Liberalization, Privatization and Globalization all over the world, has created the need for quality products and quality service. It in turn necessitated organizations to compete with one another to improve the quality and device cost reduction measures to exist in the industry. That could be done only with the development of human capital which is evidenced by the rapid economic growth of Japan and other East Asian countries. The investment in human capital cannot be easily measured as it differs from one person to another.
Basically, when we talk of human capital it refers to the human knowledge, their inner capabilities and creativity. The development of technology cannot be fully utilized without knowledge and skill. The capabilities of the human capital in relation to the needs of the organization should be improved by creating a climate in which the human knowledge, skill, capabilities and creativity can be developed. How do we develop our human capital and put it to optimum use is the challenge faced by the present day corporate sector. Technological improvements, business strategies, quality concerns etc., will have no meaning without people (human capital). So it is people who make all the difference.
People and their development only can meet the needs of globalization and liberalization. The human capital available in the organization should be rightly assessed and developed through motivation, training and perceptional needs of the organization. Only then, the organizational goals can be achieved and can continue to be a market contributor in the field of competition. The computer technology offers greater precision but demands different skills. The owners (personnel) of these new skills are both technically educated and trained on the job. It is the human capital which should be rightly invented for the qualitative improvement of human beings who are considered the most valuable asset of an organization.
Thus, the Human capital refers to the basic skill, capabilities, the perception, know-how and expertise. Every individual has certain skills and understanding. The education one has undergone should help him to develop knowledge in general. Till one gets basic employment he is not keen on planning his future and there is uncertainty. This is normal in most of the cases except a few. As one is placed in an organization in some position, he starts to look for elevation. The organization too would tap his basic skill and capabilities and divert them to achieve the goals of the organization and in the process it attempts to develop his basic skill through proper training, motivation and direction. The human capital is rightly put through for effective functioning, right decision making and career development. In all these it creates value to the organization and makes it more stable in the competitive environment.
At last, the cliche ‘people are our most important resource’ has actually come to mean something. Today more than ever the management realizes that the most effective asset in an organization is its people. In fact it is obsolete to say people are the most important asset, rather they are the only dynamic asset. Nothing happens without people-money, equipment, technology….. nothing means anything without a human to act. Hence, the management has slowly realized the importance which in turn has edged Human Resource (HR) from the background into mainstream organizational strategies. Having moved to the center stage is not the end. It has to sustain its stand and move even further and for that to happen HR must learn the language of organizations and management, i.e. it has to talk in quantitative and objective terms. Time and again, every manager has always stated ‘You can’t manage what you can’t measure’. Organizations are managed with quantitative data. Today, HR has also got into the game. It has learned the terminology of the organization’s financial statement and has begun to contribute in this area. Universally, HR is emerging as a front line strategic player.
Every organization has its eye on the bottom line-profit and all the units work to demonstrate their contribution to service, quality and performance. It is to be remembered that every unit affects business results and every function is a value-adding operation. Hence, it is imperative to be able to measure this contribution objectively.