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What is different in human capital management? The necessity and advantages of a new philosophy for human resource departments

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  • Isabell Welpe
  • Sylvia Rachbauer

Abstract

In today's 'knowledge economy', it is increasingly recognised that employees are becoming the distinctive asset for organisations. As a consequence, traditional Human Resource Management (HRM) is no longer adequate for creating as much value as possible for the company, whereas the new philosophy of Human Capital Management (HCM) offers a number of advantages. While HRM considers employees as resources, which are cost intensive and can be used up, HCM sees employees as investors, who invest their human capital into the company – similar to financial capital investors. Consequently, anything that concerns the employees of an organisation should be adjusted to this philosophy, in particular the structure of HCM, the tasks, responsibilities and behaviour of both HCM people and business leaders. We show that a knowledge company can greatly benefit by taking HCM seriously. It will create more value both for the company and for (performance-oriented) employees.

Suggested Citation

  • Isabell Welpe & Sylvia Rachbauer, 2006. "What is different in human capital management? The necessity and advantages of a new philosophy for human resource departments," International Journal of Learning and Intellectual Capital, Inderscience Enterprises Ltd, vol. 3(4), pages 421-437.
    • Handle: RePEc:ids:ijlica:v:3:y:2006:i:4:p:421-437
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