The Central Role of Human Capital in Organizations - Literature review Example

Human Resource Development For an organization to remain competitive in the constantly changing business environment there would be need for such an organization to anticipate changes, innovate and adapt to the changing environment. Successful adaptation to such an environment would be dependent on dynamic and knowledgeable employees who have competencies to steer such organizations through the turbulent environments. Human Resource Development plays the role of ensuring that employees have the needed skills and knowledge to execute this function. Borrowing from secondary sources, this paper examines the importance of Human Resource Development to individual employees and the organization at large. Introduction Human Resource Development, HRD has received much attention from researchers who have developed various theories to give a wide range of phenomena that could be of interest in the field. However, Werner and DeSimone (3) observe that despite their efforts, there has been no much progress made towards defining HRD. Scholars in Business Administration consider it a sub-discipline in Human Resource Management, HRM that deals with developing productive skills through training. Khan, Khan, and Mahmood (50) define it as a set of planned and systematic activities which an organization designs so as to provide its members with learning opportunities for the skills necessary to meet not only the current but also future job demands. This postulate observes what Maurer and Githens (268) call the need for flexibility of organizations as human resource organization and development, HROD cannot be prescribed as a set of procedures, but rather, with each given environment, organizations through their employee devise ways of surviving. For organizations to realize value creation in the modern business environment, Chaudhary, Rangnekar and Barua (664) acknowledge the importance of human capital. In HRD, human competencies continue to be widely appreciated as the most crucial resources that organizations could have. No wonder, various models have been formulated to give practices that would assist in providing competitive advantage to organizations through accumulation of human capital. This aims at not just building but also retaining future resource, the latter referred to as emancipatory knowledge by Maurer and Githens (277). Khan, Khan, and Mahmood (51) appreciate HRD as a field that leans towards the development of human resource competencies through the enhancement of knowledge, building of skills, change of attitude and teaching of values while on the other side creating conditions through programs, public policies and interventions that assist people in applying these competencies for their own benefit and that of the organization and getting things to happen. Therefore, organizations employ all available strategies to develop the competencies of their human resources. The current business environment faces fast evolution in technology and innovation which pushes organizations to constantly seek for employees learning and development (Khan, Khan, and Mahmood 53). With knowledge fast becoming a key factor for production, it also emerges as a need for attainment of competitive advantage. Thus, understanding the factors that would cause organizational learning and transfer of knowledge to the working environment stands out as an essential task for HRD. Bassey, Attah, and Bassey (129) bring this into focus using sociological principle borrowing from organizational socialization which refers to the teaching of recruits on the rules of conduct and key norms and behaviors when relating to others in an organization, described as learning the ropes. But it should be appreciated that HRD does not just function to meet the goals of training and development only, it also encompasses system and organizational level issues which influence a broad set of skills including behavioral skills, knowledge and abilities involved in learning in social context. This further covers corporate strategy, team learning, individual responsibility to learning and career development. The organizational environment and culture determine the type and frequency of learning-related events and the motivation among employees to transmit the acquired knowledge to their workplace situation. Importance of HRD to Employees and Organization In spite of the theoretical debates in the nature of HRD, the field plays a critical role in organizations. This role revolves around learning and performance, both of which have critical importance to employees and organizations alike and further extends to shareholders. According to Khan, Khan, and Mahmood (55), the importance of HRD in this perspective could be evaluated by considering the social benefits, economic benefits and the ethics in HRD. In essence therefore, this supports the importance of HRD in learning, training and development in organizations, focusing on individual development aimed at achieving business strategies and developing organizational competence. Individual employees have so much to benefit from HRD. Adopting the social perspective, Bassey, Attah, and Bassey (130) acknowledge that socialization presents employees with an idea of the roles expected of them to play thus enabling them to effectively perform these roles. According to these researchers, organizations have their histories, culture, missions and visions, career paths and structures, growth and developmental objectives and communication and market coverage. For new employees, such facts would not be known to them. Therefore, they would need to acquire knowledge on these aspects to enable them fit within the organization and perform their roles effectively. HRD, through enhancement of socialization process in their respective organizations would help such new entrants to build evaluative and affective domain that would influence