Unit 5 Seminar HR485: Strategic HR Management. Unit Five Objectives. A ssessing Human Capital V arying business conditions that require HR strategy H ow key stakeholders influence the development and implementation of an HR strategy. What is Human Capital and why is HR involvement critical?.
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Fitz-enz (2000), states that the term human capital originated with Theodore Shultz, an economist who won the Nobel Prize in 1979 interested in the plight of the world’s underdeveloped countries. Shultz claims that improving the welfare of poor people did not depend on land, equipment, or energy, but rather on knowledge. He called the qualitative aspect of economics “human capital” (p. xii). Furthermore, Shultz, as cited in Fitz-enz (2000) presented a review of a research conducted on the return-on-investment in human capital at an address to the American Economic Association and makes the relation of human capital to the branch of economics most applicable to human resource development.
Fitz-enz, J. (2000). The ROI of human capital: Measuring the
economic value of employee performance. New York, NY: AMACOM.
It is an integral part of an organization’s potential to recruit and retain a talented workforce enabling a competitive edge domestically and globally.
Human Capital refers to the knowledge, skills, and experience a workforce can contribute to the success of production and customer’s demands that have economic value (e.g., a quality, efficient, and cost effective product compared to it competitors).
Training and education is a vital component for HR to ensure the success of its Human Capital practices within the organization (Swanson and Holton III, 2001).
Before organizations continue to understand and support human capital as a valid theory, they must be convinced of its economic value.
Swanson, R. A., & Holton III, E. F. (2001). Foundations of human
resource development. San Francisco: Berrett-Koehler.
Weatherly, L. A. (2003, September). The value of people: The challenges and opportunities of human capital measurement and reporting. 2003 SHRM Research Quarterly. Retrieved September 6, 2003, from http://www.shrm.org/research/quarterly/0303measurement_essay.asp
What are some intangible assets?
Rylatt, A. (2003). Measuring know-how. T+D, 57(7), 37-39.
Demographics: age, gender, generational differences, geographic shifts in population, ethnicity, unskilled labor, nontraditional labor force
Political Factors: taxes and the federal deficit, health benefits and health-care delivery, social security reform, domestic partner benefits, retirement funds, corporate governance, affirmative action, environmental issues.
Economic: interest rates, gross domestic product, disposable income, inflation.
International Factors: European Union, wage comparisons, trade agreements, international labor law, globalization.
Technological Factors: advance in technology, technological skills, the “Digital Divide”, process changes.
Social Factors: Changing definition of families, changes in practices and education spending, increasing rate on obesity and health care cost associated with it.
Employment Factors: attitude toward careers, immigration, occupational and industry shift shifts, recruitment, unions, unemployment trends, turnover trends, relocation.
Stakeholder in a business perspective is someone who has a shared or a vested interest in an organization. Stakeholders in an organization may include shareholders, directors, management, suppliers, government, employees, and the community, etc.