Human Resource Management Vs Human Capital Management

Introduction

There are notHuman Resource Management Vs Human Capital Managementiceable dissimilarities between human resource management (HRM) and human capital management (HCM) recorded by experts, but at the same time, they cannot deny how indifferent these two management concepts are. The most important is they both deal with human resources (manpower) of the organization.

Is Human Capital Management the new name of Human Resource Management?

In earlier days, there was not much competition or workload. Employers need not focus their attention on the employees’ well-being, safety and development. In the later centuries, many Statutes and Acts came into action to protect the employees’ values and rights. Therefore, the need of human resource became undeniable. Consequently, employers turned their focus on building skilled manpower and fulfilling their professional need in an organization. Employers gathered personnel who would be responsible for treating the workforce as capital or asset of the organization. The function of human resource department became more sensitive with days. Hence, it is now more popularly known as human capital management.

In general, human resource management and human capital management possess many similarities. But it also has some basic differences which are described below:

  Similarities  Dissimilarities
Both the terms are responsible for accomplishing various functions related to individual employee working in a groupBasic Difference:
HRM
  HCM
These both components are essential to a growing organization and have a reciprocal relationship between two individual entities. To implement human capital strategies, an organization needs to have strong human resource management infrastructureDefinition:
HRM refers to the process of maximizing the utilization of available human resource in the organization.
HCM is regarded as an approach that considers employees as assets (human capital) whose current value can be measured and whose future value can be improved through proper investment
HCM takes the idea of strategic HRM one step further to integrate workforce strategy with the over organizational strategy in terms of making strategies more focused on the human side compared to traditional HRMApproach:
As it is clear from its definition HRM treats workforce as costs
As mentioned earlier in the definition, HCM treats manpower as assets
HCM does not really replace the concept of the HRM, but complements it in many ways. Each of these focuses on the adopting integrated and strategic approach on handling employees, which is the concern of all stakeholdersFunctions:
The role and responsibility of HRM is bounded by the law and company directives
HCM performs work related to all employee issues and other elements such as employment, utilization, development and compensation
 Techniques in Use:
Employs simple benchmarking techniques
Employs complicated evaluation techniques
 Authority:
Regulated only by HR team
Can only be driven under some special case of organization performance.

Although there are few similarities and dissimilarities between HRM and HCM, from the above stated points it can be concluded that both concepts hold their significance in the organization.

An Ideal Model of Human Resource Management

The human resource management model involves all the responsibilities the HRM department has to fulfill. If the responsibilities are fulfilled effectively, it enables the organization to create a willing workforce that works towards achieving organizational goals and objectives. Many forces like technology, economy, politics, law, organizational conditions influence the environment. Here is a graphical representation of the human resource management model developed by the Harvard School:

Stakeholders’ Interest: Stakeholders Employee Groups Management Governments Unions Communities
Situational Factors:Workforce and its Characteristics Management Philosophy Business Strategies Conditions Labor Markets Unions Laws/Social Values
HRM Policy Choice: Employee Influence Human Resource Flow Performance Reward Work Systems
HR Outcomes: Commitment Competent Congruence Cost-effectiveness
Long-term Consequence: Individual Well-being, Organizational Effectiveness and Social Well-being

If you are asked to develop an ideal HRM model for certain company, you can use the above reference and create an HRM model on your own. Our human resource management service is at your disposal to assist you with the coursework needs. Any problem arising with HRM assignment writing or in understanding the fundamental of HRM or even gathering research material from the sources, our HRM assignment experts will be glad to help you out.

The Changing Focus of Human Resource Management

HRM is an organizational practice that every corporation engages to make sure its people have proper tools to deal with all issues in an organization. The areas HRM deals with are recruitment, affairs related to compensation, talent acquisition, managing performance of the existing employees, development of organization, wellness and safety of the employees, motivating employees to achieve organizational goals, administration and conducting training session to elevate the efficiency of employees.

In other words, HRM is a strategic approach that organization takes up to manage its people, environment and culture. An organizational with effective HRM enables its people to contribute towards the growth of the organization and achieve organizational goals and objectives. This is the traditional description of responsibilities that any HRM in an organization has to fulfill.

