The Effects Of Human Capital On Organizational Performance

In the era of knowledge economy, human capital is a crucial factor for companies to maintain and create their sustainable competitive advantages and then improve organizational performance. Therefore, the main idea of this research focuses on the organizational performance that will be influenced by the human capital.However, the company that possesses the best human capital will not always won in the severe competition, because Human capital management (HCM) as the middle variable between human capital and organizational performance is the final determinant. That the way a company carries out management activities and then effectively manages human capital and brings them into exercise to achieve the organizational operating goal is the basic purpose of this research.Based on resource basis theory, competition advantage theory and human capital management perspective, this study examined the relationships between human capital and organizational performance. After reviewing the relevant literature, the effective management practices of human capital were concluded. Human capital was divided into several dimensions, including working time, education and training investment, to describe the stock of human capital in an organization. And also do research into the relationship between human capital and organizational performance.Results showed human capital has positive effect on organizational performance, that is, the more an organization has human capital, the better an organization performs;In addition, there is also a positive relationship between the whole HCM measures and organizational performance;In the next place, this research finds out human capital influences organizational performance through the mediate effect of HCM, that is, with good HCM, human capital can exert the function and then improve organizational performance. On the contrary, with bad HCM, human capital cannot exert the function through systematic and effective measures, so had no distinct effect on organizational performance.Finally, human capital value-chain management has more excellent performance than previous HRM on the accumulation and development of human capital and better organizational performance. If an organization were to implement the advised HCM practices that consist of selective staffing, comprehensive training, developmental performance appraisal, incentive compensation system, and broad work system, it would manage its human capital effectively and then achieve the goals.