Table of Contents
The concept of human capital has floated around in the management circles, but most people, even those in the management position, do not understand what it really means. At the basic level, human capital means people who are working in and for an organization. However, the strategic practice of human capital views people as assets rather than costs. Being assets, the value of employees might be enhanced through investment with the aim of increasing the performance capacity of the organization (Blanchard & Thacker, 2004). To achieve the intended high-performance capacity, an organization must have human capital policies to support the shared vision. Some critical aspects of the shared vision include vision for future core values, mission, goals, and objectives, as well as strategic plans that define future direction. Achieving such level of integration requires the concerned personnel to design, implement, and assess their role in helping the organization achieve its goals. This paper is a case analysis that explores how the General Accounting Office views and recommends the practice of human capital management.
People Management as an Aspect of Human Capital Investment
People working for an organization are assets that need to be invested in and nurtured to increase their performance capabilities. According to Foot and Hook (2011), the conscious way of investing in people should have such characteristics as cheaper, better, and faster delivery of service, which can contribute to developing more flexible ways to manage people. As observed in GAO symposium, people management starts when workers and employees are assigned values as assets and not costs of the business. This means that they must be nurtured and directed in their work. Organizations should also have clearly defined vision, mission, and culture. Organizational culture is the way employees behave in reaction to certain activities and requirements in their workplace. Leadership and management should be focused on achieving goals instead of imposing rules and policies (Treven, 2006). Accordingly, management of people can be achieved by having the appropriate organizational structure and clearly defined roles that suit the needs of people. The personnel function should be integrated into the human resource management as a part of the larger mission of the organization. The GAO also advocates for employers to treat continuous learning as a part of their investment in people as opposed to viewing it as a means of cost minimization. The approach used should be integrated into information management systems in place, including decision support mechanisms. Finally, leadership must recognize the changing environment as a perpetual process of an organization and invest in good and effective leadership structures.
The practice of human resource management should be accompanied by an active approach to issues that affect people in their work environment. Human resource managers are actively looking for innovative and effective ways of strategically managing the human capital as a part of the asset owned by an organization (Heffernan & Droulers, 2008). As identified by GAO delegates, a number of underlying but interrelated principles exist in the contemporary practice of effective human capital investment. Key among the principles is the notion that human personnel must be treated as a fundamental part of strategic business management. Businesses and organizations that are unable to integrate their human capital in strategic management cannot attain their shared vision. Integration means that everyone is brought to the understanding of the mission and core values and is taking part in the design and implementation of policy and regulation frameworks for achieving the set targets. The ability to participate in the decision-making process is also particularly important when it comes to integrating the human capital into management teams (Kirkman, Lowe, & Gibson, 2006). Working in teams requires leaders as well as top management people to provide guidance and direction to employees under them. Such leaders need to have an expanded strategic role beyond their traditional roles as personnel administrators. It goes down to being able to form teams and work together towards a common goal.
Human capital is an evolving area and different dynamics affect how different organizations practice it. For an idealistic approach, the internal human function can be leveraged more when integrated with external expertise. The implication is that no one organization or business should work alone to improve performance capabilities of their personnel (Brody & Nair, 2013). In fact, in the modern practice, training sessions and forums are organized in such a manner that presenters are external professionals who have worked for many years in the field of human resource management. Like most other professionals, there are numerous consultants, professional associations, and experts who give advice on strategic planning about human capital. The training and development function is critical in ensuring that workers have appropriate knowledge and skills to perform their roles. In the same line, performance management must always strive to introduce employees to new performance requirements in the organization. Tsui, Nifadkar, and Ou (2007) have argued that the department responsible for performance management must ensure that there is uniformity in the performance standards. Another aspect such as compensation of workers and employee relations can be implemented by a select team on compensation and employee relations to ensure that workers in different subsidiaries are paid.
While effectiveness of human capital depends significantly on the investment by the employer, research findings have shown that hiring process impacts the ability of the staff to perform. The human resource must develop and sustain leaders after hiring them to nurture specific talents and leadership characteristics appropriate for mission and goal realization (Baum & Devine, 2007). It is not easy to identity specific leadership traits that will go into high-performance improvement and sustenance of the organization’s pool of leaders. However, contemporary human capital management practices target recruitment, hiring, development, retention, and succession policies as a part of the organization’s commitment to achieving a particular pool of leaders. Staffing as the function of human resource management is responsible for equipping workers with necessary skills and knowledge to o their work (Dery & Wailes, 2005). In addition, effective staffing is a way of ensuring that people hired are qualified and able to accomplish the task at hand. Dynamism in the practice of human resource management means that employees might be mandated to improve their skills so as to work competitively in the industry. This is a function of the training and development team. By ensuring that workers are trained, they are put in a position to compete effectively in the market depending on good skills and knowledge they possess.
