Human Capital Model (HCM)

In business you may hear the term “human capital” used in relation to building and maintaining an organization. A human capital model is the pattern employed by an organization to best use the human capital at their disposal. Let’s briefly look at these terms.

Webster (2005) defines capital in part as, “wealth (money or property) owned or used in business by a person, corporation, etc… wealth, in whatever form, used or capable of being used to produce more wealth… any source of benefit or assistance.”

To speak of “human capital” is to express the value of human beings to the success of an enterprise, and hence the importance of investing in their training, education, and well being. Human capital theory is rooted in the work of British economists Sir William Petty and Adam Smith. “It postulates that expenditure on training and education is costly, and should be considered an investment since it is undertaken with a view to increasing personal incomes” (Becker, 1964). Marshall (1998) asserts that, “Human capital arises out of any activity able to raise individual worker productivity.”

Too often leaders see human resources as a commodity to be used up rather than to be cared for. Bolman and Deal (2003) place the emphasis of “human resources” as seeing human beings as a valuable resource to be nurtured and cared for, not just expended as a means of production. The assumption is that there is a symbiotic relationship between employees and the organizations that employ them. They suggest a human resource perspective should embrace the following core assumptions:

• Organizations exist to serve human needs rather than the reverse.
• People and organizations need each other. Organizations need ideas, energy and talent; people need careers, salaries and opportunities.
• When the fit between individual and system is poor, one or both suffer. Individuals are exploited or exploit the organization—or both become victims.
• A good fit benefits both. Individuals find meaningful and satisfying work, and organizations get the talent and energy they need to succeed (p. 115).

As to my organization, since my organization is the Church, our primary emphasis (our HCM if you will) is upon the value and worth of every human life—created by God with intention and purpose. God has made the supreme investment toward the salvation of humankind. However, from a capitalistic point of view, being a non-profit organization, we are not as concerned with people being productive toward the accumulation of more wealth as we are of people realizing their God-given potential toward their own personal fulfillment and the building of His kingdom.

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References:

Becker, G.S. (1964). Human Capital: A theoretical and empirical analysis with special

reference to education. New York. Retrieved Sep 7, 2009 from http://economyprofessor.com/economictheories/human-capital-theory.php

Bolman, L.G. & Deal, T.E. (2003). Reframing Organizations. Artistry, choice and

            leadership. San Francisco: Jose-Bass

Marshall, G. (1998). Human capital theory. A Dictionary of Sociology.

Retrieved Sep 7, 2009 from Encyclopedia.com:

http://www.encyclopedia.co./doc/1O88-Humancapitaltheory.html

Webster’s New World College Dictionary (4^th ed). (2005).

Cleveland, OH: Wiley Publishing, Inc.