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Human Capital - A Positive Exchange Rate

Next time you’re sitting at your desk take a look around you. What do you see? Computers, plants, desks, supplies – all the things a company needs to function, purchased with capital from the company’s coffers.

You’ll also see friends, colleagues, employees - human capital. Now, employees are not filing cabinets. They have needs and goals of their own, both within the organization and outside of it. To some the term “Human Capital” may have a negative edge to it. However, in business terms human assets do comprise the ultimate capital – when used wisely and effectively.

Adam Smith (everyone’s favorite 18th century economist), talked about human capital. He both realized and acknowledged that people acquire practical knowledge, skills, and learned abilities and that makes them more productive and valuable to their organizations.

Much lip service is paid to the cliché “People are our greatest asset”. However, this goes hand in hand with the less commonly used phrase “People are our greatest expense and managing them and their records is often a huge pain in the rear”.

So how do we maximize the asset and minimize the pain. We need to:

• Get the right number of people with the right skills in the right place.
  This is much harder than it sounds. Don’t overstaff, don’t understaff. Employees should not be overqualified or underqualified. Like Goldilocks, the needs of the organization demand that everything be just right.
  
  
• Attract and keep highly qualified employees.
  This is always the goal, but it doesn’t stop there. Helping those employees perform at their peak is also vital.
  
  
• Not kill ourselves or our bottom line while doing it.

It is out of these basic needs of every organization that human resources management and administration is born. Whether your company is big or small, you need to outline HR goals and your “human capital strategy”. HR management is increasing an organization’s productivity by attracting, keeping and effectively managing employees. No company can grow or be successful without achieving this goal.

Implicit in meeting any business goal, is deploying the processes and tools to help get you there. It takes determination, vision and technology. In small to mid-size organizations where HR management is likely to be lean, you’ll definitely need to leverage the technology component. Fortunately, human resource management software and systems (HRMS), are widely available and can streamline operations and cut costs in every function of the HR department. Here’s what to focus on:

Recruiting: Recruiting is where it starts. Too often, we hire the first suitable applicant and not the best applicant. The right software can reduce hiring costs, shorten the hiring cycle, and result in a better employee acquisition. You can virtually eliminate paper with online application and resume routing. Because recruiting is easier, more effort can be spent on getting the right employee not just a qualified employee.

Benefits: To attract and hold on to the most qualified applicants, you’ll need a competitive benefits package. We recommend adding online benefits administration to this. Online administration offers significant advantages: it empowers employees by offering them detailed information and access to their benefits over the internet, and it saves your department countless hours of administrative follow-up.

Payroll: Few companies today would think of manually processing the payroll function. However, many outsource to avoid the pains of keeping up with an ever changing environment. If you’re still outsourcing, chances are likely that you outgrew the economic benefits of it but never quite took the in-house plunge. Payroll software has come a long way and the economic benefits of outsourcing have been dramatically reduced. You may also want to consider automating time and attendance with the appropriate tracking software.

Training: Employee training offers the opportunity to make an investment in your human capital. It, too, is all too often short-circuited by the administrative hassles involved. Fortunately, software programs are available that will allow you to minimize the administrative investment, while at the same time creating a successful training process that is highly satisfactory for both employee and employer.

There are other aspects of human resources management that we haven’t touched on. For each, chances are good that technology has answered the call. It’s just a matter of how, when and what to deploy.