therefore, HCM is an important discipline that combines technology with advanced methodologies to help businesses build, manage, and maintain their ‘human assets’, and leverage