Human Capital Management’

Abstract: This report is prepared on the topic of ‘Human Capital Management’ which means the management of combined stock of skill, knowledge, social and personal features with the attributes of innovations to reflect the ability to perform labor force into the productive economic value. Actually it deals with the economic view of human being participating in the economic activities. It covers the social, cultural, & psychological difficulty as they face communication in the explicit or implicit economic transactions. Human capital in an organization or in a country plays a very important role in developing the economy as a whole. The main objectives of this report are as follows: To know about the business and economic role & importance of human capital management. To know about how the economic resources are transferred into Human Capital with efficient inputs of education, health, & moral value. To know about the ‘Human Resources Management’ in high performance organization To know the challenges of international business perspective of HR For the preparation of this report, firstly the management of human capital has been defined broadly with a view to making the understanding clear. Secondly, the human capital specifies how it plays role in the high performance of both organizational & international perspectives. Finally, some challenges of human capital management have been specified and some recommendations have also been mentioned for the better management of human capital. Introduction: Human capital is the stock of competencies, knowledge, social & personal goals which including creativity, the ability to perform labor in order to produce economic value. It is an economic view of the human being acting within the economics, which is an attempt to capture the social, biological, cultural, & psychological complexity as the interact in explicit &/or economic transactions. A lot of theories directly connect in human capital development to education & health care. The role of human capital development productivity, growth, & innovation has frequently been cited as a justification for government subsidies for education, job training & health care facilities. Probably it is known to all that human capital is very important for every single organization to implement its goals. The secondary sector of economy was producing much more than the tertiary sector was able to produce at the time in most country to be tangible resources, homogenous & easily interchangeable, & it was referred to simply as workforce or labor. One of the factors of production (the other being land, & assumed interchangeable assets of money & physical equipment) it is easily to perceive that land is a automatic organized natural capital & the assets in itself & human factors of production were raised form this simple mechanistic analysis to human capital in the modern financial analysis, the term “balance growth” indicate to the goal of equal growth of both aggregate capabilities & physical assets that produce goods & services. The assumption that workforces could be easily modeled in aggregate began to be challenged in 1950s when the tertiary sector, which demanded creativity, begun to produce more than the secondary sector was producing at the time in the most develop countries in the world. According to the Clark’s Sector Model for US economy (1850-2009): More attention was paid to the sectors that led to success verses failure where human management was concern. The role of leadership, talent, even celebrity was explored. Today most theories attempt to break down human capital into one or more components for analysis-usually called “Intangible”. Most commonly & important also social capital, the sum of social bonds & relationship has to come to organized along with goodwill, brad value, social cohesion, & related concepts like celebrity or fame. Sometime some talent grows into some people that are distinctive which is known as the “Intellectual capital”. It is the reflection of the social & instructional capacities, with some assumptions about their individual uniqueness in the context in which they work. Generally, these analyses acknowledge that individual trained bodies, teachable ideas, & skills & social influence or persuasion power. Management accounting is often concern with questions of how to modern human being as human capital. However, human capital is vitally important for an organization’s success (crook et at., 2011); human capital increase through education & experience. Similarly human capital is also important for the development of cities & regions. A 2011 study form the Federal Reserve Bank of New York examined how the production of universities degrees & R&D activities of educational institutions are related to the human capital. In 2010, the OECD (the Organization of Economics Co-operation & Development) encouraged the government of advanced economics to increase innovation & knowledge in production & services as an economic path to continue prosperity. Recent work has attempted to improve the linkages between education & the need of labor market by linking labor market data to education loan pricing. Justin Slay defined four types of fixed capital which is very important for the development of any organization. Among them three first capitals are very closely related to the remaining last one which specifies the management of Human Capital. Concept building of Human Capital analysis & its enhancement largely depend on the following four capital’s interaction. The four types are: Useful machines, instrument of the trade. Building as the means of procuring revenue. Important of land & The acquired & useful ability of all the inhabitants of the society. (Human Capital) Adam Smith defined human capital as follows; “Frothy, of the acquiring & useful abilities of all the inhabitants or members of the society. The acquisition of such talent, by the maintenance of acquired during his education, study, or apprenticeship, always cost a real expanse, which is a capital fixed & realized, as