Human Capital Management 

What does the word “Capital” stand for ?

Capital refers to already produced durable goods which further contribute to the production of goods and
services. In simpler words, capital refers to any produced good/service which enables an
individual/organization to deliver high quality output. Capital acts as a catalyst to increase productivity in
organizations.
What is Human Capital ?
Employees are the lifeline of an organization. An organization can’t survive if there are no employees.
Organization runs with the help of individuals who contribute in their own way in its success and
productivity. Employees spend maximum part of their day in offices and strive hard to achieve the goals
and objectives of the organization. Employees ought to be motivated from time to time so that they
develop a sense of attachment towards their organization and also deliver their best.
Human capital plays a crucial role in increasing the productivity and output of an organization.
What is Human Capital Management ?
Human Capital management refers to managing an organization’s employees for them to
contribute significantly in the overall productivity of organization. In a layman’s language managing
workforce of an organization refers to human capital management.
Human Capital Management is defined as the process of acquiring, training, managing, retaining
employees for them to contribute effectively in the processes of the organization.
In simpler words, upgrading the existing skills of an employee and extracting the best out of him/her
refers to human capital management.
Human Capital Management helps in training the employees and making them indispensable resource for
the organization. Motivate employees to take up special courses or online programs which would help
them in their job. Employees who do not brush up on their skills from time to time find it difficult to
survive in the long run. Inculcate the habit of reading. Internet is also one of the good options to keep
oneself abreast with the latest developments.
Human Capital management plays an important role in increasing the efficiency of employees.
Individuals are in a position to contribute more towards the system, eventually increasing the overall
productivity of the organization.
human capital management is important for:
 Hiring the right talent
 Orienting him/her to the organization
 Making a new employee feel comfortable
 Training employees in order to constantly upgrade their skills
 Retaining employees
 Making employees self sufficient and prepare them for adverse conditions
HCM benefits include:
 Easy updates and addition of new features.
 Requires fewer internal technology and server resources.
 Service is maintained even when organizational hardware is changed.
 Reduces the human errors that can occur when inputting data into multiple HR systems.
HCM functions
 The functions of HCM software are generally organized into the following categories:
 Core HR, including payroll, benefits administration, onboarding, compliance management and
maintenance of employee data.
 Talent management, the collective term for the process of recruiting, developing and retaining
employees. Talent management suites consist of distinct yet integrated modules
forrecruitment, performance management, compensation management, learning and succession
planning.
 Workforce management, the set of functions for deploying employees with the necessary skills to
particular regions, departments or projects. It includes time and attendance management, workforce
planning, labor scheduling and budgeting.
 Service delivery, including HR help desks, intranet portals, employee self-service and manager
self-service.
HCM suites also typically have technologies that cut across functional areas, notably analytics,
social media, collaboration and employee engagement. Many also allow mobile access to HR data
and applications, especially the self-service features. HCM vs. HRMS
In terms of technology, the features of HCM and human resource management system (HRMS) solutions
are increasingly blurred, and the terms may soon become interchangeable as recent trends show that many
software vendors confuse or intermingle the terms.
Both HCM and HRMS incorporate cloud computing, databases and other elements to handle workforce
management, and include most of the elements found in a standard HRIS system.
HCM solutions include:
 HRIS capabilities and features
 Employee performance and goal tracking
 Onboarding
 Analytics
 Position control and salary planning
 Access to company databases, policies and procedures, documentation and data.
 Global capabilities including multi-lingual, multi-currency and country-specific formatting
HRMS solutions include:
 Features and capabilities offered in both HRIS and HCM systems
 Time and labor management (TLM)
Future of HCM
HCM will continue to transform HR as technology-driven business models take center stage. Automation
of repetitive HR tasks, along with technologies like artificial intelligence (AI) and machine learning
(ML), will allow HR professionals to spend less time answering common employee questions and more
time engaging with employees and candidates.  
The explosive growth in ecommerce makes it an increasingly valuable, and even essential, tool that
enables businesses to
 HR: Refers to a set of traditional employee management functions that includes hiring, job and
position management, global HR compliance, and reporting.
 HCM: Encompasses the same processes, but also includes workforce rewards and talent and
workforce management.
 Talent management: Looks at the strategic management of talent throughout the talent
lifecycle. It includes sourcing and recruiting candidates, goal and performance management, learning
and career development, talent review, and succession management.
 Workforce rewards: Refers to all HR functions that manage any monetary or nonmonetary
rewards including compensation, benefits, or payroll.
 Workforce management: Involves all HR functions that are related to positive and negative
time management including time and labor and absence management.
 HRMS: Refers to the set of applications and other technologies that support and automate HR
processes throughout the employee lifecycle. While the terms HCM and HRMS are often used
synonymously, HCM puts particular emphasis on the strategic approach to managing employees.
 HRIS: Originally referred to keeping administrative employee records. It has been largely
replaced by the term HRMS. In practice, HRMS and HRIS are virtually interchangeable terms.
Armstrong (1997) Human resource management is defined as “a strategic approach to acquiring,
developing, managing, motivating and gaining the commitment of the organization’s key resource
— the people who work in and for it.”
In general, human resource management is concerned with hiring, motivating and maintaining
workforce within businesses.
Functions of Human Resource Management Includes:
 · Managerial Functions
 · Operative Functions
 Managerial Function Includes:
 1. PlanningOne of the primary function where number & type of employees needed to accomplish
organizational goals are determined. Research forms core HRM planning which also helps
management to collect, analyze and identify current plus future needs within the organization.
 2. OrganizingOrganization of the task is another important step. Task is allocated to every
member as per their skills and activities are integrated towards a common goal.
 3. DirectingThis includes activating employees at different levels and making them contribute
maximum towards organizational goal. Tapping maximum potentialities of an employee via
constant motivation and command is a prime focus.
 4. ControllingPost planning, organizing and directing, performance of an employee is checked,
verified and compared with goals. If actual performance is found deviated from the plan, control
measures are taken.
Operative Function Includes:
 1. Recruitment/HiringHiring is a process which brings pool of prospective candidates who can
help organization achieve their goals and allows managements to select right candidates from the
given pool.
 2. Job Analysis & Design Describing nature of the job like qualification, skill, work experience
required for specific job position is another important operative task. Whereas, job design includes
outlining tasks, duties and responsibilities into a single work unit to achieve certain goal.
 3. Performance Appraisal Checking and analyzing employee performance is another important
function that human resource management has to perform.
 4. Training & Development This function allows employees to acquire new skills and knowledge
to perform their job effectively. Training and development also prepares employees for higher
level responsibilities.
 5. Salary Administration Human Resource Department also determines pays for different job
types and incudes compensations, incentives, bonus, benefits etc. related with a job function.
 6. Employee Welfare This function takes care of numerous services, benefits and facilities
provided to an employee for their well-being.
  7. Maintenance Minimizing employee turnover and sustaining best performing employees within
the organization is the key. Minimizing ROI within HR department is also a key goal for Human
resource management team.
 8. Labor Relations Labor relation is regards to the workforce who work within a trade union.
Employees in such domain form a union/group to voice their decisions affectively to the higher
management.
 9. Personal Research Research is a vital part of human resource management. It is performed to
keep a check on employee opinion about wages, promotions, work condition, welfare activities,
leadership, employee satisfaction and other key issues.
 10. Personal Record This function involves recording, maintaining and retrieving employee
related information including employment history, work hours, earning history etc.