But HRM has taken a major turn from the traditional path during the last few decades; the responsibilities of HR manager being upgraded. Instead of administering or handling transactional roles, the HR personnel are now expected to add value to the strategic utilization of employees’ potentials, propose employee recommendation program to ensure employees’ performance growth and implement them in operation with measurable ways.

With the increased market competition, employees are considered as the most valued source in many industries. Employers register the fact that skilled and nurtured workforce is the only way to keep an organization running in the competition.

Revised Roles of Human Resource (HR) Manager

The HR managers no more take directions from the executive team; instead of taking directions, they are now authorized to sit in the executive table and recommend approaches, business solutions and processes that work to enhance the work ability of the employees. The revised roles that employees in HRM department are accountable to are discussed below:

  • Strategically lead the company in the direction of the growth and suggests HRM metrics and measurements to demonstrate their value. For that, it requires to keep their employers and organization safe from any lawsuit which may result in workplace chaos.
  • The Human Resources department has two clients to serve – employees and managers. Today, modern HR departments have many people to take care of. The department must treat all the organization’s shareholders – customers, managers, executives, owners, stockholders and employees equally.
  • In the modern era, the HR department has to identity the opportunities in relation with organizational growth and development. On other hand, the HR manager still has to act as an employees’ advocate to ensure that they are motivated to take challenges in the workplace.
  • The purpose of modern HR manager is to ensure the organization sustain the competition. Moreover, the employees working in HRM department work towards connecting the employees with the business priorities.
  • The most significant change that HRM department has experienced is the shift of focus from fulfilling expectation of employees and manager to creating compelling HR agendas that would benefit the organization.
  • With the changing focus of HRM, the role of HR manager has gone through some amendments as well. While putting primary focus on delivering the best solution to the business issues, the HR manager is also liable to be a strong consultant to business leaders. Moreover, the person needs to give attention to the productivity and performance and workplace issues.
  • Today, HR managers share objectives and goals with business leaders. They are both accountable for deciding targets and agreed upon it. The HR manager acts as a leader as well as manager in the strategic projects which concentrates on the change management agenda in the function.

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Human Resource (HR) Policy

Explanation:

By definition, it is a fundamental statement that directs how employees should be managed under the roof of an organization. In other words, the human resource policy refers to the codified, systematic and disseminated set of rules that decides and regulates how HRM department should work in an organization and how human resources will be treated in order to fulfill the organizational objectives, along with the rights and responsibilities the department and management will be bestowed upon.

In past, organizations have experienced disputes, divisiveness and dissatisfaction among the employees because of the absence of human resource policy. Some organizations do not have a policy at all. In some cases, human resource policy refers to some vague guidelines that are dependent on the mood, attitude and discretion of the supervisor. The only remedy that modern organizations can come up with is assembling a set of rules that cover all sorts of issues likely to be concerned with the workplace.

Characteristics:

A human resource policy should work to fulfill several functions in an organization. Firstly, the organization should have the rules and regulations in a written format; it should be penned down in a format that guides the supervisors and manager to follow the specific rules and regulations. There are several characteristics that ensure that a human resource policy is usable and will benefit the employees as well as the employer of the organization. The characteristics are described below:

  • First and foremost, the language of the policy should be lucid to understand. Bureaucrats tend to phrase things to suit their intellect, but this does not work in this case. If any HRM department wants the policy to be implemented, it has to be written in such manner that anyone can readily understand the content.
  • There should be enough copies of the policy so that every manager and supervisor has a copy with them. It is also necessary that the publication does not cost the company much and can be upgraded and modified easily. If there are certain changes, they need to be included. Some organizations have loose leaf binder with specific page number on them. Whenever the policy needs some alteration, they just add another page/revised page and exclude the previous page.
  • The policy pages should attach if there is any disclaimers to announce. If HRM department wants to ensure the content is not used inappropriately or for purposes that are not intended to, the HRM department should involve a disclaimer under it.

