Human Capital Essay

THE PARADOX OF HUMAN CAPITAL MANAGEMENT
Global human resources executives recently convened by SAP 2. External pressure, in the form of government initiatives and were in near unanimous agreement concerning this point: their impending regulations, may soon require companies – partic- ability to justify investments in people – in training and, more ularly those doing business in Europe – to publicly report their broadly, in new approaches to learning, knowledge management, investments in people and training. Equally as important, lob- leadership development, and performance management – has bying has intensified among trade unions, nongovernmental been severely constrained by the absence of metrics. Credible organizations (NGOs), and activist groups to urge companies metrics are needed to adequately reflect the myriad ways human to be more responsive to the situation of the unemployed, to capital affects business performance – and to convince numbers young people in search of first jobs, and to geographic regions conscious CFOs of that reality. adversely affected by globalization. In discussing a solution to the absence of metrics, those same 3. Technological capabilities, particularly in the form of enter- executives pointed to three sources of pressure to create such prise software packages and human capital management appli- a solution: cations, are making it possible – though not yet practical – to better measure, track, and manage human capital and to deliver 1. Internal pressure, such as the growing emphasis by top training and job-related information in more costeffective ways. management on shareholder value and financial management, is forcing human resources executives to make a business case Human capital is defined as individual, as well as collective, skills, for every investment. talents, and capabilities. Despite unanimous agreement in the applied literature and among academia that human capital is In recent years, the dominant theme has been cost...