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DEFINITION OF HUMAN CAPITAL AND HUMAN CAPITAL DEVELOPMENT
The human capital of an organization consists of the people who work and on whom the success of the business depends. Personal and materials success is increasingly correlated with the possession of skills. Skilled individuals can command a premium salary in periods of high economic activity. Worldwide, unemployment level remain high while organizations have difficulty in filling vacancies that require specific expertise. According to Sullivan and Steven (2003) Human capital development is about recruiting, supporting and investing in people through education, training, coaching, mentoring internships, organizational development and human resources management.
Human capital development recognizes that the development and growth of people in organizations and business are an important and essential asset to the organizations future success.
Healthfield (2011) defined human capital development as the framework for helping employees develop their personal and organizational skills, knowledge and ability. According to her, human capital development includes such opportunities as employee training, employee career development, performance management and development, coaching, mentoring, succession planning, key employees identification, tuition assistance and organization development.
The focus of all human capital development is on developing the most superior workforce, so that the organization and individual employees can accomplish their work goals in service to customers. Healthy organizations believe in human capital development and cover all of those bases. Â Â Â Â Â
More importantly, Heathfield (2011) suggests that the shortage of skilled people can act as a limiting factor on individualÂ organization and on the economy as a whole. It is in the interest of individual organization and the nation to maximize its human resource by investing in the skills of its work force, its human capital. Human capital is a crucial component of an organizationâ€™s overall competitiveness. It can be argued that economic growth, employment levels and the availability of a skilled workforce are interrelated. Economic growth creates employments, but economic growth partly depends on skilled human resources organizationsâ€
Alan (2004) opined that the concept of human capital encompasses investment in the skill of labour force, including education and vocational training to develop specific skills.
According to Sulivan and Steven (2003) human capital represents the knowledge, skills and ability that make possible for people to do their jobs.
Schaltz (1993) defined the term human capital as a key element in improving a firm assets and employees in order to increase productivity as well as to sustain competitive advantage. Human capital development involves processes that relate to training, education and other inventions in order to increase the level of knowledge, skills, abilities, values, and social assets of an employees which will lead to the employees satisfaction performance and eventually on a firm performance.
Rustogi (2000) stated that human capital is an important input for organization especially for employeesâ€™ continuous improvement mainly on knowledge, skills and abilities. Thus, the definition of human capital as â€œthe knowledge, skills, competences and attributes embodied in individuals that facilitate the creation of personal social and economic well being.
The rapid development of the human capital development has led to greater attention being paid to training. Human capital development is any activities which leads to the improvement in the quality (productivity) of the workers thus, training is an important component of human capital development. It refers to the training undergone by a person that increases his or her capabilities in performing activities which are of economic values.
Doucouliagos (1997) has noted human capital as a source to motivate workers, boost up their commitment and create expenditure in research and development (R & D) and eventually pave way for the generation of new knowledge for the economy and society in general.
2.2 PURPOSE OF HUMAN CAPITAL DEVELOPMENT
According to Asian Development Bank (1999), the significance of human capital development has to do with a concept called human capital or the education, skills levels, and problem solving abilities that will enable an individual to be a productive workers in the global economy of the twenty first century Thurow, (1992).
Human capital is the main resource that makes the difference and drives organizational performance. For people to work effectively, and behavior to be understood, organizations must adapt different systems that would create skilled and loyal employees. Organizations must also be knowledgeable in legal, technological, social and economical issues, in order to meet the needs of employees and assist them in achieving organizational goals.
The challenges facing human resources managers today include more flexible work force, managing changes, new technological and continuous development of employees. In addition, organizations are realizing that in order to adequately address human resources concerns in face of new and increased responsibilities and challenges, they must develop long-term as well as short term solutions.
Human capital development involves human resource planning recruitment, training/development and motivation.
2.3Â Â DETERMINATION OF HUMAN CAPITAL DEVELOPMENT NEED
This has traditionally been used by organizations to ensure that the right person is in the right job at the right time. Increasing environmental instability, demographic shifts, changes in technology, and heightened international competition are changing the needs for and the nature of human resources planning in leading organizations.Â
Planning is increasing the product of the interaction between line management and planners. In addition, organizations are realizing that in order to adequately address human resources concerns, they must develop long term as well as short-term solutions. Vetter (1967) defined human resources planning as the process by which management determines how the organization should move from its current manpower position to its desired position. Through planning, management strives to have the right number and the right kinds of peoples at the right places at the right times, doing things which result in both the organization and the individual receiving maximum long-run benefits. Contemporary human resource planning occurs within the broad context of organizational and strategic business planning. It involves forecasting the organizations future human resource needs and how it will be met. It includes establishing objectives needs and then developing and implementing programmes (staffing, appraising, compensation and training) to ensure that people are available with the appropriate characteristic and skills when and where the organization needs them (mills 19856). It may also involve developing and implementing programs to improve employee performance or to increase employees satisfaction and involvement in order to boost organizational productivity, quality or innovation. For example, according to Kalhnyn Conners, Vice President of human resources at Liz Claibornem, human resources is part of the strategic (business) planning process. Its part of policy development, line extension planning and the merger and acquisition processes.
Little is done in a company that does not involve employees in the planning policy or finalization stages of any deal (cited in Lawrence, 1989, p 70) John Oâ€™Brien Vice President of human resources at Digital Equipment Corporation, describes an integrated linkage between business and human resources plans as one by which human resource and line managers work jointly to develop business plans and determine human resources needs, analyze the workforce profile in terms of future business strategies review emerging human resources issues and develop programs to address the issues and support the business plans.
According to Oâ€™brien, such joint efforts occur when human resources planners convince corporate business planners that human resource represents a major competitive advantage (Planning with People, 1984 P 7) that can increase profit when managed carefully.
Finally, human source planning includes gathering data that can be used to evaluate the effectiveness of on-going programs and inform planners when revisions in their forecasts and programmes are needed.