An organization can be  only be as good as its people.  All the staff who  make up an organization’s human capital are not just essential, but are critical to its success.  The term “human capital” was  invented by economist Theodore Schultz  in the 1960s to reflect the value of human capacities and an economist named Gary Becker, popularized the term.  Schultz considered   human capital as equivalent to other form of capitals, which can be invested in order to get back in the form of  benefits.

Human capital refers to the total capabilities of employees in a company including education, experience,  knowledge, attributes, skills and  competencies that can be used to produce an economic value.  The concept of human capital assumes  that not all labor is equal and that the quality of employees can be improved by investing  in them; the education, experience and abilities of employees have economic value for employers and for the economy as a whole.
Human capital is typically managed by an organization’s human resource  management  department. The functions of a typical HR department includes recruitment, selection, training and development, compensation, safety and welfare of the human resources of the company.  Now, the HR people are expected to act as strategic business partners of the company where they share the goals and objectives of the company and  take actions  for enhancing employee skills and training employees to meet business demands which is achieving the objectives profitably. To become successful  strategic business partners,  the HR people must adopt the concept of Human Capital Development which is a process of directing, investing in, and developing an organization’s workforce as per the requirements for the accomplishment of organization’s business.

Various internal and external training programmes are one of the oldest form of human capital development.  Today, there are various  other courses of action companies can adopt to develop their human capital such as Executive Development Programmes, Professional Mentoring and Coaching and specifically tailored or custom programs for certain companies.

To reap benefits from various Human capital development initiatives companies must have a need assessment of the skills and competencies to achieve the goals of the organization.  To  achieve their goals,  organizations may adopt a specific strategy  depending upon their strength, weakness, opportunities and threat analysis results.  For each different strategies being adopted,   different set of skills and competencies are required.  For instance,    there are four types of market dominance strategies that a marketer will consider.  They  are market leader, market challenger, market follower, and market nicher.  The challenges  faced by  these organizations differ and so are the skills and competencies required to manage these challenges.  And, the HR people must assess the skill requirements on the backdrop of the specific strategy adopted and look for people who are in possession of such required  skills while staffing the company positions.  The HR department has to analyse the gap in the human capital requirements of the company and the existing human capital of the company.  Based on these HR people must be able to figure out the missing requirements and  take measures to develop that abilities and skills in the companies human capital.