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10 Best HR Practices of High Impact Value

There are numerous best practices that organizations adopt to provide better services. Some of these depend on the size of the organization, history, culture and even the leadership style they adopt. But there are few that provide highest impact of all. We here describe 10 best HR practices; you will get to know the summary of those practices and how impactful they have been on the organizational behavior.

Overall Impact of HR Best Practices
PracticesImpact Opportunity (%)
1. Well-structured Administration and Business Case Development40
2. Enforce Advance Level Workforce Planning Capabilities29
3. Enforce the ‘Right’ HR Philosophers28
4. Decrease Administration Task  for HR Partners26
5. Enforce a Flexible Design for HR Organization21
6. Enhance Direct Employee-related HR System20
7. Assess the HR Business Metrics and Operations20
8. Enhance Internal HR Skills14
9. Develop Line Manager’s Capabilities11
10. Outsource HR Services with Proven Strategies10

1. Well-structured Administration and Business Case Development:

The HRM department has to have a clear understanding of businesses and working relations among the business leaders. These tasks can be achieved by engaging business partners in the governance and planning processes. This engagement will help the organization to ensure business alignment.

2. Enforce Advance Level Workforce Planning Capabilities:

Organizations, advocating high-impact HR policies, implement the advanced workforce analytics into their operations. This action allows the HRM department to translate information related to business and the external workforce-segment information into usable condition that the organization can make use of it or distribute to business leaders.

3. Enforce the ‘Right’ HR Philosophers:

High-impact HR organizations attempt to ensure that the employee get a suitable environment that helps them achieve as individuals and team member towards the organizational success. The most effective HR policies concentrates on fostering innovation and collaboration or constructing a positive employee environment, whereas, the least effective philosophies concentrate on cost-cutting efforts and efficiency.

4. Decrease Administration Task for HR Partners:

This function varies widely from one company to another. The high impact-making HR organizations use this function to advice the business leaders, doing workforce planning, developing leadership skills, focusing on decision-making process and executive coaching. On the other hand, when this function is not properly and the focus is more on the administrative duties and receiving orders, the HRM department fails to work efficiently.

5. Enforce a Flexible Design for HR Organization:

No HR structural model has proved to be the final formula of success. A few structural features, however, play a crucial role in HR success: one of the significant is flexibility. When business needs structural changes, the HRM department is capable of making those changes.

6. Enhance Direct Employee-related HR System:

The driving factors to overall effectiveness of the organizations of HR functions are community building and self-service elements. The HRM department uses knowledge-sharing portals, management dashboards and web-based recruitment tools to provide efficient services to all HR stakeholders and various clients. The HR functions with user-friendly systems are considered as twice as effective.

7. Assess the HR Business Metrics and Operations:

With days the measurements strategies in various organizations have matured to ensure effectiveness and efficiency of the business. Measurement strategies involve both operational measures that are dedicated to administer the HR functions and strategic business measures that support the business decisions.

8. Enhance Internal HR Skills:

While focusing on the employee development company-wide, the HRM department ignores to assess the development of its own employees. The world of HR is constantly changing; therefore the need of skilled professionals is also increasing. So the high impact-making HR organizations should invest good amount of time and resources to ensure the team members’ competence growth in areas of change management and relationship management. Organizational resources should be invested to develop the business and industry knowledge of the team members, command over best practices as well as the usage of social media tools and other modern technology.

9. Develop Line Manager’s Capabilities:

A common mistake that many HR departments commit is distributing limited HR resources in an attempt to satisfy every stakeholder directly. High-impact HR organizations always prioritize their focus on HR resources on enhancing the capabilities of the line managers. This action helps the HRM department to work with line managers in partnership rather than work around those who might be ill-prepared and incompetent.

Outsource HR Services with Proven Strategies:

High-impact organizations outsource HR services so that its HRM team can focus on those roles that they cannot outsource like developing customized solution for business leaders and building relationship with business leaders. The areas that an organization outsources depend on the maturity level of the company.

Knowledge of HRM practices is significant for a HRM professional or to write projects in your module. In case, you need assistance to learn the concepts in a detailed manner or implementing the learned knowledge into your projects, you can take assistance from the HRM assignment experts.

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