it were, in his person. Those talents, as they make a part of his fortune. So do they like wise that of the society to which belongs. To improve dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilities & abridges labor, which though it cost a certain expanse, repays that expanse with a profit”. “The greatest improvement in the productive power of a labor & the greater part of the skills, dexterity & judgment with which it is any where directed, or applied, seem to have been the effect of the division of labor”. Human capital is similar to “physical means of production”, e.g., factories & machines: one can invest in human capital (via education, training, & medical treatment) & one’s output depends partly on the rate of return on the human capital one owns. Thus human capital is a means of production, into which additional investment yields additional output. Human capital is substitutable, but not transferable like land, labor, or fixed capital. Modern growth theory sees human capital as important growth factor. In the economy competency compares to the capital of an organization. The introduction is explain the unique characteristics of competence (often used only knowledge). Unlike physical labor (&the other factor of production), competence is: Expandable & self generating with use: As doctors get more experience; their competence base will increase, as will their endowment of human capital. Transportable or shareable: Competency especially knowledge, can be moved & shared. This transfer does not prevent its use by the original holder. However, the transfer of knowledge may reduce its scarcity-value to its original process. For example: An athlete can gain human capital through education & training, & then gain capital through experience in the actual game. Over time athlete who has been playing for a long time will have gained so much experience (much like a doctor in the example above) that his human capital has increased a great deal. Source: http://en.wikipedia.org/wiki/Human_capital Importance of human capital: The concept of human capital has relatively more importance in labor-surplus countries. These countries are naturally endowed with more of labor due to high birth rate under the given climatic condition. These surplus human resources are more important part than the tangible capital resource. This human resource may be modifying into Human Capital with the properly providing standard education, health & moral values. The transformation of raw Human Resource into highly productive Human Resource with these inputs is the process of Human Resource Capital formation . The most perceive problem of is the scarcity of tangible capital in the labor surplus countries that they can be solve the problem by accelerating the rate of human capital formation with both private & public investment in education & health sector of their national economics. The tangible financial capital is an important instrument of promoting economic growth of the nation. The intangible human capital, on the other hand, is an instrument of promoting comprehensive development of the nation because human capital is directly related to human development, & when there is human development, the qualitative & quantitative progress of the nation is inevitable. This importance of human capital is explicit in the changed approach of United Nations towards comparative evaluation of economic development of different nations in the world economy. United Nations publishes human development report on human development in different nation with the objective of evaluating the rate of human capital formation in these nations. The statistical indication of human development in each nation is Human Development Index (HDI). It is the combination of “Life Expectancy Index”, “Education Index), & “(Income Index). The life expectancy index reveals the standard of the health of the population of the country; education index reveals the educational standard & the literacy ratio of the population; & the income index reveals the standard of living of the population. If all these indices have the rising trend over a long period of time, it is reflected into rising trends in HDI. The Human Capital is developed by health, education, & quality of standard of living. Therefore, the component of HDI, Life Expectancy Index, Education Index, & Income Index are directly related to Human Capital formation within the nation. HDI is the indicator of positive correlation between human capital formation & economic development. If HDI increases, there is high rate of Human Capital formation in response higher standard of education & health. Similarly, if HDI increases, per capita income of the nation also increases. Implicitly, HDI revels that higher the Human Capital formation due to good standard of health & education, higher is the per capita income of the nation. This process Human development is the strong foundation of continuous process of economic development of the nation for the long time. This extraordinary process of Human Capital development in generating long-term economic development of the nation can’t be neglected. It is expected that the macroeconomic policies of all the nation are focused towards the promotion of human development & subsequent economic development. Human Capital is the backbone of Human Development & economic development in every nation. Mahroum (2007) suggested that at the macro-level, human capital management is about three key capacities, the capacity to develop talent, the capacity to deploy talent, & the capacity to draw talent to elsewhere. Collectively, these three capacities form the backbone of any country’s Human Capital competitiveness. Recent US research show that geographic regions that invest in the human capital & economic advancement of immigrants who are already living in their jurisdictions help boost their short & long-term economic growth. There is also strong evidence that organizations that process & cultivate their Human Capital outperform other organization lacking human capital (Crook, Tood, Combs, Woehr, & Ketchen, 2011) Role & important of human resources: Human resources actually are deal with the issues of managing people in the organization. The human resources department is responsible for various kinds of related issues in an organization. Under the HR department’s remit are the following roles: The process of recruiting suitable candidates for the organization Identifying & meeting the training needs of existing staff Ensuring employee welfare & employee relations are positive Ensuring the working environment is safe for employees Raising awareness of current workplace legislation Handling grievances Implementing HRM policy, e.g. equal opportunities Department also curves five keys roles of the HR: Executive role: Here, the HRM department is seen as the ‘expert’ in matters relating to human resource management & makes decisions about what should be done in this area. For example, the HRM department will ensure that organizational policies are improved in line with legal requirements, will decide to produce information booklets on training, etc. Audit role: In this capacity the HR department will cheek other departments & organization as a whole to ensure all HR policies such as health & safety, training, stuff appraisal etc are being carried out in accordance with the companies HR policies. Facilitator role: In this role, the HR department cooperates & facilitates other departments to achieve the goals or standards as laid out in the HR policies of the organization. This will involve training being delivered for issues that arise in the areas relating to people. The consultancy role: In this role, the HRM department provides advice & guidance to managers at all levels on matters to do with the management of people. Service role: In this role, the hr department is an information provider to raise awareness & inform departments & functional areas on changes policy. This is most important in times of change when the organization need to make sure that it is up to date what is happing, for example, with changes in legislation on issues like opportunities, or with development s in HRM practice or 360-degree feedback.  Human Capital Issues in National Levels In many countries, the health-sector workforce is unsatisfactory, underpaid, poorly encouraged, and skeptical of decision makers' ability to prove the problems facing the health sector. Nonetheless, it is people—the managers and employees working in health—who are responsible for establishment the changes resulting from health-sector reform. A comprehensive HRD system is very important for ensuring an effective & encouraged workforce capable of contributing to the ultimate success of the reforms. In an era of health-sector reform and shrinking budgets, serving quality health services needs leadership. Leaders and managers need to have:  The ability to correctly predict human resource requirement with a view to delivering services to common the people.  A workplace whose training and education are in accordance with client necessities and with the management requirements of their activities. The capability to attribute employees to the regional areas where they are needed. Positive relationships with union officials. A workplace favorable to change. The human capital management concerns will drive national policy development relating to the training and education that the workforce requires with a view to providing necessary services to the client populations.  (Source: http://freecourseware.uwc.ac.za/freecourseware) Human Resource in International Business perspective: For example, Canadian- based companies are conducting their business in rest of the world. Huge global companies like Noranda, Labatt’s, & Molson’s have long had extensive overseas operations. Global changes like the rapid growth of demand in the pacific Rim & other areas of the world mean that business success depend on the ability of market & manage overseas. Foreign companies like Toyota, Canada is “overseas & thousand of foreign firms already have thriving operation in Canada. Companies must be managed globally, which confronts managers several challenges. First they have to cope with number of employees around the world. As too many employees in abroad, HR departments have had to tackle new global challenges. Three broad global challenges that have immerged are as follows: Identifying & developing talent on global basis. Identifying who has the ability to manage effectively in the global organization & developing these abilities. Actually dealing with the challenges the managers have to develop HR policies & procedures just for conducting global assignment. It is very important when, candidate identification, assessment, & selection. Moreover, consideration must be in cultural sensitivity, interpersonal skills, & flexibility. Cost projection. The average cost of sending an employee & family on an overseas assignment is reportedly between three & five times the employee’s pre departure salary, as a result, quantifying total cost for global assignment. Assignment letters. The assignee’s specific job requirements & associated pay will have to be documented & formally communicated in an assignment letter. Compensation, benefits, & tax programs. There are many ways in which to compensate employees who are transferred abroad, given the vest differences in living expenses around the world. Relocation assistance. The assignee will probably have to assist with such matters as maintenance of the person’s home & automobiles, shipment & storage of household goods, & so forth. Family support. Cultural orientation, educational assistance, & emergency provisions are just some of the matters to be addressed before the family sent to abroad. Challenges of International Business Perspective of HR: There are many challenges are taking place in the international business arena is the introduction of the euro, a single currency used by the European Union since 1999. That is just the tip of the iceberg. Cross cultural, technical, & language training programs will probably