Human Capital vs. Human Resources

April 7, 2023

By viewing employees as capital that is required to sustain and grow a business, rather than expendable human resources, companies will develop a culture that values employees and thus drives retention.

As shared in an article from Harvard Law School Forum on Corporate Governance, “Over 20 years ago, McKinsey penned a famous piece called the ‘War for Talent,’ which argued that corporate success in the dawning information age would hinge on a company’s ability to attract, retain, and develop the most talented members of the labor force. The concept that high-performing talent is both scarce and critical to performance triggered a cottage industry of professionals and specialists dedicated to developing ‘strategic’ human resource programs that position companies to ‘win the war for talent’ and serve as a competitive advantage. Those efforts are broadly referred to as human capital management (HCM).”

In 2021, McKinsey interviewed European CHROs, and a key finding was the shift to “people-centric policies to help them attract and retain talent.”

The study found that CHROs were focusing on four areas:

  • Engaging more deeply with employees
  • Allowing employees to bring their whole selves to work
  • Spreading decision-making across the organization
  • Act as human capitalists

These areas of focus are important to consider in relation to performance management technology. While many eliminate the human element and focus strictly on employee assessments, the Truvelop app takes a comprehensive approach to performance management that focuses on the manager-employee relationship.

Evaluations are an important part of the tool, but they aren’t the only part. Evaluation without context is useless, and the fewer employees feel engaged, the more disgruntled they become which leads to turnover.

Unfortunately, many managers do not know where to begin when it comes to coaching employees beyond the evaluation process. With the app, managers are able to see each employee’s score and are provided with tips for how to engage the employee based on that score. Managers are also able to engage with employees on an ongoing basis, providing encouragement and recognition for successes big and small, and motivation towards goals. The tool fosters two-way communication so employees can respond to evaluations or comments from managers, or even request an evaluation in real time.

With all of the data in one platform, managers can easily assess their human capital and see where there may be gaps or opportunities. This shifts the performance management mindset from a one-sided evaluation without context to an evolving approach to ensuring employees have what they need to succeed and ultimately impact the company in a positive way.

Contact us today to learn more about our modern approach to performance management and development and how it solves for retention. Don’t just take our word for it, see what our Customers have to say.