Human Capital

Defining 'Human Capital' is critically a point of view of the organisation which has initiated the concept. Policies that focus on organisational development look at Human Capital as the start of defining the structure and potential of the organisation basically by strategics these fundamentals the right way. What is 'Human Capital?', well the best and simple way to explain the above topic is " the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organisation. This concept realizes that not all employee are the same nor are they remarkably of equal quality and or importance.

There are a lot of attributes that have to be considered for the benefit of the organisation on an economical point of view. For example of late statistically quoting, school leavers or students have found it very difficult to secure any form of employment because of lack of skill and experience. After the recession there were a lot of cut-backs hence the difficulties faced by the whole job market and school leavers who always depended on a healthy economy to provide employment.

Now back to 'Human Capital', why is it of great importance for the organisation to understand this concept and invest in Human Capital??

The term ‘human capital’ is widely used in HR to describe people at work and their collective knowledge, skills, abilities and capacity to develop and innovate. Human capital reporting aims to provide quantitative, as well as qualitative, data on a range of measures (such as labour turnover or employee engagement levels) to help identify which sort of HR or management interventions will drive business performance.

It is now commonly accepted that the value of organisations is drawn from a mixture of tangible assets in the form of equipment, money, land or other physical objects together with intangibles in the form of brand, reputation, knowledge and, of course, people – critically important in an increasingly knowledge-based economy.

However, the evaluation of human capital remains difficult for most companies. There are a number of reasons for this:

• The contribution of people is difficult to isolate from other factors such as the economic situation, market forces and customer or social trends.
• The value of people is often expressed in qualitative rather than quantitative terms that make it difficult to represent in traditional accountancy models.
• HR data has traditionally been collected for administrative rather than evaluation purposes.
• HR people do not always have the skills or resources to interpret or explain data to evaluate the contribution of people to business performance.
• Senior leaders or stakeholders do not recognize human capital as a performance measure and therefore do not demand human capital information. 

These difficulties have been further compounded by the varying definitions of human capital developed over the years and not assimilated fully... http://www.cipd.co.uk/blogs/cipdbloggers/b/health_well_being/archive/2013/01/17/Human-Capital.aspx

Human Capital Panel -;

To further its programme of work on human capital, the CIPD is developing a Panel comprising a small number of companies already recognised as 'human capital champions'. Although the requirements for mandatory reporting on human capital from companies is as yet still unclear, most of the FTSE companies would agree that as companies recognise the merits of human capital reporting, there will be increasing impetus to strengthen reporting, and for companies who currently do not report to do so. 

We have therefore developed what we hope will become a vehicle to encourage and disseminate best practice. By starting with a small number of companies who already have a good track record for human capital reporting and are skilled in the process we hope to be able to add momentum to the debate and encourage others to strengthen their data in this area. 

Purpose of Human Capital Panel -;

The Panel's purpose is to produce regular material tracking the development and use of measures to demonstrate the value and contribution of human capital.

While carrying out research for this purpose, the Panel will also seek to provide information on the following issues:

• how measures link to bottom line performance indicators
• how this data is reported externally within the requirements for business reporting
• whether any generic measures are emerging which might have value for comparability across sectors or organisations
• what skills the HR profession needs to develop to make progress on human capital evaluation.

Team Working

Teamwork is the cooperative and coordinated effort on the part of a group working in a related manner or in pursuit of a common goal¹. On a broad scale, every person is in some sort of a team, be it a family, a circle of friends or indeed in a business setting. In this series I will try and elaborate the concept of teamwork and point out how significant it is in day to day business life, how it affects individual and organisational effectiveness and efficiency and measures which can be taken to make improve teamwork's effect on these two. This episode will be focused on defining teamwork and the components that it involves as well as pointing out why it is important in business and human resource management as well as the consequences of a lack or incompetent teamwork.

The key components in this definition of teamwork are cooperation, coordination and having a common goal. Cooperation would be the active assistance each member of a team gives to another member of the team member, and this is more essential in roles which are interdependent (this will be further elaborated on). In an organisational setting, the Operations Department would cooperate with the Finance Department to ensure that there is enough capital to fund the schedule projects while simultaneously cutting the cost of production. This cooperation will of-course be in line to achieve the common organisational goal of making or maximising profit.