required. Country to country labor laws & orders are different. It is increasingly common for technology to be used to assist with global relocation. A World at Work survey found that 92% of the expatriates say that the Internet is critical to their lives, & 96% say that they used it daily. Cross cultural training, stress management, & more 5 & 80% of the global 500 corporations (the 500 largest corporations in the (work) use their Web site for global recruiting.6 Second, sending employees abroad & managing HR globally is complicated by the nature of the countries into which many firms are expanding. Employers today are not just transferring employees into the relatively familiar industrial nation. (Soyrce:http://wps.prenhall.com/wps/media/objects/728/745520/chapter13.pdf) Inter-country differences: How Inter-country differences Affect HRM to a large extent, companies operating only within Canada’s borders have the luxury of dealing with a relatively limited set of economic, cultural, & legal variables, as Canada is basically a capitalist competitive society. A company that is operating multiple businesses in abroad is generally not blessed with such relative homogeneity. For example, minimum legally mandated holiday may range from none in the United Kingdom to five weeks per year in Luxembourg. Another serious issue is that in Colombia kidnapping of foreign managers is commonplace. The management of the HR function in multinational companies is intricate by the need to adapt HR policies & procedures to the differences among countries in which each subsidiary is based. Some essential inter-country differences: Cultural factor; Wide ranging from cultural differences from country to country demand corresponding differences in HR practices among a country’s foreign subsidiaries. For example, Japanese workers are worked lifetime in the same organization in return for their loyalty. On the other hand, USA worker are interested to take higher salary advantages in market they can easily give up they actually not loyal to job. Labor cost factor; Differences in labor costs may produce differences in HR practices. For example, hourly compensation costs in USA. Dollars for production workers in manufacturing recently ranged from a high of $25.56 in Germany to a low of $2.65 in Mexico. Again, Portugal workers average work hours 1980 annually, while worker in Germany average 1648 hours. Employees in Europe normally receive four weeks of vacation, & compare with two or three weeks in Canada. Industrial relation factor; Industrial relations & specifically the relationship between the workers, the union, & the employer very form country to country & have enormous impact on HRM practices. For example, in Germany employees have legal right to a voice in setting company policies. Selecting international managers: There are common traits which managers to be assigned domestically & overseas will obviously shares. Wherever a person is to be posted, he or she will need the technical knowledge & skills to do the job & the intelligence & people skills to be successful manager, for instant, foreign assignments make demands on expatriate assignees that are different from what the manager would face if simply assigned to a management post in his or her home country. There is the need to cope with a work force & management colleagues those cultural inclinations may be drastically different form one’s own & the considerable stress that being along in a foreign land can bring to bear on the single manager. Training & Maintaining International Employees: Painstaking screening is the first step in ensuring that the foreign assignee is successful. The employee may than require special training, & additionally, international HR policies must be formulated for compensating the firm’s overseas managers & maintaining healthy labor relations. Orienting & Training Employees for International Assignments: When it comes to providing the orientation &training required for success overseas, most North American firms provide little or no systematic selection & training. While company presidents & chairpersons say that international business is growing in importance & requires employees to be firmly grounded in the economics & practices of foreign countries, few of their companies actually provide such overseas-oriented training to their employees. Level one training focus on the impact of cultural differences. Level two training focuses on the attitudes, &aim at getting participants to understand how attitudes (both negative & positive) are formed. International compensation: The whole area of international compensation management presents some tricky problems. On the other hand, there is certain logic in maintaining companywide pay scales & policies so that deviational marketing directors throughout the world are all paid within the same narrow range. This reduces the risk of perceived inequities & simplifies the job of keeping track of disparate country by country wage rates. The balance sheet approach: The most popular form approach to formulating expatriate pay is to equalize purchasing power across countries, a technique known as the balance sheet approach. The basic idea is that each expatriate should enjoy the same standard of living that he/she would have had at home. Four main home-country groups of expenses, Income tax, housing, goods & services, &reserve are focus on attention. Incentives: One international compensation trend is the use of long term incentive pay for overseas managers. MN companies are formulating new long term incentives for overseas executives using performance based long-term incentive plans. International EAPs: EAPs are going global, helping expatriates to take care of their mental, which is often affected by the stressful relocation process. The approach is to proactively contract employees before departure to explain the program’s services, than about three month after arrival families are contacted again. During this time, they have usually run into some challenges form culture shock & will greeting some assistance. Encouraging Human Resource Leadership at the Organizational Levels  Every organizations treat HRD in a different style. Human resource leaders connect all elements of human resources to create one, integrated HRD system. When an organization’s leaders adopt this type of integrated system, the impact on organizational performance can be profound. In supporting human resources by providing it a great and strategic role, a person, as a manager and a leader, are also sending information to all employees that the organization will treat them fairly & must respect their contribution to its success.  