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Know personnel basics to maximize human capital

Know personnel basics to maximize human capital

While scores of companies devote resources to the planning and execution of profitable long- and short-term strategies, some small businesses invest little effort in strengthening their most significant asset: human capital.
In many cases, human capital and human talents are what will make the difference between success and failure. In order to maximize human capital, you must consider the most fundamental concepts of human resources management.

The field of human resources is defined as the internal effort to increase the effectiveness and efficiency of personnel. The ultimate goal of HR is to measurably and quantifiably contribute to the company’s well-being and profits.

Human resources can be divided into seven different categories:

• Strategic HR: Maximizing staffing methods to enhance the company’s capabilities and profitability.

• EEO: Establishing and maintaining equal employment opportunity.

• Staffing: Recruiting and hiring the right employees at the right time.

• HR development: Optimizing staffing, orientation, training and retention.

• Compensation and benefits: Monetary and non-monetary employee reimbursement.

• Health and safety: Maintaining a safe workplace to avoid employee endangerment.

• Labor relations: Multi-directional efforts to maintain legal and viable policies regarding employee rights and obligations.

Though most of these concepts seem general, there are ways to make them more relevant to your business. Let’s look at an example in strategic HR. You might ask yourself how to hire properly without extensive cost and/or time. Traditionally, most small businesses hire based on simple interviews, referrals or applications. But how would it affect the company’s bottom line if every employee were reasonably suited to the business? How much time and money would the company save if employee turnaround were near zero? What would happen if you interviewed only candidates in sync with the company’s philosophy?

A simple staffing solution would be outsourcing to an HR company, such as, which uses online assessment tools to identify candidates based on previously established parameters custom tailored to the individual organization. Though not flawless, such an option illustrates an effective way to decrease the cost, attract the best talent and increase the return on investment.

Alternatively, a small business can attempt to master the hiring process internally, which may result in a tremendous waste of capital, time and other resources. In theory and in practice, HR companies can be tied directly to the pay-per-performance concept, which allows for effective optimization of results and costs.

Be advised: Human resources and human capital management are much to complex to be covered thoroughly here. However, the one thing that you should take away from this article is the suggestion to take advantage of modern technology in your human resources efforts. Modern online tools and third-party pay-per-performance services will allow you to save a substantial amount of money and avoid headaches. v

Kamyar Shahmohammadi is the owner of the management consulting firm World Consulting Group,

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