Business management is essential in determining the organization’s success. It is the process followed by a firm to achieve its goals. Additionally, effective business management is necessary to enhance optimum resource utilization, cost minimization, the establishment of a sound organization, and a firm’s prosperity. However, there are various business processes, including developing and managing products and services, marketing and selling products and services, managing customer service, developing and managing human capital, and managing information technology. This paper will look at Dairy Farmers of America Inc., a company that manufactures various dairy products, including dairy ingredients, ice creams, butter, cheese, and fluid milk. However, this paper’s main focus will be on developing and managing human capital, with one of the firm’s business processes.
Inputs and Outputs of Developing and Managing Human Capital
Similar to any other asset in the organization, it is essential to consider the rate of return on investment (ROI) while developing human capital. Human capital investment is the amount of money the organization uses to create human capital. This development process includes selection and recruitment, compensation, training, and development, etc. (Afiouni, 2013). Analyzing human capital is another crucial step in human capital development, as it helps in improving it.
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While developing human capital, a firm must ensure a transfer of knowledge to the employees. This knowledge transfer is essential in enhancing the abilities, competencies, and skills of human capital. Subsequently, the firm must evaluate its human capital’s development. Using the 5 C’s: Compliance, Customer Satisfaction, Culture Management, Contribution, and Cost Control, is essential to enhance evaluation effectiveness (Afiouni, 2013). Once the firm has developed the necessary human capital, it has to manage the attained asset effectively to ensure an increase in performance. Human Capital Management systems’ essential features include time and attendance, payroll, performance management, and culture connect.
Roles of Developing and Managing Human Capital
There are various roles involved in the process of developing and managing human capital. Recruitment and selection, the process of identifying the job need, defining the job holder’s necessities and the position, advertising, and selecting the most qualified individual for the job, are some of the roles in question. The first step for the recruitment and selection process is advertising for the position. Secondly, the firm managers have to screen the resumes to eliminate the applicants who don’t meet the required qualifications. Interviewing qualified applicants is the next step. The questions asked in this stage should mostly focus on the capabilities needed for the job. Then, an assessment to evaluate the performance of the interviewed individuals should be conducted. A job shadow, which indicates if the candidate is an excellent cultural fit, is the next step for this process. Consequently, a reference check, essential in assessing the applicant’s capabilities, is conducted (Nathan, 2018). Lastly, the job is offered to the most qualified candidate.
Additionally, training and development is another role in developing and managing human capital. This organizational activity is aimed at improving employees’ performance. Training teaches employees specific skills, while development enhances workers’ management and personality skills. Since this process brings positive changes in the employees’ attitudes, skills, and knowledge, it should be continuous. To ensure that the training is sufficient, the trainer should first create a plan to determine what employees should learn. Then, regular training sessions should follow. Hosting frequent training sessions help maintain knowledge and skills (Nathan, 2018). Also, it is an excellent technique of teaching advanced skills and notifying employees of various job-related changes. Highly skilled employees can be used as trainers.
Human capital analysis is also a vital role in developing and managing human capital. This analysis includes person analysis, which refers to the employees’ skills. Also, it has operational research, which refers to the functional outputs such as services, goods, sales, and workers’ behavior. Organizational analysis is another part of this analysis (Nathan, 2018). It helps in identifying corporate objectives, limitations, constraints, and strengths.
Evaluating human capital development is the last role in this process. For practical evaluation, it is crucial to consider the 5 C’s. Compliance is essential in ensuring that all human resource initiates, including human capital development, comply with legislation and laws. Customer satisfaction, referring to the employees subjected to the developmental efforts, is crucial in evaluating the process. Likewise, culture management is vital since it affects the workers’ attitudes, which affects their behavior in turn (Nathan, 2018). Human capital development should be efficient in terms of cost. Therefore, it is crucial to consider cost control through analyzing, assessing, and evaluating development needs, organizational strategy, and workers to capitalize on expenditures. Lastly, the firm should assess if the developmental activities are contributing to the organizational goals.
The Effectiveness of the Current Process at Dairy Farmers of America Inc.
At Dairy Farmers of America Inc., the process of developing and managing human capital is relatively effective. Most employees in this organization claim to be satisfied with their job. Investing in staff professional development is essential in increasing employee satisfaction. Similarly, providing career advancement opportunities is critical in improving workers’ retention rates. Dairy Farmers of America Inc. has a relatively high employee retention rate. Also, since the company started investing in human capital, its ROI has moderately increased. According to Weygandt et al. (2018), to calculate the human capital’s ROI, the formula used is:
Conclusively, such success demonstrates the effectiveness of developing and managing the human capital process.
The Cost of Developing and Managing Human Capital
Although the cost of developing and managing human capital at Dairy Farmers of America Inc. is relatively high, it has dramatically improved its return on investment. Due to the high employee retention rate, the company doesn’t spend a lot of money on the recruitment process. However, the average employee makes about $44,156 per year. The firm has over 6,000 employees, making their annual salary of approximately $264,936,000 (Dairy Farmers of America, 2020). Other developing and managing human capital costs for this organization include training fees. To reduce this cost, the company uses Dairy University to offer online training and job enhancement classes. Consequently, the workers get an opportunity to grow, while the organization spends less on conditioning.
Improvements for Management Consideration
Although the Dairy Farmers of America Inc. is doing relatively well, it needs to make a few improvements for management consideration. Efficient communication is one of the business challenges experienced in this organization. There is a communication breakdown between top-level management and other employees (Dairy Farmers of America, 2020). As a result, the company should evolve its technologies to work cohesively. Besides solving the communication problem between the management and employees, developing their technology will also enhance communication efficiency between the company and its customers.
References
Afiouni, F. (2013). Human capital management: A new name for HRM? International Journal of Learning and Intellectual Capital, 10(1), 18. https://doi.org/10.1504/ijlic.2013.052081
Dairy Farmers of America. (2020). Dairy Farmers of America Overview . Get the job you really want - Zippia. https://www.zippia.com/dairy-farmers-of-america-careers-20864/
Nathan, A. (2018). 7 key steps for better training and development programs . SHRM. https://www.shrm.org/resourcesandtools/hr-topics/organizational-and-employee-development/pages/key-steps-for-better-training-development-programs.aspx
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2018). Accounting principles . John Wiley & Sons.