One of the problems that firms face in their quest to have an inclusive human capital is the breakdown in communication. Communication is critical in getting everyone to know about goals and objectives of the shared vision for the organization. As noted by Taylor and Davies (2004), effective communication is the bane of teamwork and high-quality performance. Human resource managers must put in place systems that can enhance a common understanding of strategic goals, core values, and mission that employees need to achieve working together as a team. Communication is a factor that promotes understanding of how commitment and unity work for achieving positive and better results. An existing gap in the practice of human resource management is the notion that communication is a distinct department that is independent of human capital investment (Tsaur & Lin, 2004). People in charge of human capital are thus not familiar with appropriate or existing communication channels. Therefore, they are not able to recruit or hire people who have necessary competencies to perform their work. The breakdown in communication also means that employees will work with an antagonistic approach to each other.
Identifying right competencies and developing them are also a key aspect of the modern practice of human resource management. The person in charge must have the capacity to identity competencies such as abilities, knowledge, skills, and behaviors that can work towards achieving mission and goal as set out by the organization (Ulrich & Smallwood, 2005). This also should be built and sustained through talent pool of hiring, developing, and retaining practices and policies that are directed at building sustained competencies. The other aspect involves the use of performance management systems such as motivations, rewards, and recommendations to achieve desired results. The human resource management is at the center of ensuring that employees are motivated and enthusiastic to perform their duties (Blanchard & Thacker, 2004). As such, the role of providing necessary incentives must be seen as a way of making the staff committed to and accountable for achieving the set minimum standards. The human capital practice may call for rewarding the staff who have achieved high standards in their performance. Furthermore, the human capital needs the management to support and reward various teams in the organization to get them to achieve high performance.
In the process of achieving aligned human capital, organizations need resources such as finances and time to invest in the strategic management. This might also call for competitive sourcing of the staff by ensuring that people with right skills and knowledge are recruited and deployed to various departments. Financial performance also becomes a major factor in achieving proper human capital investment (Foot & Hook, 2011). Without proper management of finances, the staff will soon not have the salary or motivation to work. This approach is what the President’s Management team has resorted to adopting when the president came into office. Part of the process involved initiating leadership and knowledge management initiatives as a form of empowering people to work effectively in their respective positions.
Organizational Culture as a Successful Factor to Quality Performance
Organizational culture stands at the crossroad with the success of the organization. Culture defines values, beliefs, and behaviors that employees will carry with them while executing their functions. An organizational culture, which is a collection of individual cultures, can influence the autonomy that employees have in an organization and the level of job satisfaction as well as customer satisfaction (Treven, 2006). Culture also determines the kind of leadership practiced and management strategies that are put in place by people occupying influential positions in the organization. Culture, therefore, serves an essential purpose of providing guidelines and parameters beyond which employees and managers of an organization would want to go. Similarly, organizational culture defines the business ethics that will be followed by employees in an organization and helps to anchor activities of the organization on an agreeable ground regarding values, beliefs, and behaviors (Heffernan & Droulers, 2008). Organizational culture is also important in the sense that it highlights the kind of protection that the management is likely to give employees such as human rights, safety at the workplace, and general health of employees while at work. Some organizations have developed a working culture that emphasizes the need to have a well-planned program that takes care of the welfare of the staff as a prerequisite for the development and advancement in service delivery to customers (Kirkman et al., 2006). This principle is normally vested in the fact that satisfied employees can offer better services to the customer or even engage in maximum production.
The organization alignment with the organization’s culture strives to integrate human capital strategies with core business practices. The best strategies are chosen for integrating the components, core processes, activities, and resources towards supporting achievement of the goal (Tsui et al., 2007). Human capital systems should also be aligned with strategic and program planning as a means of attaining the level of success commensurate with the position of the firm in the industry. However, a gap in this aspect is the lack of knowledge about the impact of organizational culture and practices on the attainment of the goals and mission. Compared to most investment measures, the human capital management is specifically focused on maximizing the value of the staff, while ensuring that risks are managed (Brody & Nair, 2013). Thus, the need for workforce planning is directly drawn from the shared vision as well as traditional human resource functions that involve fundamental reorientation. There should also be strict support of functions that promote personnel processses and rule and regulation compliance. Effective human capital professional practice is hinged on the preparation and experience of providing effective decision support mechanisms and encourages managers to develop, implement, and assess approaches to human capital practices in the organization.
