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Intellectual Capital Essay

3064 words - 13 pages

Human Capital and Organizational Performance
Management Accounting Individual Assignment

Human Capital and Organizational Performance
Management Accounting Individual Assignment


Human capital is elusive and as such hard to classify, quantify, and digitize without qualitative tools. The challenge of making such an intangible asset assessable, and part of the balance sheet has resisted the test of time, and therefore even with the countless innovations and advancements of the 21st century we find ourselves challenged and without the adequate tools to incorporate the above assets to formally drive ...view middle of the document...

Therefore such intangible resources must not only be invested upon, but also protected and preserved to enable the firm to implement strategies that improve its efficiency and effectiveness resulting in improved organizational performance. The company as a whole must develop a plethora of core competencies that must be packaged in unique ways and deployed as a strategic tool to give the company an edge and create overall value in ways that no other competitor has the ability to imitate or acquire from outside sources. Once companies agree with Peter Drucker, that “knowledge workers are the [company’s] true assets”, they should work towards redefining the role of the human resource department into one that focuses its efforts to develop practices that empower individuals to build on their knowledge and therefore on the organization’s knowledge to boost company performance through creativity, innovation, quality and flexibility. Managers need to understand that besides physical and financial resources that drive performance and add value to organizations, human capital is a crucial element that left unused would put the organization at a disadvantage resulting in substandard performance. The trick is to combine a unique blend of tangible and intangible assets to respond to market opportunities in a way that will distinguish you from the competition by delivering superior customer value in a competitive superior manner. The resource-based model emphasizes the need for a fit between the external market context, in which a company operates and its internal capabilities. The ability to identify the key organizational components that fit such a puzzle and deploy them effectively while delivering sustained value has a direct relation with the collaborative efforts of the firm’s highly skilled, knowledgeable, capable and creative talent, otherwise identified as human capital.
Human Capital Management Strategy
Human capital management “represents the human factor in the organization: the combined intelligence, skills and expertise that give the organization its distinctive character”. Many worldwide judge the ability to attract and retain people as one of the critical enablers of growth according to a study conducted by the Economist Intelligence Unit. In order to achieve competitive advantage and create value through human capital a company needs to put in place a well thought-through talent management plan in order to obtain superior results. The days of hiring someone just to fill an open position or to do a friend a favor are far gone. Efforts must be directed towards hiring the right person for the position; the one that possesses special skills or characteristics that will contribute to the organizations ability to succeed in a competitive marketplace. Talent management must be all encompassing including attracting talent, engaging, developing and retaining talent for the purpose of maximizing organizational performance.

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