Many public companies are struggling with plummeting stock prices, diminished sales and employee layoffs. And a number of these businesses are feeling the painful repercussions of decisions made during the economic boom, when they exercised less than stellar hiring practices to fill desperately needed positions. As a result, hundreds of positions and individuals are now considered expendable. Consequently, these organizations are now altering their view of their future strategic human capital management plans.
According to a recent report published in March 2001 from the Boston-based Aberdeen Group, a leading market analysis firm, the emerging human capital management (HCM) market will grow from $120 million in 2001 to reach $10 billion by 2004. The emerging HCM marketplace includes services and technology offerings in employment-related functions such as strategic recruiting, deployment, compensation, training, development and retention.
Why this predicted growth? While most businesses plan for sales, marketing and overall expansion, many typically fail to include a critical element in their strategic plan-human capital management.
Human capital is the wealth of talent within the workforce of an organization: past, present and future. Effective HCM strategies focus on the employee as a valuable asset to the organization. Companies must understand the need to make sure their employees feel valued and are challenged on the job, while also recognising the value they add to the bottom line. To be successful, businesses must master every aspect of managing human capital.
According to Merrill Lynch, effective HCM will be the single-most important point of differentiation for businesses in the 21st century. In fact, more than 70 percent of Fortune 100 CEOs now view human capital as a strategic part of their businesses. Without the right people to execute the business plan, a company is heading for eventual failure.
One function of the company that has been underrepresented in the executive suite is human resources. Today, HR is considered merely a cost center--the party planners and paper pushers of an organization. But in the future, HR will be viewed as having a significant role to play in boosting the bottom line.
Is it time for the Chief Human Capital Officer (CHCO)?
HR officers, in addition to their traditional responsibilities, will find themselves concerned with growing market share, improving customer service and enhancing company image. Understanding financial and business strategy issues, and forging strong relationships with other senior executives, will be essential to succeed in this elevated role.
In 2002 we will see the start of many different services and solutions offered by recruitment and staffing firms, including smaller firms building networks that will go on to win large outsourcing contracts. This will allow more HR officers to focus on strategic recruitment and human capital management. It's an exciting time to be pioneering new approaches and partnering with others.

Reg Athwal, Founder & Executive Director, HCM World, more of his work can be seen at www.ehcm.com and www.hcmindustry.com.