Human Capital
28 September 2022 11:34 AM
Chapter Layout
Human capital functions:
• Manpower planning as a prerequisite for recruitment and selection
• The process of procuring the finest talent for the business
Legislation:
• Legislation impacting on Human Capital
Human Capital
• Shift in focus of managing employees- no longer regraded as a resource and useful as a means
to boost performance of the business
• Now regarded as an asset with skills, knowledge, experience, characteristics and attitudes
• Business must determine current and future value of employees and reward them in a fair
manner, knowing that the future value of the employees should be enhanced through
investment in training and development
• Human resources ---->Human Capital Function.
Manpower planning:
• Process of determining how many employees the business needs, the required skills and when
they are needed (time frame)
• Prerequisite for recruitment and selection
• Top-down process: strategic plan determines which skills are needed to achieve goals of the
business- required skills will be acquired via manpower planning + training
• Each position (job) in the business must be analysed, described and job specification drafted
► Job analysis:
• Performed to determine all the tasks and responsibilities associated with each job in the
organisation
• It provides the basis for a job description
• Methods: observation, questionnaire, interview
► Job description:
• Summary of all info collected in job analysis
• Rewritten in a specific format
• Specify the job title, summary of the job, duties, working conditions associated with the job
and degree of supervision required to perform the job
► Job specification:
• "interprets" job description into qualifications, skills and experience necessary for the
employee to do the job
• Job specification used as a guide during the recruitment and selection process.
• Once categories and specific skills have been identified, the Human Capital Function has to
determine if a "skills gap" is evident
• Skills gap: difference between skills available in the business and the skills needed
• Recruitment and selection process (and later training process) will aim to eliminate the skills
gap
Human Capital Page 1
,2.1 Recruitment
28 September 2022 11:52 AM
• Focus: attract the most competent talent
• Internal and external options available
• What is the task of recruitment agent: determine the most effective communication channels
to be used for the recruitment message
Internal Recruitment
• When an employee is appointed to a new position by transfer/promotion
Techniques:
• Job posting: business will notify present employees of the vacancy by adding to the notice
board/ intranet
• Business searches through own employee files and asks suitable candidates to apply
• Recommendations from outsiders by present employees- combination (hybrid) of internal and
external recruitment
Advantages:
• Employee morale improve as employees know there is opportunities for promotion/ growth
• It is more cost effective
• Employee's past performance and attitude towards the business is already known
• Cheaper and quicker
Employees are familiar with the business and know how it operates
Provides opportunity for promotion and growth
Business knows the strengths and weaknesses of employees
Disadvantages:
• Limits the number of potential applicants
• No new ideas can be introduced from outside
• May cause resentment amongst candidates not appointed
• Creates another vacancy which needs to be filled
External recruitment
• When it is not possible to recruit employees from within the company
Techniques:
• Employment agency
• Advertise in newspaper, trade journals or at trade shows
• Schools, colleges, universities, and other institutions
• Casual applicants (walk-ins)
• Employees may also be "head hunted"
Advantages:
• New ideas and skills
• Opportunity to employ AA candidates to meet EE targets
• "head hunted" employee may provide insight into the operations of the competitors
• No infighting occurs among employees for the position
• Outside people bring in new ideas
• Larger pool of workers from which to find the best candidate
• People have a wider range of experience
Disadvantages:
• Longer process
• More experience process due to advertising and interviews required
Human Capital Page 2
, • More experience process due to advertising and interviews required
• Selection process may not be effective enough to reveal the best candidate
Human Capital Page 3
28 September 2022 11:34 AM
Chapter Layout
Human capital functions:
• Manpower planning as a prerequisite for recruitment and selection
• The process of procuring the finest talent for the business
Legislation:
• Legislation impacting on Human Capital
Human Capital
• Shift in focus of managing employees- no longer regraded as a resource and useful as a means
to boost performance of the business
• Now regarded as an asset with skills, knowledge, experience, characteristics and attitudes
• Business must determine current and future value of employees and reward them in a fair
manner, knowing that the future value of the employees should be enhanced through
investment in training and development
• Human resources ---->Human Capital Function.
Manpower planning:
• Process of determining how many employees the business needs, the required skills and when
they are needed (time frame)
• Prerequisite for recruitment and selection
• Top-down process: strategic plan determines which skills are needed to achieve goals of the
business- required skills will be acquired via manpower planning + training
• Each position (job) in the business must be analysed, described and job specification drafted
► Job analysis:
• Performed to determine all the tasks and responsibilities associated with each job in the
organisation
• It provides the basis for a job description
• Methods: observation, questionnaire, interview
► Job description:
• Summary of all info collected in job analysis
• Rewritten in a specific format
• Specify the job title, summary of the job, duties, working conditions associated with the job
and degree of supervision required to perform the job
► Job specification:
• "interprets" job description into qualifications, skills and experience necessary for the
employee to do the job
• Job specification used as a guide during the recruitment and selection process.
• Once categories and specific skills have been identified, the Human Capital Function has to
determine if a "skills gap" is evident
• Skills gap: difference between skills available in the business and the skills needed
• Recruitment and selection process (and later training process) will aim to eliminate the skills
gap
Human Capital Page 1
,2.1 Recruitment
28 September 2022 11:52 AM
• Focus: attract the most competent talent
• Internal and external options available
• What is the task of recruitment agent: determine the most effective communication channels
to be used for the recruitment message
Internal Recruitment
• When an employee is appointed to a new position by transfer/promotion
Techniques:
• Job posting: business will notify present employees of the vacancy by adding to the notice
board/ intranet
• Business searches through own employee files and asks suitable candidates to apply
• Recommendations from outsiders by present employees- combination (hybrid) of internal and
external recruitment
Advantages:
• Employee morale improve as employees know there is opportunities for promotion/ growth
• It is more cost effective
• Employee's past performance and attitude towards the business is already known
• Cheaper and quicker
Employees are familiar with the business and know how it operates
Provides opportunity for promotion and growth
Business knows the strengths and weaknesses of employees
Disadvantages:
• Limits the number of potential applicants
• No new ideas can be introduced from outside
• May cause resentment amongst candidates not appointed
• Creates another vacancy which needs to be filled
External recruitment
• When it is not possible to recruit employees from within the company
Techniques:
• Employment agency
• Advertise in newspaper, trade journals or at trade shows
• Schools, colleges, universities, and other institutions
• Casual applicants (walk-ins)
• Employees may also be "head hunted"
Advantages:
• New ideas and skills
• Opportunity to employ AA candidates to meet EE targets
• "head hunted" employee may provide insight into the operations of the competitors
• No infighting occurs among employees for the position
• Outside people bring in new ideas
• Larger pool of workers from which to find the best candidate
• People have a wider range of experience
Disadvantages:
• Longer process
• More experience process due to advertising and interviews required
Human Capital Page 2
, • More experience process due to advertising and interviews required
• Selection process may not be effective enough to reveal the best candidate
Human Capital Page 3
