hcm_.ppt
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Human capital
andmanagement
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Human Capital
Human capital represents the human factor inthe organization; the combined intelligence, skillsand expertise that gives the organization its
distinctive character.
The word Human Capital was introduced byA. W. Lewis in Economic Development with
Unlimited Supplies of Labour.
Human capital is the part of intellectual capital.
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INTELLECTUAL CAPITAL
Human capital Structural capital Relationship capital
What is intellectual capital?
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Intellectual capital
The stocks and flows of knowledge available to anorganization. These can be regarded as the intangibleresources associated with people which, togetherwith tangible resources (financial and physical assets),
comprise the market or total value of a business.Total valueof the firm
=
Intangible resources(intellectual capital)
+Tangible resources(financial and physical assets)
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Intellectual capital=
Human capital+ structural capital +relationship capita
l1.Human capital includes:
knowledge, competencies and the experience and
expertise of staffs.
2.Structural capital includes:
Information systems and databases ,R $ D, patent, copy
right, trade marks, IT systems etc.
3.Relationship capital includes:
Customer relationships ,customer satifaction,brand
images, franchising agreements, supplier relationships.
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Human capital advantage
1.sustainable competitive advantage is
attained when the firm has a human resource
pool that cannot be imitated or substituted by
its rivals.
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2.The concept of Human capital has relatively
more importance in labour-surplus countries.
The surplus labour in these countries is thehuman resource available in more abundance
than the tangible capital resource. This
human resource can be transformed intoHuman capital with effective inputs of
education, health and moral values.
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3.The problem of scarcity of tangible capital in the
labour surplus countries can be resolved by
accelerating the rate of human capital formationwith both private and public investment in
education and health sectors of their National
economies. The tangible financial capital is an
effective instrument of promoting economic growthof the nation. The intangible human capital, on the
other hand, is an instrument of promoting
comprehensive development of the nation because
human capital is directly related to humandevelopment.
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4.The Human Capital is developed by health,
education and quality of Standard of living.
Therefore, the components of HDI are directly
related to Human Capital formation within thenation. HDI is indicator of positive correlation
between human capital formation and
economic development. If HDI increases, thereis higher rate of human capital formation in
response to higher standard of education and
health. Similarly, if HDI increases, per capitaincome of the nation also increases.
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An example in India
In India, rate of human capital formation has consistently
increased after Independence due to qualitativeimprovement in each generation. In the second decade of
21st century, the third generation of India's population is
active in the workforce of India. This third generation is
qualitatively most superior human resource in India. It has
developed the service sector of India with the export
of financial services, software services, tourism services and
improved the Invisible balance of India's Balance of
payments. The rapid growth of Indian economy in response
to improvement in the service sector is an evidence ofcumulative growth of Human Capital in India.
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HUMAN CAPITAL RISK
Human capital risk accumulates in four primary categories:
Absence activities (activities related to employees not showing upfor work such as sick leave, industrial action, etc.). Unavoidable absence
is referred to as Statutory Absence. All other categories of absence are
termed "Controllable Absence";
Collaborative activities are related to the expenditure of timebetween more than one employee within an organizational context.
Examples include: meetings, phone calls, instructor led training, etc.;
Knowledge Activitiesare related to time expenditures by a singleperson and include finding/retrieving information, research, email,
messaging, blogging, information analysis, etc.; and Process activities are knowledge and collaborative activities that
result due to organizational context such as errors/rework, manual data
transformation, stress, politics, etc.
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Why measuring the value and impact of
human capital Human capital constitutes a key element of the market worth of a
company. A research study conducted in 2003 (CFO ResearchStudies) estimated that the value of human capital representedover 36 per cent of total revenue in a typical organization.
People in organizations add value and there is a case for assessingthis value to provide a basis for HR planning and for monitoring
the effectiveness and impact of HR policies and practices. The process of identifying measures and collecting and analyzing
information relating to them will focus the attention of theorganization on what needs to be done to find, keep, develop andmake the best use of its human capital.
Measurements can be usedto monitor progress in achievingstrategic HR goals and generally to evaluate the effectiveness ofHR practices.
You cannot manage unless you measure.
W O I
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Ways or Organ zat ons to IncreaseHuman Capital
1.constant training
2.monitoring performance
3.Direct communication 4.define job responsibilities
5.motivation
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Human Capital Management
HCM refers to the management of an
organizations employees for them to contribute
significantly in the overall productivity of
organization. Every employee tries his level best
to utilize his knowledge and skills to benefit his
organization and become an indispensableresource in due course of time.
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Aims of HCM
To determine the impact of people on the
business and their contribution to value;
To demonstrate that HR practices produce
value for money in terms (e.g. ROI).
To provide guidance on future HR and
business strategies.
To provide data that will inform strategies and
practices designed to improve the
effectiveness of HRM in the organization.
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THANK YOU