HRM-635: Acquiring, Developing, and Leveraging Human Capital.


The effective strategic management of human capital is what differentiates every successful organization from others. If you undertake an HRM-635: Acquiring, Developing, and Leveraging Human Capital course, you will come across talent management, workforce diversity, succession planning, employee development and motivation, and performance matrix. Additionally, it also addresses human resource competencies identified by the Society of Human Resource Management (SHRM). Using the strong strategic human resource acumen provided by this course, students will be well-prepared for positions as senior human resources specialists or as general managers.

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Definition of human capital?

Human Capital is a measure of the skills, education, capacity, and attributes of labor that influence their productive capacity and earning potential. There are various types of human capital. These types include:

  • Individual human capital – the skills and abilities of individual workers
  • The human capital of the economy – The aggregate human capital of an economy, which will be determined by national educational standards.

For statistical purposes, human capital can be measured in monetary terms as the total potential future earnings of the working-age population.

Factors that determine human capital

  • Skills and qualifications
  • Education levels
  • Work experience
  • Social skills – communication
  • Intelligence
  • Emotional intelligence
  • Judgment
  • Personality – hard-working, harmonious in an office
  • Habits and personality traits
  • Ability to innovate new working practices/products.
  • Fame and brand image of an individual. e.g. celebrities paid to endorse a product.
  • Geography – Social peer pressure of the local environment can affect expectations and attitudes.

How to develop human capital.

1.       Specialization and division of labor.

Specialization enables workers to focus on specific tasks and increases specialization of skills. However, specialization can lead to boring, repetitive jobs and limited skill development of workers.

2.       Education.

Basic education to improve literacy and numeracy has an important implication for the basis of human capital.

3.       Vocational training.

A skilled profession requires particular vocational training. Therefore, direct training should be provided for skills related to jobs, electrician, plumbing, and nursing.

4.       A climate of creativity.

An education that enables children to think outside the box can increase human capital in a way that ‘rote learning’ and an impressive accumulation of facts may not.

5.       Infrastructure.

The infrastructure of an economy will influence human capital. Good transport, communication, availability of mobile phones, and the internet are very important for the development of human capital in developing economies.

6.       Competitiveness.

An economy dominated by state monopolies is likely to limit individual creativity and entrepreneurs. An environment that encourages self-employment and the creation of business enables greater use of potential human capital in an economy.


Importance of human capital

Structural unemployment.

People whose human capital is inappropriate for modern employers may struggle to gain employment. This can be seen in countries with modern economies since the rapid deindustrialization has left many manual workers struggling to thrive in a very different labor market.

Quality of employment.

In the modern economy, there is an increasing deviation between low-skilled, low-paid temporary jobs. On the other hand, high-skilled and creative workers have increased opportunities for self-employment or good employment contracts.

Economic growth and productivity.

A better educated, innovative, and creative workforce can help increase labor productivity and economic growth. Therefore, this improvement in human capital results in long-term economic growth.

Human capital flight

Globalization and greater movement of workers have enabled skilled workers to move from low-income countries to higher-income countries. This may result in adverse effects for developing economies that lose their best human capital.

Limited raw materials.

Countries with limited natural resources rely on the high-skilled and innovative workforce to add value to raw materials in the manufacturing process. This is the only way they can grow their economies.


What we leave to future generations; whether we leave enough resources, of all kinds, to provide them with the opportunities at least as large as the ones we have had ourselves.

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