Human Resource or Human Capital?

                It is inevitable that human resource become the most prominent asset in comparison with other assets in an organization/company namely money, material, and work equipment. Why it is so? Because human resources act as cogs of other three kinds of asset for producing goods and services in the company.  The more competence and qualified the human resources owned by the company, the more effective and efficient the production process of goods and services will be.  Effective means that the objective of the company achieved as set, whereas efficient means less money expend to produce goods and services.

Unlike other assets which are relatively easier to be valuated, the value of human resource is very difficult to be estimated. Therefore, on one hand, it is often declared that money, material, and work equipment are categorized as tangible assets. On the other hand, human resource is grouped as intangible asset. We can value very easy work equipment, for instance, but so difficult to give value to our employees. So, human resources owned by a company relatively can be valued by quality attached to them. In other words, our discussion is directed to the human capital concept not human resource per se.

Human resource and human capital terminology is often used interchangeably. Actually these two concepts are different to each other. In the company context, human resource can be said as individual who work for producing goods and services. Whereas, human capital is related to whole knowledge, skill, experience, and other attributes which is inherent to the individual as such. Therefore, human capital is unique because it is dynamic‒always growths and develops. Human capital, then become the company’s foundation of creativity and innovation. 

            Human resource management is substantially as utilization of human resources in achieving company’s objective which is specifically focused on programs and practices of procurement, development, and motivating. Through such programs and practices, it is expected that capacity and potency of human resources in the company could be optimally utilized. Meanwhile, Human capital management is basically as an approach which is focused on systematic improvement of human resource quality. So, through Human capital management, the human resources value owned by the company can be measured at the present and can be enhanced in the future through improvement of knowledge, skill, experience and others attributes.  It can be said that Human capital management is connected to the strategic role of human resources in the company. Strategic role is meant as development and creation of human resource value associated with the creation of other resources value in endeavor to achieve company’s competitive advantage.

            In the tight business competition of this globalization era, sustainability of human capital improvement is become “a must”.  Human resource management experts namely R. Wayne Mondy and Robert M. Noe argue that for implementing Human capital management, the change of company’s philosophy is critically needed.  That is the reason many experts state that Human capital management is essentially emerged as the new approach of Human resource management with put the first priority on achievement of company’s competitive advantage and given the term “The new competitive approach of Human Resource Management”.