HUMAN CAPITAL IN ORGANIZATIONS

Hakan Ozel, General Manager – Shangri-La Hotel, Dubai

Human Capital is the relationship between what the luxury enterprises invest in employees and their emerging success as an economic value that the employees bring. Desirable result is the positive return, which the enterprises gain from the loyalty, creativity, effort, skills and expertise, personal values and believes, networks and connections, and physical and mental health of employees if the organizations provide them with the right framework, resources, compensation and support. It is the combination of factors such as the traits that the employee brings to job; employee’s ability to learn and develop; and finally the motivation that the employee shares the information and knowledge.

Human-Financial Interface

Human Capital should not be mixed up with human resources. Without a doubt, it is critical since it has a direct link to how company operates to achieve its strategic goals and how it will shape the future with appropriate design and investment. It is linked to economic value-add preposition, corporate and business unit productivity, cost structure, and profit ability.

It is a true fact that capitals and related investments in enterprises are passive. Only the action and performance of the employees would leverage the value from these investments with human-financial interface as a cause of outcome. In other words, most of the companies are similar to each other when it comes to investment; technology, fixed and operating resources, finance, infrastructure, etc. Differentiator of the most of the organizations is the Human Capital, which is the competitive advantage. It is the people and how the organizations attract, maintain, motivate and retain the knowledge, skills and creative capability of those employees that drive organizational success.

Partnership and Strategic View

In successful and accomplishing organizations, brand and culture obviously and strongly correlate. Like in luxury hotel companies, the brand is a promise to the marketplace about what it can expect when dealing with the company. The brand is the expression of quality, service, value, innovation, consistency, and alike. Employees are trained and educated in several ways to become a business partner about what is expected, acceptable or should not be done in line with culture. Problems start when the brand promise is different from the cultural behaviors in the work place, which is away from the strategic view. If the market is expecting an excellent response against the expectations, then excellent products and service conditions must be provided. Trouble starts when organization’s culture say one thing, and employees act in different manner for any reason. That is where the consistency and alignment in Human Capital process fails. In this case, business shifts to competition with an economic impact. To avoid it, aligning the brand promise and reality in work place in-line with Human Capital concept is strongly required.

Human Capital and ROI

To achieve the organizational success through motivated, loyal and driven employees, investment to their performance, development and loyalty is absolutely necessary. These investments require time and fund. Return of Investment (ROI) is a natural expectation after a disciplined investment process in people. Human Capital revenue factor, economic value-added, cost factor and market value are some of the metrics to be used to measure the success. Another good organizational example is the employee engagement and its nature. Organizations spend substantial amount of time and fund for employee engagement. Employee engagement is measured with an employee engagement survey. If employee engagement survey scores are high, the outcomes such as return guest ratio, revenue/profit per employee, higher spending patterns, etc. of the organization as the gross productivity and analytics of ROI should be expected high, whilst some concerned ratios like employee turnover rate would likely be low.

Conclusion

Organizations are the collections of processes, which run amongst the business units. Human Capital measures the economic value and the impact of employee performance within all these processes. Viewed from either economic or philosophic perspective, the thing that matters is how people are effective and fulfilled in their workplace. The organizations that make work place as fulfilling as possible will develop and retain the most productive employees and enjoy the most loyal customers to patronage the premises.   

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