Coordination would be to combine the efforts of each individual asset of the team in a harmonious relation. Again, this follows the path of a common goal. For instance, the coordination that goes on between the departments in order to device a budget for a project. The research team would would investigate the most profitable project to invest in. They pass this on to the operations department which investigates type and quantities of resources needed. They liaise with the human resources department to find out if there is need for the new recruits, or training of the current employees. All these figures of the costs of the entire project would then be passed on to the Finance department which judges how much capital to afford to the individual teams based on how much the company has or can acquire to fund the project. This has to be harmonious because resources are usually scarce and certain sacrifices and priorities will have to be made. So the budget making process will involve harmonious two way communication to make sure that the all members are informed.

The common goal is the finale desired result of all the combined efforts of the team and this will usually act as a yardstick to measure the effectiveness and efficiency of teamwork.

Now that we have an establish what teamwork, we have to find out why it is important for a business to have a team set up and why effective teamwork is important. A cooperation of the minds helps in decision making and problem solving because it opens up the contribution of more ideas and employs more critical thinking skills. In the example of the budget making, numerous ideas are brought forward on which department needs the most capital in the carrying out of the project. A contribution from each individual department and a critical analysis of these ideas will help to generate the most reasonable conclusion. This conclusion has a great chance of being universally accepted because each department would have been represented in the decision making process².

Cooperation and coordination also ensures that tasks are completed faster. It also gives opportunities for resources to be shuffled around, competent members complimenting less competent ones³.

Teamwork, through cooperation, also allows individual employees to learn the skills and trades of their fellow team mates, thus making themselves more capable of filling in in the absence of their counterparts². This quality of teamwork also helps to breed people with better leadership skills because as people become more skilled on the broader scale of the business, they will be able to make decisions which are beneficial to all or most departments not just the ones in which they specialise. For example, an operations manager who Is experienced in human resources as well would know how important employee motivation is to human resources department and subsequently to the overall profitability of the business, therefore he will try to device operation procedures which improve or takes advantage of the motivation in the employees. This improvement in leadership skills also makes it easier for the current team members to welcome, train and assimilate new recruits who would have joined their teams.

Competition is inevitable and especially on the professional front. Since roles within a team are often interrelated and interdependent, effective teamwork creates a healthy competition within the business. Each team member will operate with a degree of competitiveness which drives him or her to always perform better than his fellow team member but without compromising the quality of the performance of the team as a whole. In the absence of a team mentality, individualism would create unhealthy, selfish competition with the risk of behaviours like sabotage and hostility. If we go back to the business setting we will find that the Productions department would want to increase their efficiency by employing more cost intensive methods of production and quality analysis in order to reduce the costs of production more that what the Human Resources department cuts by increasing motivation and reducing costs of recruitment and training. These efforts will eventually create a synergy in the organisation as the combined efficiency of each individual department will subsequently increase the efficiency and profitability of the entire business.

Teamwork also gives an opportunity for bonding between the employees because as employees interact, they get to know each other. This bonding encourages employees to be more cooperative as they would be willing to assist one another, thus facilitating a family environment. This is also motivational because employees would love working in that particular team which makes them more likely to put in more effort even without it being financially rewarded.

So far we have learnt how teamwork is generally defined and how the importance of the components of teamwork such as cooperation and coordination. We have also examined some of the most important advantages of teamwork in the work place, using the example of a broad division of a company into the core departments which represent an individual member of a team which in this case is the business as a whole. In the next episode we will further examine the benefits of team work and ways in which teamwork can be improved within different contexts.

Mudiwa Mari

1 Dictionary.com, Visited [31/03/2013] http://dictionary.reference.com/browse/teamwork

2Management Study Guide, Visited [31/03/2013] http://www.managementstudyguide.com/importance-of-team.htm

3Forbes, Created by Edmund Lau, Published [23/01/2013], Visited [31/03/2013] http://www.forbes.com/sites/quora/2013/01/23/why-and-where-is-teamwork-important/