What is Human Capital Management and Why is it Important
Defined by research firm Gartner, human capital management (HCM) is a “practice related to people resource management. These practices are focused on the organizational need to provide specific competencies.” Simply put, human capital is the human resources available in your business and managing human capital covers the acquisition, management, and optimization of the human resources available within your business.
But why is it important? Human capital management plays a large part in employee retention and hiring in restaurants. The concept lays the foundation of how your business acquires, manages and optimizes your human capital.
Acquiring Human Capital
Acquiring human capital may sound a little dry and stuffy, but it simply means hiring the right employees to run your business. Each person you hire creates a resource and knowledge base in the company.
The first step in a strong human capital acquiring process is understanding its importance. Hiring is the first step of an employee's journey and a clear, concise and recruitment process can only help you in future retention and turnover prevention. The National Restaurant Association set the restaurant industry’s turnover rate at a staggering 74.9%, while the North American industry-wide turnover rate sits at 21%. This means 74 out of every 100 restaurant employees leave their job each year.
Turnover can account for many things including the loss of students moving into full-time careers and seasonal workers switching to new jobs. The issue with such high turnover is in the loss of resources that employees take with them. Longer term employees have more human capital as they have more company knowledge, industry know-how, and training. Investing in acquiring and hiring the right candidates will help you save significant time and money in the long run.
Managing Human Capital
As a business owner, one of your goals will be maximizing your business' value and this starts with employees. The second step in retaining a new employee is getting them started on the right foot and nothing shouts organization than a smooth onboarding process. Managing human capital is managing people and good management of human capital really lies in the creation of an employee profile. These profiles, whether in paper form kept in a folder or stored digitally online, are used to keep everything from an employee’s basic information to onboarding forms and paperwork for review and future development. In short, everything that is used to manage human capital should be kept in these individual profiles.
Proper onboarding has been linked to higher retention as is growth and succession planning. A good management process of your documentation will help make sure employees and important items are not missed.
Optimizing Human Capital
The optimization of human capital brings together acquisition and management. Set up a strong onboarding process, create an employee manual and share the culture and expectations with new hires to increase the acquisition of the right employees. Use management systems like Push Operations HR to help document and monitor the future success of employees.
The Harvard Business Review states human capital drives leadership, engagement, knowledge accessibility, workforce optimization and learning capacity. To optimize the entirety of a company's human capital they must monitor all 23 HCM practices under the five categories. In workforce optimization processes, conditions and accountability are the most important driving factors.
The American Standard Companies used HCM to develop their human capital. The company saw a 60% to 130% growth rate after improve the HCM growth rate in each office. A focus and clear optimization of HCM practices can help create a defined vision and expectations for employees while helping them improve their skills and confidence in the work they are doing.