Chapter four : Human capital function
Why “human capital”?
Employees are no longer just a resource – they are an asset with skills, knowledge, experience, characteristics and attitudes.
Their value must be rewarded fairly and grown through training. That is why “Human Resources” became the “Human Capital
Function”.
The HC department must also make sure all labour legislation is complied with.
KEY TERMS :
1. Manpower planning: estimating the number of employees, range of skills and time frame of the business’s employment
needs.
2. Skills gap: the difference between the skills available and the skills needed.
3. Remuneration: payment for work done.
4. Affirmative Action: designated groups who were previously disadvantaged now get preferential treatment.
A) Manpower planning
A top-down process – the strategic plan decides which skills are needed to reach the business’s goals.
1) Job analysis: determines all the tasks and responsibilities of each job
2) Job description: job title, summary of the job, duties, working conditions and degree of supervision
3) Job specification: “interprets” the description into the qualifications, skills and experience needed. Used as a guide for
recruitment and selection
Once skills are identified, check for a skills gap. Recruitment, selection and training aim to close it.
B) Recruitment and selection
Recruitment:
1) Internal: transfer or promote an existing employee
a. Methods: invite staff to apply, search employee files, manager recommends someone, notice board or intranet
, b. Advantages: better morale (promotion opportunities), more cost effective, past performance and attitude known
2) External: someone from outside the business
a. Methods: employment agencies, internet, newspapers, trade journals, trade shows, schools and universities, walk-
in CVs, head hunting
b. Advantages: new ideas and skills, helps meet Affirmative Action / EE targets, insight into competitors, no infighting
3) Hybrid: current employees recommend someone from outside
Selection steps:
1) Receive application forms and CVs, check all information is there
2) Evaluate them against the criteria – unsuccessful applicants are informed
3) Compile a shortlist using predetermined criteria (keeps it objective)
4) Background and reference checks (references, credit checks, criminal record)
5) Interviews by a panel using a set interview guide → impartial
6) Tests:
a. Work sample tests – eg. a trainer gives a presentation
b. Psychometric tests – mental ability and personality
c. Medical exam – only if it is an inherent job requirement (eg. a pilot). The business pays
7) Rank candidates – offer the job to the best one. If he declines, offer it to the next
8) Employment contract signed by both parties, including:
a. Employer’s details
b. Employee’s details (names, ID, address, tax number)
c. Position details: start date, job title, duties, probation, working hours, leave, pay, notice period, retirement age
C) Placement, induction and remuneration
1) Placement: putting the employee in the position he is best suited for
a. Usually the job applied for, but a better fit may emerge
b. Correct placement = employee is optimally used, in the interest of both parties
2) Induction: orientation for ALL new employees so they become productive as soon as possible
a. Should include:
i. Written copy of policies and procedures
ii. Organogram
Why “human capital”?
Employees are no longer just a resource – they are an asset with skills, knowledge, experience, characteristics and attitudes.
Their value must be rewarded fairly and grown through training. That is why “Human Resources” became the “Human Capital
Function”.
The HC department must also make sure all labour legislation is complied with.
KEY TERMS :
1. Manpower planning: estimating the number of employees, range of skills and time frame of the business’s employment
needs.
2. Skills gap: the difference between the skills available and the skills needed.
3. Remuneration: payment for work done.
4. Affirmative Action: designated groups who were previously disadvantaged now get preferential treatment.
A) Manpower planning
A top-down process – the strategic plan decides which skills are needed to reach the business’s goals.
1) Job analysis: determines all the tasks and responsibilities of each job
2) Job description: job title, summary of the job, duties, working conditions and degree of supervision
3) Job specification: “interprets” the description into the qualifications, skills and experience needed. Used as a guide for
recruitment and selection
Once skills are identified, check for a skills gap. Recruitment, selection and training aim to close it.
B) Recruitment and selection
Recruitment:
1) Internal: transfer or promote an existing employee
a. Methods: invite staff to apply, search employee files, manager recommends someone, notice board or intranet
, b. Advantages: better morale (promotion opportunities), more cost effective, past performance and attitude known
2) External: someone from outside the business
a. Methods: employment agencies, internet, newspapers, trade journals, trade shows, schools and universities, walk-
in CVs, head hunting
b. Advantages: new ideas and skills, helps meet Affirmative Action / EE targets, insight into competitors, no infighting
3) Hybrid: current employees recommend someone from outside
Selection steps:
1) Receive application forms and CVs, check all information is there
2) Evaluate them against the criteria – unsuccessful applicants are informed
3) Compile a shortlist using predetermined criteria (keeps it objective)
4) Background and reference checks (references, credit checks, criminal record)
5) Interviews by a panel using a set interview guide → impartial
6) Tests:
a. Work sample tests – eg. a trainer gives a presentation
b. Psychometric tests – mental ability and personality
c. Medical exam – only if it is an inherent job requirement (eg. a pilot). The business pays
7) Rank candidates – offer the job to the best one. If he declines, offer it to the next
8) Employment contract signed by both parties, including:
a. Employer’s details
b. Employee’s details (names, ID, address, tax number)
c. Position details: start date, job title, duties, probation, working hours, leave, pay, notice period, retirement age
C) Placement, induction and remuneration
1) Placement: putting the employee in the position he is best suited for
a. Usually the job applied for, but a better fit may emerge
b. Correct placement = employee is optimally used, in the interest of both parties
2) Induction: orientation for ALL new employees so they become productive as soon as possible
a. Should include:
i. Written copy of policies and procedures
ii. Organogram
