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PROPOSAL DEVELOPMENT
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HCM-HOW TO GET BEST OUT OF
YOU
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/2015

SALIK AHMED

[PROPOSAL DEVELOPMENT] 2

Human Capital Management: How to Get


the Best Out Of You?
Introduction:
Human capital is one of the most essential resources of an
organization. Human capital management aligns both personnel and
organization and in future it contributes to successful management.
The world has become a global village due to which organization
innovates

and

adopts

technological

advancements

with

the

revolutionizing markets. In order to cope up with the developments


the human capital requires advancing as well. Human capital needs
to learn the skills and competency training. Moreover, to align the
individual

characteristics,

attitudes

and

competencies

of

the

collective needs of the company with the available human capital,


essentially differs from the top down approach of resource planners.
According to the capabilities of the employees suitable tasks are
assigned. Organizations that adopt human capital management are
strategically oriented towards creativity, efficiency, flexibility and
empowerment. Also, in a mutual agreement individual performance
indicators and degree of empowerment are determined.
Knowledge plays a vital role and has a positive influence in the
development of human capital. So its very important to make sure
that knowledge is created and dispersed to create value, especially
in firms providing services. Knowledge management indirectly helps
the organizations by developing human capital. It has been found
that the firms must learn continuously in order to be successful.
Market changes can be anticipated by applying the knowledge
rapidly.

Knowledge acts like a seed once planted it grows into a

fruitful tree. Likewise, if the organizations adopt continuous learning


system it will help open the doors for R&D projects as well as the

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innovative culture in the organization.
Training is one of the ways to create human capital. Training must
not be considered a cost but as an asset and an investment gaining
progressive returns for the organization. Even though it is a direct
cost but the fact that employees knowledge, skills and abilities
cannot be taken away. Human capital is an asset that is very hard
imitate, replace or transfer from one organization to the other. In
addition to this, unlike tangible assets human capital never
depreciates and it doesnt lose its value. Also, it can be used for
multiple projects simultaneously. Thus, Training has a positive
impact on the performance of the organization.
Investments in human and social capital are widely believed to
improve the performance of employees. There are two kinds of
human capital: general and specific human capital. General human
capital includes the entrepreneurs personal characteristics, which
are not directly associated with their responsibility as a company
founder. Whereas, specific human capital incorporates the training
and professional experience of the founder in the areas associated
to the activity of their new company. Studies suggest that human
capital plays a vital role in the survival of the newly born firm as
both general and specific human capital have a positive impact on
the survival time of the new firm. Furthermore, human capital is
collective,

which

means

that

the

greater

the

number

of

entrepreneurs establishing a company, the longer is its time of


survival.
In addition to this social capital refers to the relationship building
with the players inside and outside the organization. Mostly, social
capital is used as concept for multinational firms. To compete in the
market effectively and efficiently firms operation in the market
around the world doesnt have sufficient resources to access the

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relationships. So they access the desired resources through formal


and informal relationships with other firms. Studies show that Asian
countries have emphasized relationships much more strongly than
Western firms. As a result, the social capital of many Asian firms
gives them a potential competitive advantage in global markets.
Additionally, while Asian firms often have strong network ties in their
domestic markets, they have to develop many more ties globally to
operate effectively in global markets. As a result, the development
and management of social capital has become of critical importance
for competitive advantage internationally.
Human capital can be linked with the economies and environment.
The

accumulation

of

human

capital

acknowledges

improved

specialization in production that leads to lesser dependency on selfprovisioning for utilization. Human capital management contributes
in the efficient and effective achievement of objectives and goals of
the organization and also caters the newly born businesses. The
greater the innovations and businesses the greater will be the
employment rate as markets will thicken creating opportunities for
the young talent. Hence, leading to the economic development of
the country. Pakistan is in dire need of such system, which can
contribute, to the economic development of the country. Human
capital has a significant influence on the exports of goods and
services. Study suggests that human capital was not significantly
more essential for services for export than for goods for export as
per the expectation from the human capital theory. In Asia human
capital investment has a greater impact rather than in the
developed countries.
In order to make international investments its important to take
human capital in the decision venture capitalist firms into account.
Large number of general human capital (more executives) and more
specific

human

capital

(more

VC

executives

with

previous

international experience) the chance of investing internationally

[PROPOSAL DEVELOPMENT] 5
increases.
decision

Therefore, both general and specific human capital


is

valuable

to

overcome

the

obstacles

that

internationalization investments inevitably bring about.