Leveraging on the human personnel to achieve high performance must be implemented through investment in people who work for the company. The human capital model can help to highlight the thinking that some specific steps can help to manage people strategically. The guiding principles during the process should view people as assets whose value can be increased by investing in them, while managing potential risks (Baum & Devine, 2007). The existing standards for achieving results can be used to design, implement, and assess results and mission. Following the principles of investing in people, the following recommendations are put forth.
- Invest in developing leadership skills, especially in people who head departments and teams. Investing in developing leadership skills is a commitment to manage the human capital. Leadership teams should be developed and nurtured to accomplish milestones and meet targets. The human resource management should be focused on developing and directing reforms, while also encouraging initiatives to improve skills of everyone in the company. It is also recommended that the initiatives be aligned with the strategy to achieve the mission and goals.
- Develop a clear understanding of the level of performance desired and systems to achieve the specific level. Dery and Wailes (2005) have noted that there is no way a human resource manager can go about facilitating performance of the staff without knowing the level of performance required. Performance levels can be reached through comparison with similar organizations in the same field, as well as comparing with the performance of previous years. Analysis of the needs of employees in terms of skills required should be often done with resources brought together and the work environment streamlined to support the process.
- Implement communication systems that align with the goal and objective of the organization. The human resource should develop systems to ensure a smooth and timely exchange of information between the staff. Evidence has shown that miscommunication often causes misunderstanding and later underperformance of employees. The staff who do not get decision support are likely to be demotivated no matter what kind of human capital practices are in place (Taylor & Davies, 2004). Effective communication can be applied during each appraisal step to make employees know how they are contributing to the high performance of their organization. Without proper communication channels, employees can be bored because either they are not getting information they want to do their work or information reaching them is wrong and therefore leads to wrong decisions in their place of work.
- Lastly, it is recommended that the human resource managers in the organization work in collaboration with the rest of stakeholders to develop a strategic plan for human capital. The aim should be to accomplish goals by effectively integrating policies and practices that target the goals set (Tsaur & Lin, 2004). Emphasis should also be put on emerging demands and human capital challenges so that the human resource practice is open to a re-evaluation of human capital practices. There should also be data-based capital decisions. Decisions made should be based on the performance-oriented style of managing human capital.
The implementation process for a strategic plan requires participation of every person in the initiative. The implementation, therefore, will be headed by the human resource department manager working closely with the staff in the department. The human resource manager will present a budget to the management, indicating financial resources needed for training and empowering employees as a part of investment. Some programs to be implemented include training and learning sessions where staff in the organization will be taught about teamwork, leadership, and decision support mechanisms available to them in their work environment (Larson & Gray, 2014). The investment will encompass putting in place necessary communication systems to enhance communication and ensure that everyone gets timely communication.
The implementation plan will also involve deployment of appropriate technology systems to empower the human resources to promote human capital investment. For example, the process will involve enlisting services of professionals and experts with knowledge of the dynamics and trends in human capital investment and seek their advice on the way forward. The tools will also be used in acquisition, development, and retention of top talent, while focusing on delivering on the set objectives (Richardson, 2014). Strategic initiatives will be directed at the investment that enhances the value of each employee.
The implementation process will be accompanied with a risk analysis plan to determine potential risks that the organization might face in the process of the human capital investment. Potential risks must be identified and mitigating measures should be proposed to ensure continuity during training and learning sessions. For example, normal operations of the business should not stop during the implementation of the strategic initiatives such as training of the staff. Lastly, implementation of investment in human capital will involve all stakeholders of the organization. Stakeholder involvement is critical for achieving shared vision and mission (Rose, 2005). There will be explicit and inclusive development of policies and regulations to allow everyone to participate in the process. The human resource department will work closely with other departments to encourage team formation and leadership skills as a part of achieving high and quality performance.
Organizations can achieve high performance by investing in the human personnel as a part of the asset. Viewing employees as assets will prompt the human resource department to develop strategic initiatives that allow the staff to pursue the shared vision. The mission, goals, and objectives of the organization should serve as the basis on which leadership practices, organizational culture, and strategic human capital planning are practiced.