New Trend in HCM

Dr. Natalia Christiani, M.Pd., CPHCM.

Content
Introduction

Constituents of Human Capital

Importance of Human Capital Management

Human Capital Management Drivers

Human Capital Measurement

Approaches to Human Capital Measurement

Introduction

The word “Human Capital” was

introduced by A. W. Lewis.
Human capital consists of the
knowledge, skills and abilities of the
people employed in an organization.
According to Lawrence Bossidy
an American author and former
CEO of Allied Signal,
later Homewell.

“I am convinced that nothing we do

is more important than hiring and
developing people. At the end of the
day, you bet on people, not on
strategies.”
According to Lawrence Bossidy
an American author and
former CEO of Allied Signal,
later Homewell.

“I am convinced that nothing

we do is more important than
hiring and developing people.
At the end of the day, you bet
on people, not on strategies.”
Definition
Modal manusia mewakili faktor manusia dalam
organisasi; gabungan kecerdasan, keterampilan,
dan keahlian yang memberikan karakter khas
pada organisasi. Elemen manusia dalam
organisasi adalah mereka yang mampu belajar,
berubah, berinovasi dan memberikan dorongan
kreatif yang jika dimotivasi dengan baik dapat
menjamin kelangsungan hidup organisasi dalam
jangka panjang.
Bontis et al. (1999)
Constituents of Human Capital
Human Capital consists of:
Intellectual Capital
• Modal intelektual adalah nilai pengetahuan,
keterampilan, pelatihan bisnis, atau informasi
kepemilikan apa pun yang dimiliki karyawan suatu
perusahaan yang dapat memberikan keunggulan
kompetitif bagi perusahaan.
Social Capital
• Modal sosial terdiri dari pengetahuan yang diperoleh
dari jaringan hubungan di dalam dan di luar organisasi
Organizational Capital
• Modal organisasi adalah pengetahuan yang
dilembagakan yang dimiliki oleh suatu organisasi yang
disimpan dalam database, manual, paten, dll.
Meaning: Human
Capital Management
Human capital management
(HCM) transforms the traditional
administrative functions of
human resources (HR)
departments—recruiting, training,
payroll, compensation, and
performance management—into
opportunities to drive
engagement, productivity, and
business value.
Human Capital Management

Manajemen sumber daya manusia

(HCM) adalah serangkaian praktik
yang digunakan organisasi untuk
merekrut, mengelola,
mengembangkan, dan
mengoptimalkan karyawan guna
meningkatkan nilai mereka bagi
perusahaan.
 What’s the strategic importance
of implementing HCM in 2024?
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Importance of Human Capital Management
Managing a company's people resources.
Enhance the recruitment process

Identify gaps in the capabilities of the workforce.

Align human capital management with business goals

Allows better career planning

Improve productivity and efficiency

Improve performance reviews

Match positions with employee capabilities

Improve organic growth by identifying the competencies

of individual employees
 Human Capital Management Drivers

Driver 1 - Driver 2 - Driver 3 - Driver 4 - Driver 5 -

Leadership Employee Knowledge Workforce Learning
Practices Engagement Accessibility Optimization Capacity
Key
Communication Responsibility Work processes Innovation
Information
Areas Availability
Working
Conditions
Inclusiveness Commitment Training

Team Work Accountability

Time Career
Supervision
management Development
Hiring
Information
Leadership Evaluation Sharing Performance Learnings
Management
Human Capital Measurement
Human capital measurement has been
defined by IDS (2004) as being ‘about
finding links, correlations and, ideally,
causation, between different sets of
(HR) data, using statistical
techniques’.

The primary aim of HCM is to assess

the impact of human resource
management practices and the
contribution made by people to
organizational performance.
Reasons for interest in human
capital measurement

• Human capital constitutes a key element

of the market worth of a company
• People in organizations add value.
• Focus attention on what needs to be done
to make the best use of human capital.
• Monitor progress in achieving strategic
HR goals and evaluate HR practices.
• You cannot manage unless you measure.
Approaches to Human capital measurement
1. The human capital index – Watson Wyatt

2. The organizational performance model –

Mercer HR Consulting

3. The human capital monitor – Andrew Mayo

4. The balanced scorecard

5. European Foundation for Quality

Management (EFQM) model

6. The Sears Roebuck model

•The HCI is a methodology of
The human capital index (HCI) –
Watson Wyatt used to calculate Watson Wyatt
the correlation of human capital
and shareholder value.

