Difference between Human Resources and Human Capital

Human resources and human capital are often used synonymously, but there is a considerable difference between the two terms. Human resources include all the people or set of individuals who work in an organisation and make its labour force. On the other hand, human capital refers to the competencies of the individuals who are working in any particular organisation which can be used to achieve its goals and objectives.

Human resources are converted into human capital after going through a rigorous training process which eventually assists in attaining the vision and mission of the organisation.


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    Human resources

    It consists of all the individuals who form up the workforce of an organisation. It can simply be called as the overall human potential of any organisation and its capability to get engaged into something beneficial. It is also known as manpower and labour force.

    The organisations oversee their human resources through HRM (human resource management system). HRM or HR is a system through which the organisations attract, select, train, assess and reward their employees. It helps in achieving the goals and objectives of the organisation by taking the right work from all the individuals who are working in the organisation. With the emergence of globalisation and liberalisation, the HR practices have become more complex and crucial. If the companies want to compete with their rivals, they have to develop profound HR. Besides, it assists in keeping the operations of the organisation in accordance with the ongoing labour laws.

    Human resources have greater significance as compared to the physical resources of the organisation because the former help to manage the latter to attain the targets.

    Image courtesy: gettyimages.co.uk

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    Human Capital

    It is a narrower concept which includes the competencies, creativity, knowledge, personal and professional skills of the individuals which are used by the organisations to achieve their goals and targets. It can be referred as the ability of the workforce to produce economic value for the organisation. With the advancement in the field of business administration, human capital has gained more importance as it is responsible for the economic development at both micro and macro levels.

    In today’s world, not only private, but public organisations are also emphasising on the human capital in order to develop all the sectors in the economy.

    Image courtesy: gettyimages.co.uk

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