Human Capital Development And Corporate Performances


Human Capital Development And Corporate Performances

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There are basically four resources that organizations use to achieve their objectives. These resources are known as the four “Ms” in the vocabulary management. They are; man, materials, money and machines. Of these four, the most important element is unarguably the resources – man. The development of people in an organization will lead to improved performance.

Although business executives believe that people are the most important asset, some of these executive fail to invest in people.

Partial evidence abounds as to the connection between people development and financial performance. Companies that invest in the development of human capital seem to achieve better financial performance than those that do not. Training is one of the ways in which an organization can develop employees for improve performance. It helps to ensure that workers in an organization function effectively, through equipping them with required skills and knowledge and also up date their knowledge as condition changes. Many new employees come into the organization already equipped with skills and knowledge that will help them to start work. Others may require extensive training before they are ready to make such of a contribution to the organization. Majority, however, at one time or the other will require some type of training in order to maintain an effective level of job performance. While training may be accomplished on an informal basis, better results are usually attained through a well – organized formal training program. The question now is – does human capital development drive superior performance or does superior financial performance make it possible to take a more strategic approach to human capital development? The ability for profitable companies to provide better pay and better training opportunities than their competitors may lead employees to “blur engagement” which connotes involvement and superior contribution – with satisfaction, with pay.

The biggest challenge for managers is the ability to create a highly motivated human resource development unit. Modernization of human resource development and the transformation of human capital are efforts essential for the provision of excellent and high quality service to the stakeholders and client.

For years, companies have vigorously treasured key areas of their operations – from the success rates of new product introductions and productivity of manufacturing operations, to direct mail conversion rates and customer retention. The reason is obvious: brining desirable new products to market, squeezing the most from one’s most physical assets and gaining and keeping customers are all critical factors in a company’s success. Without concrete performance measures, effective e management of these areas would be impossible. However, while measurements of supply chain, research and development and sales activities has been common place, consistent and routine gauging of the performance of the work force – as well as the impact of the human capital investments – has been virtually non existent. The fact is that successful organizations today and in the foreseeable future will be those that are able to measure the business impact of the investment in people – whether that investment is employee recruiting, performance management, skills development or benefits administration.

For quite sometime now, attention ahs often been focused almost entirely on financial and physical assets, like cash, stocks, machines, equipment, land and building to mention but a few. However, the resulting human metrics can serve as a catalyst for change, providing a critical missing link for creating and sustaining competitive advantage for organization operating in an increasing knowledge intensive global economy.

Although employees are always treated as both assets and cost for their employers, most organizations have proven to be much more capable at measuring the cost side of human capital than the asset side. At a minimum, this imbalance results in inefficiencies in human capital management. Analysis shows that, in many cases, the imbalance creates a chronic under investment in human capital elative to other forms of investment. The result is sub – optimal performance on the part of most organizations, often accompanied by a sacrifice of long term productivity and portability in exchange for short – lived gains.

Improving the quality and the relevance of human capital measurement enables organizations to better understand their overall “people – related” strengths and weakness and identifying areas for improvement. It is essential to correct this situation. Any organization hoping to perform at highest level need to link investments in people to bottom – line business result.

The rise in human capital management in the 1990’s brought management scholars to debate on the linkage between the management of people and performance. A number of attempts were made to put empirical flesh on the theoretical bones of the resource based view and he specific human resources prescriptions. Some of these studies include; (1) A cross sectional study of U.S owner firms by Huselid, M.A (1995), he was that high performance work systems have an economically and statically significant impact on both turnover productivity and performance.

Huselid, M.A Jackson, S.E and Schuler, R.S (1997), did a cross sectional study on 293 publicly held U.S firms. They discovered that human resource can perform by recruitment, selection, training, performance appraisal and compensational administration.

The system of human resource practice can increase organization performance (Yeung and Ulrich, 1990).

For organizations given the present difficult business environment which is highly competitive, all organizations including banks have come to recognize the importance of having the best type of workers. The value that people can bring to services and products for customers depends on the competence and ownership toward work performance. Developing employees competence and commitment is an investment that would ensure organizations continued business success.

This study is therefore undertaken to show the relationship between human capital development and corporate performance, that is how human capital development will bring about increase/improved performance.



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