What Is Human Capital Management?

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  • Written By: K.C. Bruning
  • Edited By: John Allen
  • Last Modified Date: 15 October 2019
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Human capital management is the strategic handling of a company’s employees so that their attributes are used to provide the best economic value. It encompasses quantifiable elements such as skills and experience along with less easily measured traits including personality and influence. At the core of the practice is the belief that the workforce is part of a company’s capital like other assets such as land, buildings, and equipment.

Successful human capital management typically begins with the recruiting and hiring process. The employees engaged in this task can do several things to increase the likelihood of hiring and retaining a strong employee. Before speaking to candidates, it can be helpful consider whether the position being offered is well defined and that everyone involved in the hiring process understands what it requires. During the hiring process, some things to consider are whether the candidate has the skills for the position and if the person is a good fit with company and departmental culture.

Another aspect of human capital management that is wise to pursue with a new hire is a full assessment of the employee’s abilities. This can include current skills, abilities that can be improved with training, and innate traits that would enable an employee to pick up and execute a certain skill with ease. A personality test can also help to determine how an employee is likely to work with others and how this person’s particular characteristics can be most efficiently utilized.


The ongoing process of human capital management includes analyzing, tracking, and managing the elements of the company that affect employees. This can include policies, special programs, and training. Some companies may also periodically perform a cost-benefit analysis of employee programs in order to ensure that they are worth the expense to run.

Human capital management can also include tracking the outside resources of each individual. This primarily consists of what professional and personal connections an employee may have that can help the company reach its goals. Another important factor to consider is the traits of the people in an employee’s network, such as their skills, resources, and loyalty to the employee.

One of the least tangible aspects of human capital management is gaining knowledge of an employee’s most influential personal traits. It can be valuable to understand what kind of effect each individual in the workforce has on internal and external resources. This can be particularly helpful to know when making decisions about promoting within and searching for new leaders.


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