Human Capital Strategy
11 Pages Posted: 21 Oct 2008
Abstract
There are two key principles in human capital strategy. One is that people are assets whose value can be enhanced through investment. The other is that an organization's human capital policies must be aligned to support the organization's shared vision. Excerpts from two GAO reports provide an excellent summary of the topic.
Excerpt
UVA-OB-0848
HUMAN CAPITAL STRATEGY
This note recaps the pioneering work that the U.S. federal government did in human capital strategy, a term now being embraced by the U.S. military and major companies such as IBM for maximizing the effectiveness and efficiency of people in organizations. It abridges two very long General Accounting Office (GAO) documents, using selected direct quotes to provide the essence of what the federal government has been doing for the past 10 years in the area of human resources. What follows comes directly from GAO documents as noted; my own comments appear in italics.
What Is Human Capital?
Simply stated, human capital means people. There are, however, two key principles central to the human capital idea. First, people are assets whose value can be enhanced through investment. As with any investment, the goal is to maximize value while managing risk. As the value of people increases, so does the performance capacity of the organization and therefore its value to clients and other stakeholders. Second, an organization's human capital policies must be aligned to support the organization's “shared vision”—that is, the mission, vision for the future, core values, goals and objectives, and strategies by which the organization has defined its direction and its expectations for itself and its people. All human capital policies and practices should be designed, implemented, and assessed by the standard of how well they help the organization pursue its shared vision.
Eight Principles for Managing People
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Keywords: Human Capital Managing People, leadership, organizational behavior
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