Categories Percentage
•Watson Wyatt identified four
major categories of HR practice • Total rewards and accountability 16.5 percent
that could be linked to increases in
shareholder value creation.
• Collegial, flexible workforce 9.0 percent
•HCI shows that better an
organization is doing in managing
its human capita, the better its • Recruiting and retention excellence 7.9 percent
return for shareholders

• Communication integrity 7.1 percent

 The organizational performance model –
Mercer HR Consulting
Organizational performance model developed by Mercer HR Consulting is based on the
following elements:

Information
Work Decision
People Management Structure and Rewards
processes making
knowledge

• Each elements plays out differently within the context of the organization, creating a unique DNA.

• The statistical tool, ‘Internal Labour Market Analysis’ used by Mercer scrutinize the record of employee and labour
market data to analyse the actual experience of employees rather than stated HR programmes and policies

• Thus gaps can be identified between what is required in the workforce to support business goals and what is actually
being delivered.
 The human capital monitor –
Andrew Mayo
Mayo has developed the ‘human capital monitor’ to
identify the human value of the enterprise or ‘human
asset worth’, which is equal to ‘employment cost ×
individual asset multiplier’.

The individual asset multiplier is a weighted average

assessment of capability, potential to grow, personal
performance (contribution) and alignment to the
organization’s values set in the context of the
workforce environment (ie how leadership, culture,
motivation and learning are driving success).

He believes that value added per person is a good

measure of the effectiveness of human capital

This Photo by Unknown Author is licensed under CC BY

 EFQM model of quality

• The European Foundation for

Quality Management (EFQM)
model indicates that customer
satisfaction, people (employee)
satisfaction and impact on
society are achieved through
leadership.

• This drives the policy and

strategy, people management,
resources and processes
required to produce excellence
in business results.

The EFQM model

1. Leadership – how the behaviour and actions of the executive team and all other leaders inspire, support
and promote a high performance culture.
2. Policy and strategy – how the organization formulates, deploys and reviews its policy and strategy and
turns them into plans and actions.
3. People management – how the organization realizes the full potential of its people.

4. Resources – how the organization manages resources effectively and efficiently.

5. Processes – how the organization identifies, manages, reviews and improves its processes.

6. Customer satisfaction – what the organization is achieving in relation to the satisfaction of its external
customers.
7. People satisfaction – what the organization is achieving in relation to the satisfaction of its people.

8. Impact on society – what the organization is achieving in satisfying the needs and expectations of the
local, national and international community at large.
9. Business results – what the organization is achieving in relation to its planned business objectives and in
satisfying the needs and expectations of everyone with a financial interest or stake in the organization.
 The Sears Roebuck model (Rucci et al., 1998)

• The Sears Roebuck model defines the

employee-customer-profit chain. It is
sometimes called the ‘engagement model’.

• It explains that if you keep employees

satisfied in terms of their attitude to the
company and their job you will create a
‘compelling place to work’, which will
encourage retention and lead to service
helpfulness and merchandize value, which
leads to customer satisfaction, retention and
recommendations, thus creating ‘a compelling
place to shop’.

• This in turn creates ‘a compelling place to

invest’, because of its impact on return on
assets, operating margins and revenue growth This Photo by Unknown Author is licensed under CC BY
The balanced
scorecard
A balanced scorecard (BSC)
is defined as a management
system that provides
feedback on both internal
business processes and
external outcomes to
continuously improve
strategic performance and
results.
The financial perspective
• Focuses on financial performances of an organization. It normally covers the revenue and profit targets of commercial
companies as well as the budget and cost-saving targets of not-for-profit organisations. The financial health of an organisation
is a critical perspective for managers to track. It is important to note that financial performance is usually the result of good
performance in the other three scorecard perspectives.

The customer perspective

• Focuses on performance targets as they relate to customers and the market. It usually covers customer growth and service
targets as well as market share and branding objectives. Typical measures and KPIs in this perspective include customer
satisfaction, service levels, net promoter scores, market share and brand awareness.

The internal process perspective

• Focuses on internal operational goals and covers objectives as they relate to the key processes necessary to deliver the
customer objectives. Here, companies outline the internal business processes goals and the things the organization has to do
really well internally in order to push performance. Typical example measures and KPIs include process improvements,
quality optimization and capacity utilization.

The learning and growth perspective

• Focuses on the intangible drivers of future and is often broken down into the following components:
• Human Capital (skills, talent, and knowledge)
• Information Capital (databases, information systems, networks, and technology infrastructure)
• Organization Capital (culture, leadership, employee alignment, teamwork and knowledge management).
• Typical example measures and KPIs include staff engagement, skills assessment, performance management scores and
corporate culture audits.