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HRM Review Magazine:
Human Capital Management : A New Approach to People
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Human Capital Management (HCM) treats people management as an important strategic issue that aims at value-creation by effective utilization of human resources to achieve business goals. It involves five strategic domains: leadership capital, structural capital, workforce capital, cultural capital and intellectual capital. HCM is broader in scope than human resource management. HCM involves several steps: developing a HCM strategy, developing measures to monitor the execution of the strategy, benchmarking the strategy, implementing the strategy and reporting on achievement. Implementing excellent HCM maximizes value added at each stage and ensures that people become the basis for competitive advantage in an environment, where all other sources of competitive advantage have become less important.

 
 
 

An organization's human resources are its most important assets. They define an organization and affect its capacity to perform. HCM is an approach to people management that treats people management as an important strategic issue and seeks to analyze, measure and evaluate how people, policies and practices create value. It focuses on people's capability as a source of human capital and organizational transformation. HCM is a business discipline that ensures the effective management of human capital strategies and portfolios. It combines business and workforce intelligence to provide decision support for the development of enterprise human capital strategies that aim at leveraging people and their ideas to achieve the business goals of growth, increase in market share and margins and decreasing selling, general and administrative costs. As such, human capital management is not the same as human resource management.

Formulating the strategies for growth is one of the most important functions of leadership. Growth involves human capital decisions. Growth strategy may entail either organic growth or an acquisitions strategy. Organic growth of a company through extending new products, adding new products or entering new markets requires human capital resources. HCM has a tremendous role to play in mergers and acquisitions too. The post-merger integration is very critical in mergers and acquisitions and HCM facilitates this.

Procter & Gamble (P&G) is an example of the role that leadership plays in growth. AG Lafley, Chairman, President and Chief Executive, P&G, has been credited with turning P&G around. The ingredients for Lafley's success include a focus on innovation and building the company's brands like Crest, Pampers and Tide. He has also laid considerable emphasis on nurturing talent by instituting leadership programs aimed at everyone from P&G's top 100 managers to the company's new hires. Lafley notes, "our assets at P&G are our people and our brands."

 
 
 

HRM Review Magazine, Human Capital Management, HCM, Human Resource Management,Ccapital Resources, Global Business, Corporate Governance Structure, Mergers & Acquisitions, Organization Culture, Business Strategy, Human Capital Decisions, Employee Engagement, Organizational Transformation.