Human Resource Planning

Human Resource Planning (HRP) is the continuous process of planning the human resource of an
organization to meet the demand in terms of numbers and the quality. The process involves the critical
task to balance the supply and demand of human resource to optimally utilize the resources.
job analysis: A job analysis is a process used to collect information about the duties, responsibilities,
necessary skills, outcomes, and work environment of a particular job. You need as much data as possible
to put together a job description, which is the frequent output result of the job analysis.
Recruitment: Recruitment refers to the overall process of attracting, shortlisting, selecting and
appointing suitable candidates for jobs (either permanent or temporary) within an organization.
Recruitment can also refer to processes involved in choosing individuals for unpaid roles. Managers,
human resource generalists and recruitment specialists may be tasked with carrying out recruitment, but
in some cases public-sector employment agencies, commercial recruitment agencies, or specialist search
consultancies are used to undertake parts of the process. Internet-based technologies which support all
aspects of recruitment have become widespread.
Selection
Selection is a process of identifying and hiring the applicants for filling the vacancies in an organization.

Employee selection is a process of matching organization's requirements with the skills and the qualifications of individuals.

performance appraisal
A performance appraisal is a regular review of an employee's job performance and overall contribution to a
company. Also known as an "annual review," "performance review or evaluation," or "employee appraisal,"
a performance appraisal evaluates an employee's skills, achievements and growth, or lack thereof.

Training
Training is teaching, or developing in oneself or others, any skills and knowledge or fitness that relate to specific useful

competencies. Training has specific goals of improving one's capability, capacity, productivity and performance.