The authors of this book describe, successfully in my opinion, the strategic role of human resource practices in company administration and management. Building on their experiences as business consultants employed for one of the largest human resources/accounting firms worldwide, they illustrate in detail the notion of human capital. According to the authors “Human Capital sees people not as a perishable resource to be consumed but as a valuable commodity to be developed people become more valuable when we invest in them. Moreover we can measure returns on that investment ” (pp. 3‐4). Subsequently, this book is primarily directed to personnel specialists and managers who wish to increase the role of human resource management in organizational decision making. From an academic point of view it does not add too much to the well‐established and well‐researched notion that investing on human resource management is well worth the effort, both in a micro and macro‐economic level. However, from a practitioner′s viewpoint this book may prove to be an extremely useful guide, describing the steps taken by Arthur Andersen consultants in applying the principles of human capital in their client organizations.
The book consists of 12 relatively brief and easily read chapters. The first two chapters provide the necessary background information to the concept of human capital, without providing an extensive literature review of the subject, as you would expect from a book aiming mainly to practitioners. Chapter 1 serves as a brief introduction to the topic, providing the necessary working definitions, along with the management gaps to which their model aims to respond. The focus of the second chapter is quite innovative, responding to the necessity of the 1990s to address issues in a globalized context. Bringing together examples from Asia, Europe and the USA, the authors try to strengthen their position of investing on human resources, in order to improve organizational effectiveness.
Chapter 3 is the first chapter from a series of chapters describing the five stages of the authors′ model, called human capital Appraisal . The chapter provides numerous examples and questions the HR specialists should be aware of when implementing the human capital approach. The five stages are the clarification, assessment, design, implementation, and monitoring of human capital within the following five areas: recruitment‐retention‐retirement, rewards‐performance management, career development‐succession planning‐training, organizational structure, and human capital enablers (“systems for improving legal compliance, employee and industrial relations, communications, and information flow ”, p. 43). The clarification stage is dealt in detail in Chapter 4. It aims to simplify business context and HR issues while beginning a companywide communication and involvement process (p. 49). The authors address a series of questions necessary in clarifying human capital Appraisal within the five areas of human capital management mentioned earlier.
Chapter 5 deals with the issue of assessing the fit, cost and value of human capital programs. Using an assessment checklist for the five areas of human capital management, the authors show how to plot the cost‐value of the human capital initiatives, as opposed to the strategic fit of the organization in a two‐dimensional matrix. In Chapter 6, the authors go through twelve steps necessary to design human capital programs. Assuming that these programs will be mainly initiated by large firms with the appropriate resources, they describe the top‐to‐bottom stages of devising such a model, providing detailed information for the tasks involved in each step. Chapter 7 deals with the implementation of human capital initiatives suggesting seven tools for facilitating it and making it more effective. The effectiveness of these programs is assessed during the final stage of monitoring, which is discussed in chapter 8. The authors suggest that, although overlooked, this is the most important stage of the process, because it provides the necessary information in evaluating and feeding back the results of the program.
The following three chapters go more fully into the questions of fit, cost and value mentioned earlier. Chapter 9 deals with the assessment of the human capital fit, with the organization from a strategic management perspective. Chapter ten discusses the organizational costs of implementing human capital initiatives, discussing both direct and indirect costs as well as opportunity costs. Finally, Chapter 11 discusses in detail the most important question of these programs. Are these programs worth the effort, the time and the resources allocated? The authors obviously respond affirmatively to this question, arguing that when the necessary steps have been followed, investing in human capital programs will return the investment both in a micro and a macroeconomic level. The last chapter of the book defends the authors′ approach by providing numerous case studies of companies across the globe which invested successfully in human capital within the five areas of human resources management.
The main aim for the authors of this book was to boost the investments in human capital within the practitioners′ community. As an academic, and I am sure that a lot of colleagues will agree with me, I cannot say that I found it useful for my research in human resource management. However, as an academic‐soon‐to‐be‐practitioner, I found it very useful providing numerous examples and case studies for the advantages of allocating additional resources in order to improve personnel practices. These examples were given in a language clearly understood by CEOs, marketing/finance manages, accountants, and any other people not involved in human resources. From this point of view, it is a very useful and comprehensive book, easily read by anyone involved in management practices.
