HUMAN CAPITAL RISK MANAGEMENT
Dear Reader,
I am taking you on a journey of discovery and the Landscape is Human Capital Risks Management.
I am taking you on a journey of discovery and the Landscape is Human Capital Risks Management.
I will like to establish that this is a subject that
employers and employees whether at the state level or private level should be
interested in and the reasons are not far fetched.
Almost anything that can go wrong with a business has
a human capital component;
It is my objective that at the end of reading
this piece, if you are new to the topic you would have a strong foundation upon
which you can build on, if you are a students of the topic , you would have been
re-exposed to the subject and a master on this topic will have had their
memories juggled pleasantly.
The Concept of Human Capital Risk Management is a
combination of two very interesting yet broad areas of knowledge: Human Capital
and Risk Management. In this section we will consider the meaning of Human Capital and thereafter, Risk Management.
So what does human capital mean?
Human
capital refers to the skills possessed by labour force and is regarded as a
resource or asset.
It
encompasses the notion that there are investments in people (e.g. education,
training, health) and that these investments increases an individual’s
productivity.
Sometimes when we say capital it is immediately
assumed to mean a bank account, millions of shares of stock, the funds required
to start a business etc. These are all forms of capital in the sense that
they are assets that yield income and other useful outputs over long periods of
time.
But such tangible forms of capital are not the only
type of capital. An employees’ schooling or education, a computer training
course, expenditures on medical care, and lectures on the virtues of
punctuality and honesty are also capital. That is because they raise employee
earnings, as well as those of their employer, improve health, or add to a
person’s good habits over much of his lifetime.
So to say Human Capital is one of the factors
of production is correct. However, as described above, that definition is
limited.
The
human capital is a synonym of knowledge embedded in all levels such as an
individual, an organizations and/or a nation.
Characteristics
of Human Capital
Compared
to physical labor, human capital includes expandable,
self-generating, transportable, and shareable characteristics.
To
begin with, the expandable and self-generating characteristics of human capital
are closely linked to the possibility that the increase in stock of knowledge
increases individuals’ human capital.
Secondly,
the transportable and shareable characteristics of human capital mean that the
original holder of knowledge can distribute his/her knowledge to others.
Consequently,
the former two characteristics extend the volume of human capital, and the
latter two expand the range of human capital.
Impacts of Human Capital: On
the Perspectives of Individual, Organization, Society and Individual: Much
possibility of increasing individual income, resulting from the individual
productivity
Worker’s
possibility to move to higher level in the internal market
Organization:
- collective competences, organizational routines, company culture; and
relational capital” (Edvison & Malone, 1997)
Human Capital
and Business Growth
As
a business owner aggressively seek to find new ways to stimulate top line
growth, their people strategies must
be in proper alignment with the business initiatives. In today’s new workplace, human capital and
business growth represent two sides of the same coin. If Nigerian businesses continue to ignore
this critical and time sensitive fact, the risk profile of our nation’s economy
will increase.
Corporations
today are looking for an economic miracle that will shoot the organization into
the next phase when much of what they really need resides in their own
workplace. If an organization’s success
is truly dependent upon its people, then it’s time for companies to find the
untapped talent within its own organization.
Instead of being focused solely on investing in new products and
advertising campaigns that take years to recoup the desired ROI, it is smarter to
think about how to leverage your talent pool to enable business growth.
Here
two recommendations:
1. Properly Enable Your Employees and Encourage an Atmosphere of Innovation
Enabled employees can become one of the most
valuable tools for business growth. People give
their best when they are respected and treated like dignitaries.
Human Capital has to be self-generating. That is
the individual must be willing to invest in continuous learning. The employer
should partner with their employees on this quest by providing a system that
provides work – life balance.
2.
Pay Attention
to Your Front Line Managers
There is another shift that is happening in the workplace; it’s the transition from a top-down, hierarchical, departmental-silo, pure profit-driven model to a more transparent, flat, community-based and innovation-minded operating environment.
There is another shift that is happening in the workplace; it’s the transition from a top-down, hierarchical, departmental-silo, pure profit-driven model to a more transparent, flat, community-based and innovation-minded operating environment.
A mountainous,
volcanic island country, Japan has inadequate natural resources to support its
growing economy and large population, hence dependent on imported raw
materials. Not as a result of systemic deficiency like you have in most African
countries. The country however, built up a very diversified, varieties of
advanced industries that are among the world's most successful. Japan's major
exports include automobiles, consumer electronics, computers, semiconductors,
copper, iron and steel. Secondary key industries include petrochemicals,
pharmaceuticals, bio-industry, shipbuilding, aerospace, textiles, and processed
foods. The Japanese economy however, has stagnated, and was overtaken by China
in 2010. It is now the world's 3rd largest economy.
In 2013 Japan Exported $787 billion Period of massive industrialization and currently has a GDP of 4.2 trillion dollars.
The miracle behind the Japanese economic miracle, is investment in human capital. Whether you look at it from a Macro perspective or Micro perspective, the principle regarding the value of Human Capital holds true. In the next edition of this topic we will examine cursorily, the other half of this subject: Risk Management, as it relates to Human Capital.
In 2013 Japan Exported $787 billion Period of massive industrialization and currently has a GDP of 4.2 trillion dollars.
The miracle behind the Japanese economic miracle, is investment in human capital. Whether you look at it from a Macro perspective or Micro perspective, the principle regarding the value of Human Capital holds true. In the next edition of this topic we will examine cursorily, the other half of this subject: Risk Management, as it relates to Human Capital.
Interesting Topic. Thanks for sharing it.
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