Human Capital, KSAOs, and Strategic HRM Concepts

Human Capital

The knowledge, skills, abilities, and other characteristics employees bring that create value for the organization.

KSAOs

Knowledge, Skills, Abilities, and Other characteristics; the building blocks of human capital used to evaluate and develop talent.

Knowledge (K in KSAOs)

Information and understanding a person has (facts, concepts, procedures).

Skills (S in KSAOs)

Proficiencies developed through training/experience; what someone can do.

Abilities (A in KSAOs)

More stable capacities to perform tasks (cognitive, physical, emotional).

Other Characteristics (Os in KSAOs)

Traits, values, interests, personality, motivation, and attitudes that affect performance.

Financial Capital

Money and financial resources used to run and grow the organization.

Human Capital vs Financial Capital

Human capital is tied to people's KSAOs; financial capital is money/assets—both matter, but human capital is harder to imitate and often drives long-term advantage.

HR Systems Thinking

Viewing HR practices as an interconnected system with systemwide relationships and continuous feedback loops.

Systemwide Relationships (HR Systems)

HR activities influence each other; changing one practice affects others and overall outcomes.

Feedback Loops (HR Systems)

Outcomes of HR practices feed back into the system to reinforce or adjust future practices.

HR Practices as a Process

HR is not isolated actions; it's a flow from recruiting → selecting → developing → retaining.

Strategic HRM

Aligning HR systems with organizational strategy to build and sustain competitive advantage.

Sustaining Competitive Advantage (VRIN)

Resources create superior returns when they are Valuable, Rare, hard to Imitate, and Non-substitutable.

Valuable (VRIN)

Human resources improve efficiency, quality, innovation, or customer value.

Rare (VRIN)

The KSAOs are scarce compared to competitors.

Hard to Copy / Inimitable (VRIN)

Competitors can't easily replicate employees' KSAOs because of history, culture, or complex development.

No Strategic Alternatives / Non-substitutable (VRIN)

No other resource can replace the value created by those employees.

How HR Becomes a Source of Superior Returns

When employee KSAOs meet VRIN conditions through hiring, development, and retention systems.

Talent Management

Systematic process of attracting, selecting, developing, and retaining high-potential and high-performing employees.

War for Talent

Competition among organizations to recruit and keep the best human capital.

Planning for Human Resources

Forecasting talent needs and building pipelines before shortages occur.

Recruitment

Identifying and attracting a broad pool of qualified applicants.

Selection

Narrowing applicants to those with best fit and KSAOs for the job.

Placement

Putting selected employees into roles where their KSAOs best match job demands.

Mindsets in Diversity Training

The framing used in EDI development that shapes how people engage with diversity goals.

Learning Mindset (Diversity Training)

Emphasizes growth, curiosity, and skill-building; increases openness and participation.

Evoking Positive Affect (EDI)

Creating hopeful, supportive emotional tone so people feel energized—not blamed—about shared EDI goals.

Job Search (Individual Perspective)

The process individuals use to identify opportunities and move toward employment.

Transitional Matrix

HR tool showing inflows and outflows of employees across jobs/levels over time.

Inflow (Transitional Matrix)

Movement into jobs (new hires, transfers in, promotions in).

Outflow (Transitional Matrix)

Movement out of jobs (quits, layoffs, transfers out, promotions out).

Yield Ratio

Recruitment success ratio: number moving to the next stage divided by number in the previous stage.

Example Yield Ratio

Offers accepted ÷ offers made (or interviews ÷ applicants), used to spot bottlenecks.

Cost per Hire

Total recruiting/selection costs divided by number of hires; evaluates recruiting efficiency.

Recruitment Effectiveness

How well recruiting produces qualified hires efficiently (often assessed via yield ratios and cost per hire).

Person-Organization Fit (HR Context)

Match between employee values/KSAOs and organizational culture; improves retention and performance.