Question

Evaluate the approach oto human capital of an organisation?

Answer 1

Development of an economy , as opposed to the traditional way of looking at per capita income in now considered in a wider sense—to include removal of poverty, longer life expectancy, higher standards of living and so on, hence human capital and importance has been highlighted ever since.

Human capital means widening the abilities of a human being and urging him (or her ) to improve his productivity and skills to an extent that the productivity of the person improves leading to higher performance in terms of money as well as in terms of skill formation.

The ‘One time Only’ oto approach to human capital in an organisation depends upon the level of skilled labour involved and their contribution to the scale of operation as well as the concept of division of labor, -- given that the production process is divided --where by the productivity of a labourer improves with the skill acquired by performing the same job over and over again .

Human capital requires skill development occurs not just through education but also a proper and a conducive environment for such a development , for example provision of better housing facilities, better hospitals and medical facilities, awareness about exercising regularly and keeping the body and mind stress free, awareness about use of technology for development and so on. It requires that the society is willing to transform itself towards mass betterment.

Education creates awareness which in turn gives power to the labor to use the latest technology available and put it to best use both to improve the person’s ability as well as to improve the organisations’ productive capacity, given the fact that the organization’s performance largely depends upon its workers’ skills and their best use.

An organisation will benefit from skilled labor who will be willing and able to adapt themselves to changes more effectively and quickly as well as work for longer duration to produce the desired the desired results , in consonance with the organisational goals.

Skilled laborers bring about a change in the society around them such that they create a positivity in their surroundings which ‘rubs off’ onto other laborers who are goaded to perform equally well. A healthy competition takes place among the laborers who try to compete with each other over skill improvement , this could lead to better results for the organization while for the worker it could spell better income and higher standard of living .

The oraganisation’s performance will show an upward trend in the form of better employee performances, better sales –which could in effect lead to the organization having an edge over its competitors, since one of the internal economies or lower per unit costs of production that occur to bigger organisation sis that they are able to recruit and retain ‘expert staff’ who are able to provide their skills and expertise towards realising the organisational goals.

It could lead to better communication among the various departments of the organisation which will reduce wastage of ‘man hours’ in communication and improve the overall productivity of the organisation. It could lead to lower labour turnover from the organization hence training costs and the costs of recruiting newer labor regularly is drastically reduced.

However, when older or senior employees retire from an organisation –it could mean that there is a ‘gap’ created because the work experience of the senior employee is indeed not easily replaceable by any other , at least for a certain time period.

The cost and time involved in finding newer replacements and trying to achieve better productive results will be time consuming. It would lead to changing ‘work habits’ which may or may not be conducive to the organisations’ goals and objectives.

Inadequate facilities like lower quality ‘work atmosphere’ ( ,may be lesser number of computers, lesser number of chairs and so on ..) lack of facilities like food availability, recreation and leisure facilities and so on also affect the worker’s performance adversely which may in turn affect the organisation’s performance. The producer aims for lower production costs and higher profits and lower production costs also mean lower labor costs and lower costs of administration, however , this in effect could lead to inadequate ‘work spaces’, unsatisfactory employees and lower productivity. It would create an imbalance between the ‘need ‘ and the ‘availability’ which mat translate into lower employee performances.

The organization is a collection of various factors of production –the land, the labor, the capital and the entrepreneur—these factors combine themselves to meet the common objective of the organization . The co ordination between the ‘human’ factors—the management or the entrepreneur and the laborers is very important as it has an accelerating effect on the other non human factors—land and capital—in the sense—better worker-manager relationship leads to better productivity which leads to better technology ( capital) and expansion—(land—building newer offices and so on…) this leads to organisational growth.