HUMAN CAPITAL STRATEGY: HARNESSING THE ORGANIZATIONS COMPETITIVE ADVANTAGE.

This descriptive paper looks into the impact of human capital strategy on organizational performance. To better understand the role of human capital strategy to human resource management as a function, the distinction between human resource and human capital are viewed in the context of human resource management (HRM) and human capital management (HCM) respectively. An in-depth literature review was conducted to examine both the convergent and divergent elements between HCM and HRM. Various literatures suggest that both HCM and HRM aim to help the organization achieve its objectives and gain competitive advantage. However, HCM is more strategic in nature for it takes into account the present needs of the company at the same time the effects of present actions to the future of the organization. This is not to say, however, that HCM should replace HRM. HCM complements, supports, and strengthens HRM. Both are concerned with the process of people management. In HCS, human resource management practices are still necessary. These practices, however, become more strategic in HCM. It can be said then that HCM compensates for what HRM lacks to guarantee that the organization can fully harness its competitive advantage. Consequently, human resource management as a function will remain relevant even upon the execution of a human capital strategy.