10. Link between Human Capital and Human Resource Development

      10.  Link between Human Capital and Human Resource Development

 


In the current organizational context, people bring different levels of education, skills, knowledge and abilities where organizations rely on employee knowledge, skills and abilities as a key from of value creation. McConnell, C, Brue S and Macpherson D, 2009, p.85 has asserted that a more educated, better trained person is capable of supplying a large amount of useful productive efforts than one with less education and training. The great economist, Adam Smith has defined the human resource as a production factor and the term “human capital” has been introduced by Theodore W. Schultz. Human capital theory has been initiated by Gary Backer.

Human capital is the knowledge and skills that people acquire through education and training and this capital is a product of deliberate investment that yields return. (Shultz T.W, 1961)




Link between Human Capital and Human Resource Development

According to Swanson and Holton (2022) Human Resource Development means the process for developing and unleashing human expertise through organization development and personnel training and development for the purpose of improving performance.

Human capital theory more focus on investing in human capita where it states that main outcome form investment in people is the change that is manifested at the individual level in the form of improved performance, and at the organizational level, in the form of improved productivity or profitability and social level in the form of returns that benefit the entire society while Human Resource Development discusses on work place development through investment in education and training (Holton and Naquin, 2002).

EX:

1.     Skill development: Human resource development more focus on nurturing the skills where human capital theory more focus on how training and development will lead to the increase in productivity.

2.     Talent management: In human resource development recognizing and fostering skills is a core. In human capital theory, employees view as an asset. Therefore. Organizations can maximize the employee potentials through investments in learning and development.

 

Human capital theory provides a road map for organizational success and the alignment of both these concepts are undeniable. The investments in human resource is not just investing in people, but also in the future of the organization.

 

References

1.     McConnell, C, Brue S and Macpherson D. (2009), Contemporary labor economics. 12th edn. New York: McGrew-Hill.

2.     Schultz, T.W. (1961), Investment in human capital, The American Economic Review.; 51(1) pp. 1-17 [Online]. Available at: https://www.scribd.com/. Accessed on 08th November, 2024.

3.     Swanson, R.A, and Holton, E.F (2022), Foundations of Human Resource Development 3rd edn. Berrett-Koehler Publishers [Online]. Available at: https://books.google.lk/. Accessed on 08th November, 2024.

4.     Phillips, J.J. (2005). Investing in Your Company’s Human Capital: Strategies to Avoid Spending Too Little or Too Much. New York: Amacom [Online]. Available at: https://books.google.lk/. Accessed on 08th November, 2024.

  



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