Human Capital Management...say what?

What is human capital? Human Capital management is not what most people think (i.e. recruitment or paying people). Human capital encompasses the competencies, knowledge and experience of talented people that make an organization what it is. Human Capital management is all about having the right people and internal programs in place to fulfill the mission and vision of the organization in the best way through its greatest asset of all: people.

When most people begin a social venture, they think about product design, market demand, promotion, pricing, financing, and growth. Within growth, there is a big piece of the pie called human capital management that needs to be addressed. According to the latest Intellecap report, human capital management is a major challenge for social enterprises in India. It is difficult to find the right talent, specifically for the more senior management roles. Furthermore, it is becoming more difficult for social enterprises to retain talent due to various reasons. For many social enterprises, they are unable to keep up with the competitive compensation packages that bigger corporations or organizations are offering. Another reason is that there are no performance management processes or professional development programs in place for talent to grow within these social enterprises. Therefore, having HR processes and programs in place is essential for these social ventures to grow. Like children, employees need to be nurtured, developed and incentivized. If employees are not nurtured, developed and incentivized, then they will go to other places where they will receive nurturing, development and incentives.

For many social ventures, nonprofits and for-profits, human capital management tends to be towards the bottom of the priority list. My client has done a great job in establishing its product, fundraising, and acquiring a customer base over the past 8 years. However, they haven’t thought about the organizational structure until now. I’ve been happy to help them in establishing an organizational structure, evaluating what roles they need to fill, and examining what other HR processes need to be in place in order for this organization to grow.

I hope that many more social ventures will not forget the importance of human capital management. It’s not just about recruitment or paying people. Without talented and committed people and the right programs in place, an organization will have a hard time growing and scaling.