Even though human capital is one of the most vital organizational
resources, but nowadays it is only marginally considered in
companies internal and external control and reporting instruments.
However, on the other hand this can indicate misallocation of
resources, transaction cost and agency cost, as well as to potential
market inefficiencies. Shareholders cannot properly assess their
investment due to lack of the information. On the other hand, it is
impossible to control human capital with regard to the companys
strategic objectives if this capital is not adequately considered in
strategic performance management instruments.
There is another point of view when it comes to relationship
between organization and employee, since these two are highly
interrelated and helps each other to work smoothly. Two Different
schools of thought comes under observation one school of thought
explains that organizations do not exist instead organization is just
mere amalgamation of human beings who get together to achieve
goals together thus making an organization whereas the second
school of thought explains that the organization does exist, because
employees need an atmosphere that is adaptable and social life
which helps them to gain trust in an organization and work together
thus making a concept of organization a separate theory that
employee.
These two schools of thought however highly criticized gave a new
concept to a theory that explains that both organization and
employee are highly dependent to each other, since employee is an
asset to organization bringing in all his skill and knowledge and
experience requires some sort of satisfaction which motivates him

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to

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work

and

serve

organization,

so

to

make

successful

organization a balance between organization and employee is highly


required, that also includes work life balance of employee and
successful target completion of an organization.
Organizations in order to get best from their employees give
compensations in form of salary, bonus, appreciation , promotion
and other incentives through a process of contract , so that it
creates a win win situation for both organization and employee. But
this sometimes is not enough for motivating an employee sometime
the situation in any work place gets more and more complex where
organization is forced and compelled to make arrangements that
motivates employees in much more complex situations, this can be
done by making employees relationship with organization more and
more stronger, the alignment of human capital should be as
stronger that the organization should be able to deal with the
complex scenario tasks and make complete use of their human
capital which is also considered as the organizations assets.

Literature Review
Recognizing the employees as asset and considering them of some
value in future is very important in human capital management, in
order to get the best from your employees it is necessary to align
your workers with the organization, aligning your workers with the
organization will make you able to tackle the difficult situation which
we often face in our routine work life, keeping the importance of
alignment it is necessary that your employees are loyal to the
organization only then you can will be able to motivate them in
complex and tougher situations three different domains with respect
to organizations are very important in order to make proper
alignment (i) Corporate identity and values, (ii) Human Development
(iii) and Human operations.

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Corporate Identity and values can be define as Commitment Human


development can be portrayed as motivation and human operations
can be explained as Dedication, In each domain, the object and
corporate interest and options must be aligned with the motivations,
efforts and competencies of the employee in order to utilize your
asset which is technically employees of the organization in the best
possible manner.
Human capital Management first aims at the inhibit culture of the
organization. A strong prevailing culture of the organization has
greater chances of stability and success the organizations mission
and values has great impact on corporate identity, the collective
behavior of the organization as well as behavior on individual level
makes

it

easy

for

the

organization

to

be

successful,

also

organizations that pays great attention in communicating the


companys vision and mission adds a lot into the way of success. If
the employee has clear idea of what company is requiring from him
and what are the strategically goals which one has to accomplish
will make you able to get best from your employees since employee
would be having clear picture in mind that what company is
expecting from him and what he has to deliver and how he could
maintain the positive culture alive, employee eventually represents
an organization and if he has clear understanding of vision and
mission of the organization then he might be to add in the value.
The next domain is also of very much important in nature. Human
operations represent all the task and duties that are to be
performed in accordance with the planned activities. In order to
complete

the

process

of

alignment

between

employee

and

organization the vision, goals, mission, and objectives of company


are derived and translated to employee properly this process helps
breaking down the tasks, duties and responsibilities of all the
employees which is also known as policy deployment. The prime

