Human capital refers to the capabilities that employees bring to their jobs. Consisting of their individual and collective knowledge, skills, abilities, or other characteristics, these capabilities serve as the foundation for an organization’s ability to meet its stated mission. In this way, human capital has economic value to the employee, the organization, and to the larger market of which the organization is a part.
Given the critical nature of the contribution of these capabilities to organizational success, employers maximize these capabilities, and thus develop their workforce, by building, implementing, and evaluating human capital systems. These diverse systems span the entire employee life cycle and may include systems to improve recruitment, selection, onboarding, training, performance management/assessment, or coaching and other types of career development.
In addition to systems like these that serve employees most directly, other human capital systems improve the organization’s functioning and thus improve performance indirectly. These systems include efforts to improve staffing, compensation, job/tool design, management structure, organizational culture, and other resources that serve employees more secondarily.
As organizations must function in situations that vary along a number of parameters such as availability of skilled workers, the number and type of competitors, and the market place more generally, the specific human capital systems that are relevant for developing a specific workforce vary substantially from organization to organization. It is in the appropriate selection of—and subsequent development, implementation, and evaluation of—human capital systems that AIR brings considerable expertise.