Why Treating Staff as Capital Drives Sustainable Growth

In the era of fierce competition, every organization needs strategies to gain a competitive advantage and maintain sustainable growth. Among the essential factors, employees are considered a key resource that contributes to the differentiation and value of the organization. However, not every organization recognizes the role and value of employees, as well as how to effectively manage and develop them.

In this article, Aniday will introduce you to the concepts of Human Resource (HR) and Human Capital (HC), the difference between these two concepts, and how to transition from Human Resource to Human Capital to leverage the value of Human Capital in the organization.

Concept of Human Resource and Human Capital

• Human Resource (HR): This term is used to refer to the collection of individuals capable of labor and contributing to the organization's activities. HR is seen as an intangible asset that cannot be valued in monetary terms. HR is managed by the organization's policies, processes, and systems to ensure employee compliance, efficiency, and satisfaction.

• Human Capital (HC): This term is used to refer to the collection of knowledge, skills, abilities, and attitudes of individuals within the organization. HC is seen as a valuable asset that can be valued in monetary terms. HC is developed through training, learning, and innovation activities of employees to enhance their dynamism, creativity, and commitment.

Difference between Human Resource and Human Capital

Based on these two concepts, we can see the difference between HR and HC in the following points:

Transitioning from Human Resource to Human Capital, Leveraging the Value of Human Capital

To transition from HR to HC, an organization needs a clear strategy and should follow these steps:

Strategy:

• Define the goals and vision of the organization, as well as the role and contribution of employees in achieving those goals and vision.

• Identify the needs and desires of employees, as well as how to satisfy and surpass those needs and desires.

• Build a friendly, supportive, encouraging, and rewarding organizational culture.

Analysis and Proposed Solutions:

• Analyze the current capabilities of employees, as well as the desired capabilities for each position and role in the organization.

• Propose solutions to enhance the capabilities of employees, including training activities, learning opportunities, project participation, job changes, promotions, networking, etc.

• Implement the proposed solutions, monitor and evaluate the results.

Process Optimization:

• Use modern tools and software to support the management and development of HC, such as Learning Management Systems (LMS), Performance Management Systems (PMS), Talent Management Systems (TMS), etc.

• Optimize processes related to HC, such as recruitment, evaluation, development, rewards and penalties, etc.

• Continuously update and improve tools, software, and processes based on market changes and employee needs.

Project Planning Capability:

• Identify projects related to HC, such as building an online course, implementing a training program, designing a promotional campaign, etc.

• Plan for projects, including defining goals, budgets, timelines, scopes, resources, risks, and stakeholders.

• Implement projects according to the planned schedule, address arising issues, and report progress.

Data Analysis and Decision Making:

• Collect and process data related to HC, such as the number of employees, turnover rate, satisfaction rate, commitment rate, productivity rate, etc.

• Analyze data to draw conclusions and insights about the current situation of HC in the organization.

• Make decisions based on the conclusions and insights.

Conclusion

Employees are not just a workforce but a crucial asset to an organization. To transition from Human Resource to Human Capital, an organization needs an HC strategy aligned with the business strategy, analyze and propose solutions to leverage the value of HC, optimize processes related to HC, improve project planning capabilities, and analyze data and make decisions related to HC. By doing so, the organization will have a strong, innovative, and efficient human capital. We hope this Aniday article is helpful to you!