role performance given by the organization. It gives employees a sense of job satisfaction and thus their increased effort at work. From this perspective, socialization plays a critical role of training new employees using other employees which perfects them in their roles and thus enhances individual productivity. Supporting this observation would be the argument by Werner and DeSimone (38). According to these scholars, training and development as propagated by HRD helps in promoting and sustaining growth which boosts the productivity and income of the worker and in turn positively affect organizational economic development. This argument supports the observation by Khan, Khan, and Mahmood that “organizations have been created by humankind and can soar or crumble” depending on the influence such humankind has on the organization (55). Thus, to make sure that the contribution of human capital sees growth in an organization, HRD would develop and maximize human expertise. Maurer and Githens (277) refer to this creation of knowledge which results in action and empowerment of the oppressed employees using their knowledge as critical action research. Focusing on the benefit to the organization, Chaudhary, Rangnekar, and Barua (665) argue on the importance of HRD to focus on employee engagement. Whereas many other studies focus on how perceived organizational support, job characteristics, rewards and recognition, personal resources and organizational justice determine employee engagement, these researchers focus on how employee development influences employee engagement. Employee engagement measures return on investment in human capital, thus providing an alternative for measuring the commitment of employees to the organization and therefore create more effective workplaces. From their research study, the researchers find a positive correlation between employee development and employee engagement. Hence, through employee development, organizations boost employee engagement which enables employees to realize increased job performance while for the organization there would be an increase in customer satisfaction and financial returns. Closely related to employee engagement is the socialization postulate. According to Bassey, Attah, and Bassey (135), highly socialized employees are an asset to the organization. The awareness that would be created through socialization to new employees by the other employees helps prevent unethical behaviors that in most cases cause losses to organizations. Highly affective and evaluative employees would help in preventing truancy, corruption and help boost commitment to work. Such persons, having been equipped with organizational objectives, exhibit creativity, innovation and ingenuity while executing their job mandates. These positive variables emanating from industrial socialization serve to boost the productivity of organizations. Recommendations Therefore, organizations seeking to increase their employee engagement need to continually develop their employees as a developmental HRD climate builds and engages workforce (Chaudhary, Rangnekar, and Barua 676). Furthermore, even as employees point out the areas they would need training, top management should be involved in formulating training programs. They should be open enough to allow employees to freely discuss with them their weaknesses where HRD will step in to assist. According to Maurer and Githens (272), dialogue stands out as an important component for critical engagement with organizations, referring to this as dialogic action research. It stresses on critical engagement of communities, organizations and individuals when carrying out action-oriented research into issues or problems in organizations. From the socialization perspective, Bassey, Attah, and Bassey (133) recommend that organizations discourage counter-socialization, which refers to learning experiences that contradict previous experiences which could radically change the personality of an employee. Instead, these researchers advocate for continuity in socialization so as to avoid inefficiencies in role performance. Conclusion From this paper, the central role of human capital in organizations has been articulated, indicating the important function of HRD in equipping organization’s human resource with the necessary skills and knowledge that would ensure organizations survive in the changing business environment. Employee development equips individual employees with knowledge and skills that enable them adapt to the organizational environment, give them job satisfaction and increase their productivity and income. On the other hand, the organization benefits from increased employee engagement and increased production. Socialization postulate observes that the resultant benefits including curbing unethical behavior saves the organization from associated losses. Therefore, HRD is an important organizational component which should be critically guarded for the benefit of individual employees and the organization. Works Cited Bassey, Antigha Okon, Frank Attah, and Umo Antigha Bassey. “Industrial Socialization and Role Performance in Contemporary Organization.” International Journal of Business, Humanities and Technology 2.5 (2012): 129 – 136. Chaudhary, R., S. Rangnekar, and M. Barua. “Relation Between Human Resource Development Climate and Employee Engagement: Results from India.” Europe’s Journal of Psychology 7.4 (n.d.): 664 – 685. Khan, M. T., Dr., Dr. N. A. Khan, and K. Mahmood. “An Organizational Concept of Human Resource Development – How Human Resource Management Scholars View ‘HRD’.” Far East Journal of Psychology and Business 8.3 (2012): 50 – 60. Maurer, M., and Rod P. Githens. “Toward a Reframing of Action Research for Human Resource and Organization Development.” Action Research 8.3 (2010): 267 – 292. Werner, J. M. and R. L. DeSimone. Human Resource Development. 6th ed. Mason, OH: South-Western Cengage Learning, 2012. Read More