Best Practices in Human Capital Development

Custom Student Mr. Teacher ENG 1001-04 1 August 2016

Best Practices in Human Capital Development

Human capital refers to the stock of productive skills and technical knowledge embodied in labor. Many early economic theories refer to it simply as labor, one of three factors of production, and consider it to be a fungible resource – homogeneous and easily interchangeable. Other conceptions of labor dispense with these assumptions. Today’s Globalization and competition among companies made companies to select the best practices for Human Capital Development.

This Research contributes to the Best Human Capital Development Practices that are implemented by the companies and continues with in-depth study of its Weakness and Strengths and calculate the production metrics of each practice. Accenture Human Capital Development Framework (HCDF) Research from HCI (Human Capital Institute) shows that Human Capital Development Framework is one of the best Human Capital Development practice in the corporate world. The Accenture HCDF uses four distinct measurement tiers in arriving at an assessment of an organization’s human capital practices.

These tiers reflect the key variables that influence the relationship between a company’s human capital assets and its financial performance: Tier 1, Business results, consists of measures of organizational performance (e. g. , traditional financial analyses featuring EVA TM, revenue growth, market share and stock performance). Tier 2, Key performance drivers, consists of measures of intermediate organizational outcomes (e. g. , productivity, quality, innovation and customer satisfaction) often captured on a balanced scorecard.

Tier 3, Human Capital Capabilities, consists of the most immediate and visible people-related qualities (including employee attitudes and abilities) that are necessary for achieving critical business outcomes. Their influence is felt through key performance drivers. Page 2 Tier 4, Human Capital Processes, consists of practices that lead to robust and effective human capital capabilities. Included in this tier are core HR processes (e. g. , competency management and performance appraisal) and broader human capital processes such as learning and knowledge management.

Strengths: Individual Development is focused, Growth Oriented, Human Resource Identification and Performance Appraisal. Weakness: Team Management is Absent, Production rates and costly. 360-Degree Performance Management Feedback System As per Research with HR Capital Management and Development, Report, 2007: This system, which solicits feedback from seniors (including the boss), peers and subordinates, has been increasingly embraced as the best of all available methods for collecting performance feedback.

Gone are the days of working hard to impress only one person, now the opinions of all matter, especially if you are in a leadership role (at any level). Every person in the team is responsible for giving relevant, positive and constructive feedback. Such systems also help in identifying leaders for higher level positions in the organization. Senior managers could use this feed back for self development. Sony and Acer are implementing this HR tool for development of Human Capital. (The Best HR Capital Development Practice, Geetha Sharma 2007)

Strengths: Motivational, Higher Retention of Employees, Leadership and Higher Production rates. Weakness: Misunderstanding and Disputes between executives and Managers. Page 3 Knowledge Sharing Adopt a systematic approach to ensure that knowledge management supports strategy. Store knowledge in databases to provide greater access to information posted either by the company or the employees on the knowledge portals of the company. When an employee returns after Attending any competencies or skills development program, sharing essential knowledge with others could be made mandatory.

Innovative ideas (implemented at the work place) are good to be posted on these knowledge sharing platforms. However, what to store & how to maintain a Knowledge base requires deep thinking to avoid clutter. This HR Practice is performed at Google, Inc. and other large companies. Strengths: Responsibility of employees, Development in Teams. Weakness: Only Innovative Groups are encouraged leading to inequality. Fair Evaluation System for Employees Develop an evaluation system that clearly links individual performance to corporate business goals and priorities.

Each employee should have well defined reporting relationships. Self rating as a part of evaluation process empowers employees. Evaluation becomes fairer if it is based on the records of periodic counseling & achievements of the employee, tracked over the year. For higher objectivity, besides the immediate boss, each employee should be screened by the next higher level (often called a Reviewer). Cross – functional feedback, if obtained by the immediate boss from another manager (for whom this employee’s work is also important), will add to the fairness of the system.

A relative rating of all subordinates reporting to the same manager is another tool for fairness of evaluation. Normalization of evaluation is yet another dimension Page 4 Of improving fairness. This is practiced at many companies around the globe with Equal Opportunity Provider Including HSBC and American Embassy. Performance linked Bonuses Research with SBA, USA on Human Resources Practice: Paying out bonuses or having any kind of variable compensation plan can be both an incentive and disillusionment, based on how it is administered and communicated.

Bonus must be designed in such a way that people understand that there is no payout unless the company hits a certain level of profitability. Additional criteria could be the team’s success and the individual’s performance. Never pay out bonus without measuring performance, unless it is a statutory obligation. Companies like Nokia and GM are implementing this practice. Strengths: High Productivity and Determination among Human Resources. Weakness: Cost Effective to the Company.

Metrics to evaluate Organization Human Capital Development Processes: Research with Northern California Human Resources Association (NCHRA), Companies should evaluate the Human Capital Development by Estimating the ROI (Return on Investment) with the staff and other functionalities like revenue growth, market share and stock performance. Employee Retention and High Productive nature helps the companies to evaluate the Organizations Human Capital Development. Page 5 Companies should take Staffing as a Profit Center.

Companies are spending more than ever on training programs to drive specific strategic initiatives and improve performance, yet they often fail to demonstrate the business value of their investments. Research with HR Metrics and Development Seminar, 2005: Each metric contains 2 to 5 performance indicators. For instance, “employee attitudes” metric includes the following indicators: Job Contentment (the percentage of employees satisfied with their job), and Manager Contentment (the percentage of employees satisfied with their manager).

References • Marcus Buckingham and Curt Coffman, First Break All the Rules (New York: Simon and Schuster, 1999). • Accenture High Performance Workforce Study, 2002-2003. • HR Capital Management and Development, Report, 2007. • HR Metrics and Development Seminar, 2005. • Human Resource Capital Institute, New York • The Best HR Capital Development Practice, Geetha Sharma 2007. • Northern California Human Resources Association (NCHRA), Website for HR Managers.


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  • University/College: University of Chicago

  • Type of paper: Thesis/Dissertation Chapter

  • Date: 1 August 2016

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