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concept of this process is to bring creativity, flexibility effectiveness


and efficiency of each individual which can ultimately make an
organization that uses its assets (employees) in full and most
valuable manner. This is a chained process break down of each
tasks, duties and responsibility will not only make clear line of action
for employees but also can be proper guide line for managers that
directs them that what operations are to be carried forward and
what role and duties are to be opted, further making process and
companys goals and objectives clear will also empower employees
and increase loyalty and sense of responsibility among employees.
Finally

the

third

most

important

domain

which

is

Human

Development needs some attention. Mega companies and giant


projects

innovate and develop new technology

and prepare

themselves for market change. Most of them fail to do so because


they forget the essential element of developing its very own
humans. We should not forget that human development is as
essential as any other corner of the company since in the end
machines are used and processes are done by the humans. Human
capital can be enhanced by learning new skills and increasing ones
knowledge and competencies. An organization can become a
learning organization if it determines the need of knowledge on time
and make them basis for human development and also by making
learning loops within the organization so that information flows
keeps running and everyone brings in and share their knowledge
and ideas.
Almost every organization in this era has realized that the only way
to survive in the competition is to be competitive, yet very few of
them are successful in realizing the human capital as source of
competitive advantage, companies that lag behind at some point
during their life cycle often find huge flaws in human capital
management. Many of the great surveys have concluded that

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obtained and developing the right person for the right job is very
important in nature when it comes to the success of the
organization, work is designed in standardized and simplified
manner and individuals are controlled in same old traditional
manner to get the job done by controlling the behavior of individual
through

intentionally

designed

complex

hierarchical

reporting

system under tough supervision. In order to make proper use of


human capital even hiring extremely talented workers, or training
them with full resources or even making your organization a better
one with best working environment wont do it. Making humans
asset as a source of competitive advantage requires much more
than that, making short term solutions for long term problem wont
fix anything instead it will bring more complexity and waste of time
which sometimes can be more costly than the actual problem.
Making human capital a source of competitive advantage require
attracting, getting and retaining right people as well as managing
them foe effective use in future. It is not very easy to Attract right
people but companies can do so by putting enough resources and
by devoting enough time to human capital.
What exactly does a company that is using its human capital as a
source of competitive advantage looks like? Well first it has a
members

of

corporate

board

who

are

fully

equipped

with

guidelines,, knowledge and expertise to advise on day to day human


capital issues and must have ideas to improve its effectiveness, in
other words the board would be receiving complete detailed
information about its human capital situation as the very same
board receives all the detailed information about its financial
situation. Secondly it would develop individual executives who are
capable of practicing shared leadership and are committed enough
in developing and making leaders through the organization that
would make an organization full of leaders that brings in new ideas

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and would be self capable in managing difficult task thus proving


themselves a great source of inspiration even to others outside the
organization. Thirdly such organization would consider it human
resource department as one of the most important staffing groups in
the organization, human resource posts would be filled with the
individuals who are able to understand the processes of the
organization completely and would also know the complexities and
solutions

of

human

capital

management.

And

finally

such

organization should be having the effective information system that


would

report

on

the

competencies

and

capabilities

of

the

organization as well as the individual. A company possessing these


four characteristics would definitely be having a competitive
advantage by using its human capital as a source. The detailed
discussion on these four aspects is mentioned below.

Corporate Boards
Corporate boards can and should do a lot when it comes to human
capital of an organization, since it is the only decision making body,
boards should examine and evaluate the effectiveness of their
human asset as they examine and evaluate the condition and
effectiveness of their financial assets on regular basis.
When it comes to make big decisions about human capital
knowledge about human capital management and organizations
effectiveness are the important factors that are needed by board
members. But the important question is that where this knowledge
about human capital management does comes from. Practically and
technically there are two major sources that are available to board
as source of knowledge, the first source is its very own member (the
board member) who takes decision daily and the second source
which is also called the external source are the other incumbents
specifically those employees who are asked to make presentations

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on routine reports of organizations (those who are not part of
boards). Usually the Hr personnel are never the part of the board
since they are unable to take decisions and provide genuine
knowledge about the position of human capital like other members
from team of supply and finance do.
The prime concern of this board should be to evaluate the members
and employees of the organization, by evaluating employee of the
organization does not mean to evaluate lower section of the
organization only but also the CEO and the members of board as
well since evaluating senior members will make the board able to
diagnose problem from upper division of the organization as well.

