Human Capital Management and Relevance

Intangible Assets: Human Capital -- Its Management and Relevance to Organizations

In essence, intangible assets, according to Kaplan and Norton (2013) can be categorized into three; human capital, information capital, and organization capital. It is important to note that intangible assets are great relevance to any business. Often, however, their monetary value outside the formal or perceived boundaries of a business is diminished. In my opinion, the most important intangible asset an organization, including mine, could have is human capital. This particular intangible asset also comes across as being the most difficult to manage.

Human capital, in the words of Kaplan and Norton (2013) includes "employee skills, talent, and knowledge." In my opinion, when it comes to the implementation of the organizational strategy, the relevance of this particular asset cannot be overstated. For a business to be successful, we need people oriented capabilities. None of the other two kinds of intangible assets can operate devoid of human capital. Human skills and capabilities are required to manage all the other assets, as well as implement business ideas and objectives. Human capital could be an important source of an organization's competitive advantage. This is particularly the case if the company focuses on not only hiring but also retaining people with a proper set of skills and capabilities. According to Barney (as cited in Baron, 2007, p. 26), the human capital advantage concept has its basis, or is largely founded "on the belief that sustainable competitive advantage is achieved when a firm has a HR pool that cannot be imitated or substituted by its rivals." Such an organization must, however come up with sound strategies to ensure that after the acquisition of the said resource; the same is not poached by other entities.

Despite being the most important intangible asset, human capital also remains the most difficult to manage. This is particularly the case given the diverse nature of those the company works with in seeking to fulfill its objectives. Matching the right people to various organizational roles could also be an uphill task. This is more so the case given the impact that a mismatch of skills and capabilities to tasks could have on the implementation of organizational strategies. While some capabilities and skills that suit specific roles could be acquired through training and experience, others like time management, temperament, and people skills are largely innate and cannot be acquired in a conventional set up. Companies also find it difficult to ensure that their personnel are constantly at the top of their game. This is more so given the reality of global competition. It is for this reason that organizations must continually train people in an attempt to ensure that in addition to acquiring new techniques, they also sharpen their existing skills set. Employee motivation is also another issue of significant relevance. Boosting the morale of employees in a way that motivates them to advance the organizational agenda requires great commitment from the organizational leadership -- sadly, this is an aspect that is often overlooked.