Why Is Human Capital Management Important?

The phrase “human resources” is used in organizational architecture when referring to a department that handles tasks around employees within the organization. Commonly they are known as the Human Resources department or as Human Resource Management.

Human capital management is not only about the “hard tasks” that an HR person daily takes care of within the firm, like administration and such, but it also covers the management of skills and experience of all employees. It is not only the skill set of an individual worker but also how the organization as a whole collaborates and interacts. Human capital management has to be pursued alongside social capital management to better understand the mindset and connection that a person has towards the organization.

So, what are we talking about when we mention human capital management?

Human resources are necessary for transforming materials into a final product. Managers and organizations pay attention to human resources so that the overall organizational productivity can be increased. This department is also involved in managing, organizing, and developing people within the company.

What does the organization do for human capital management?

Organizations have something of value – the expertise and brand they’ve built up over time. They might have buildings, machines and infrastructure, too. And their people are just as valuable as any other “hard” aspects. Employees can contribute to the success of the company with their skills, knowledge, and mindset.

“The better a human resources department does, the higher a company’s human capital. The better the people, the better their work will be, and this helps companies thrive.” – Péter Kalmár, Founding & Managing Partner at Flow International

A closer look at what goes into human capital management

Companies will want to invest in their employer brand because it is the best way to attract talent. Key elements of HRM include recruitment, training and development, onboarding, rewards, reporting, and analytics. If an organization wants to take care of its human resources, HR needs to focus on these activities and make the same investments as they would with any other aspect of the organization. This includes marketing the company itself as a great organization effectively within the job market.

The role of human capital management

As mentioned above, human capital is not only the people’s skills but also how they work together and what level their loyalty is towards business. Organizational leaders should be concerned with ensuring that the people working for them are committed to the organization’s goal. In order to have a positive impact on the organization and culture, they need to generate value by increasing the productivity of the human capital. There are numerous advantages to collaborating with multiple people. Do you have a long-term project that you need results for? Build connections with team members, and put them in contact with each other to get work done efficiently.

Organizations don’t just have human capital; they also have social capital, which can be thought of as information and know-how that an employee has acquired from people who are not formally affiliated with the organization.

What challenges may you encounter when managing human capital?

With the administrative and bureaucratic tasks that need to be dealt with, there is little time left for anything else. One of the most difficult things to deal with is managing both the human capital of the organization in addition to its soft and hard parts.

If your organization does not invest in social capital, then this extra possibility and excellent synergy of cooperation and collaboration will not be realized. HRs goal is to make sure that the sum of individuals who compose the organization have their skills and knowledge taken into account. HR has to deal with running multiple, parallel tasks, so it deals with all the stages required for a well-functioning organization.

3 Key Takeaways when it comes to human capital management

Organizations specify the value and are able to increase such value by aligning soft and hard aspects. The connectedness factor is missing when not looking at an organization’s network structures.

Athletes often say a team is their greatest asset. But how do you make sure the team is working to its potential? ONA lets you keep track of your employees and make data-driven decisions.

Organization communication can be difficult to make sure everyone is updated. Don’t you want to know if your organization’s communications are reaching everyone?


OrgMapper provides consulting on how to expand communications quickly in all pockets of the organization to tackle business problems effectively. Over the course of more than a decade, we have found ONA to be beneficial for employee engagement. It increases the cohesion and satisfaction with the company, which becomes a personal and empowering experience for employees.

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