Leader
Clearly the effectiveness and efficiency of leadership in an
organization has great impact overall. The quality of the executive
members of the organization and Ceo will definitely affect the
performance of the organization and motivation level of each
individual. If the executive members and CEO posses leadership
qualities only then it will be possible to direct its employees on right
direction.
Since in order to get the best from your employees it is necessary to
motivate them properly and this job can only be done by the true
leaders of the organization, executive post holders and CEO of any
company has this responsibility to motivate its employees as best as
possible.
Shared leadership is also one of the key points that make any
organization stand differently , only the support from senior member
and executive can make it possible to share leadership in an
organization that would ultimately make sense of responsibility

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among employees by give them authority and empowerment.

Human Resource the Key Staff Function


Giving great importance to human resource department is one of
the prime factors to focus on. Individual in human resource
department should be hored on the basis of that they are
completely capable of handling tough and complex situations and
that they are complete understanding of the processes and
functions of the organizations, this criteria is set to make grounds
for the process of selecting the right person for the right job which
would

ultimately

bring

the

best

selected

candidate

in

the

organization who is devoting and can be determined as one of the


loyal persons of the organizations.
The business support is the ultimate goal of human resource
management and department, by providing the right person who is
skilled and efficient the human resource is adding into the capability
of the organization because the business is ultimately getting a
person who will provide complete set of skills he requires thus
helping a business to run properly. Also empowering the HR
department will make it feel sense of responsibility and thus would
get more and more motivated and would work even better in the
future.
One of the key tasks of human resource department is to provide
information about how the company is using and managing its
human asset and what are the gaps where company is required to
make amendments and additions.

Information System
We all know the information system that flows in the organization
about he financial budget and policy is well updated and followed

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regularly, the same importance is required for the human capital
system as well.
Human resource department is required to maintain and make flow
of complete updated information system about each individual
employee of the organization that how he is putting his skills to use
and hoe it is making a difference in an organization also if he is
meeting the goals and targets assigned to him by organization. This
would make proper record of information about each employee and
would make the executive to know about the situation of human
capital and take decisions regarding each individual.

In all, these four aspects together make a strong Organizational


structure which help human capital management work more
efficiently and smoothly, Organizational structure if work properly
makes huge difference by aligning work with the organization.

Theoretical Framework
In the light of literature review it is determined that organizational
structure is independent variable which means it is entirely up to
organization that how does it structures itself , if it structures itself
strongly and by using proper use of four mentioned domains it will
directly affect the effectiveness of human capital management
which is a dependent variable, so we can come to the point that
human

capital

management

(dependent

variable)

is

dependent on organizational structure (independent variable).

highly

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DIAGRAM:

INDEPENDENT
VARIABLE

DEPENDENT
VARIABLE

ORGANIZATIONA
L STRUCTURE

HUMAN
CAPITAL

HYPOTHESIS

H1: STRUCTURE OF AN ORGANIZATION HAVE POSITIVE


IMPACT ON HUMAN CAPITAL MANAGEMENT
Ho: STRUCTURE OF AN ORGANIZATION DOES NOT HAVE
POSITIVE IMPACT ON HUMAN CAPITAL MANAGEMENT
H2: STRUCTURE OF THE ORGANIZATION CAN BRING
EFFECTIVENESS IN HUMAN CAPITAL MANAGEMENT
Ho: STRUCTURE OF AN ORGANIZATION CANNOT BRING
EFFECTIVENESS IN HUMAN CAPITAL MANAGEMENT
H3: STRUCTURE OF ORGANIZATION IS MAINLY
CONTROLLED BY CORPORATE BOARDS
Ho: STRUCTURE OF ORGANIZATION IS NOT MAINLY
CONTROLLED BY CORPORATE BORADS

METHODOLOGY
Q1: how is it possible to get the best from your employee by
changing or amending the structure of your organization
that could lead to effective output?
Q2: In todays organization is it possible to share leadership
at all levels? If so how would it be possible and what
measures can one take to implement this?
Q3: How to overcome the hurdles faced by any organization
during the process of change? And how to minimize the
affect of resistance

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