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human capital theory
the argument that individuals make investments in their own "human capital" in order to increase their productivity and earnings
Skill Development
Employees mastering advanced machinery or robotics to improve productivity.
Talent Optimization
Encouraging innovation and problem-solving among workers.
Productivity Enhancement
High employee engagement through workplace wellness programs or incentive structures.
General Human Capital
Knowledge and skills useful across various industries and valued by many employers.
ex: Skills in accounting, software programming, or management practices.
intellectual capital
Represents the collective knowledge, skills, and experiences that contribute to an organization's value and competitive advantage.
Development
Providing ongoing learning opportunities and career advancement paths.
Develop Clear Job Descriptions (Talent Management Process)
Provide clarity on roles, expectations, duties, and required qualifications.
Select Employees with Superior Potential and Cultural Fit
Seek individuals with the right skills, attitudes, and values aligned with the company culture.
Effective Onboarding and Training
Ensure new hires feel welcome and are equipped with the necessary tools to succeed.
Ongoing Coaching, Mentoring, and Feedback
Provide regular feedback and support to help employees grow.
Quarterly Performance Development Discussions
Allow employees and managers to assess progress, discuss challenges, and set new goals.
Hold Exit Interviews
Gain insights into why employees leave and use feedback to improve the organization.
Reward Strategy
A plan for how a company rewards its employees in ways that support broader business goals while motivating and retaining workers.
Focus on Rewards That Matter to Employees
Understand what motivates employees and tailor rewards accordingly.
Prioritize Effective Program Delivery
Ensure the reward system is implemented efficiently and communicated clearly to employees.
Succession Planning
Ensures an organization has a pipeline of qualified leaders and employees ready to step into critical roles as they become available.
Succession Strategies
1. Measure for the three Cs (competence, connection, and culture) 2. Implement tools for development - 3. Involve talent in the planning - 4. Cast a wider net in a bigger ocean - 5. Focus on the future -
Steps for succession planning of Business Owner
1. Consider the various constituents - 2. Identify the main characteristics a successor should possess - 3. Determine the established criteria 4. Ensure a rigorous and inclusive selection process - 5. Make decision - 6. Communicate the decision companywide - 7. Ensure periodic review of the plan's components and ultimate succession decision - 8. Address ownership succession - 9. Provide for emergencies -
Consider All Stakeholders
Think about the impact on all stakeholders, including employees, shareholders, customers, and suppliers.
Identify Key Characteristics of Successors
Define the skills, qualities, and values that future leaders must possess.
Establish Clear Criteria
Develop criteria that candidates must meet to be considered for succession.
Ensure Rigorous and Inclusive Selection Process
Involve diverse perspectives to avoid biases and uncover hidden talent.
Make the Decision
Evaluate candidates based on established criteria and make a final decision.
Communicate the Decision Company-Wide
Ensure transparency to build trust and reduce uncertainty
Periodically Review the Plan
Periodically Review the Plan: Regularly review the plan to ensure it remains relevant as the company evolves.
Address Ownership Succession
Plan for the transfer of ownership in family-owned private businesses
Provide for Emergencies
Have contingency plans in place for sudden or unexpected leadership vacancies.
Talent Audit Strategy
A systematic process used to evaluate and understand the strengths, weaknesses, and potential of employees within the organization.
Behavioral and Technical Competencies
Evaluate skills and behaviors needed for effective performance
Behavioral and Technical Competencies
Use unbiased, measurable tools to assess employees.
Address Most Critical Factors
Focus on evaluating the skills or competencies most crucial to organizational success.
Gather Insights from Assessment and External Benchmarks
Analyze results and compare them to external benchmarks to understand workforce strengths and areas for improvement.
Employee Resourcing
methods and approaches used by employers to meet organizational goals related to recruitment, retention, dismissal, performance appraisal, and management.
Human Capital
Refers to the collective skills, talent, and productivity that employees bring to a company.
Theodore Schultz
The one who introduced human capital in 1964, economist.
Example of Human Capital Theory
- Skill Development
- Talent Optimization
- Productivity Enhancement
2 Types of Human Capital
1. Specific Human Capital
2. General Human Capital
Specific Human Capital
Highly specialized knowledge and skills valuable in a particular job or company, with limited value outside the organization.
ex. employee operating a unique piece of machinery used only in one company.
Cognitive Knowledge
Formal education, technical skills.
intuitive knowledge
Experience-related knowledge, problem-solving, creativity, decision-making.
Talent Management
organization's strategic approach to attract, retain, and develop its most talented employees.
Key Components of Human Capital
- Recruitment
- Retention
- Development
Recruitment
Finding and hiring individuals with the right skills and cultural fit.
retention
Keeping talented employees through competitive benefits, opportunities for growth, and a positive work environment.
Negotiate Requirements and Performance Standards
Set clear performance standards and outcomes to help employees understand expectations.
Design Effective Compensation and Recognition
Offer competitive compensation and recognize hard work to motivate employees.
Promotional and Career Development Opportunities
Provide paths for career growth to motivate employees to stay with the company.
Align Employee Reward Strategies with Business Strategy
Rewards should be tied to what the business is trying to achieve.
Compare Assessment Results to External Benchmarks
Benchmark employee skills and competencies against industry standards or competitors