Human Resources Management in High Performance Organization: Human resource is very important for every competitive organization. Without well established Human Resource Management, no organization doesn’t go ahead & pick up the organizational goals. To maintain smooth HR in an organization managers take various kinds of techniques, they are as follows; Job analysis: A systematic ways of collecting & recording information about jobs within organization is known as job analysis. Forecasting HR demand & supply: After managers fully understand the job to be performed within the organization, they can start planning for the organizational future HR needs. They start assessing trends in past HR usage, future organizational plans, & general economic trends. Assessment trends in: External labor market Current employees Future organizational plans And general economic trends Replacement chart: For every high performance oriented organization, mangers plan for specific people & positions. The technique most commonly used in the ‘replacement chart”, which list each essential managerial position, who occupies it, how long he/she probably stays in it before moving on, & who is now qualified or soon will be qualified to move into the position. Employee Information System: For that high performance organization, promotion & transfer are taking place with the help of employee’s information system, where’s information about employee’s education, ability, skills, working experience, & career appraisal. Matching HR supply & demand: Having informed of future demand & internal supply, manager can make plan that they predict shortfall or overstuffing. If there is shortfall, they can be hired new employees, training the existing, convinced to stay on, & enhanced labor friendly activities. If overstuffing is expected to be a problem, the main options are transferring the extra employees, not replacing anyone who quite, encouraging early retirement, & laying people off. Recruiting Human Resource; Recruiting human Resource is a complicated task. It is a process of attracting qualified persons to apply for job that are opened. Internal recruiting: Considering the existing employees for the higher level post of the organization, as it is encouraged the employees to do better for the organization. External sources; Hiring people from outside of the organization is external source of recruiting. Selecting Human Resource: Once the recruiting process attracted the applicants, the next step is to select whom to hire. The selection process is a step by step ways of finding best one for the organization. The ways or procedures are as follows; Application blanks: The first step in the selection process is asking the candidate to fill out a blank application. Application blanks are an effective method of finding information about the applications, previous work history, educational background, & other job related demographic data, such as gender, religion, age, & national identity. Interview: Although it is a popular form of selecting device, interviews are sometime providing poor ideas about the applicant’s future success. Assessment centers: Assessment centers are a popular form of current employee’s promotion. A typical center lasts two or three days, with group of 6 or12 persons participating in different types of managerial exercises. Centers may also include interviews, public speaking, & standardized ability test. Other technique: Organizations also use other selection techniques depending on the circumstances, polygraph tests once popular, now declining popularity. Now organizations & applicants both want to take physical exam. Organization also using drug test, for example, applicants for nuclear power plant would likely be tested for drug use. Developing HR in organization: Regardless of how effective a selection system is however, most employees need extra training if they are grow & develop in their jobs. Evaluating their performance & feedback are also essential. Training & development: In HRM, training usually refers to operational & technical employees how to do the jobs for which they were hired. Development is teaching managers & professionals the skills needed for both present & future jobs. Assessing training: The first & for most step in improving a training plan is to determine what needs exist. For example, if the employees don’t know how to operate the machineries important to do their jobs. As training programs are being developed, the managers should set up specific goals what participants are to learn. Common training methods: A various range of training methods are available, taking a method depends on many considerations, but perhaps the most important is training content. When the training content factual material (such as company rules or explanations for how to fill out firms) assigned reading, programmed learning, & lecture methods work well. Evaluating of Training: Training & development programs must be evaluated. Typical evaluation approaches include measuring one or more relevant criteria before & after the training, & determining whether the criteria changed. Evaluation measures collected at the end of training easy to get, but actual performance measureds collected when the trainee is on the jobs are more important. Trainees may say that they enjoy the training. Performance appraisal: Once employees trained & settled into their jobs, one of management’s next concerns is performance appraisal. Performance appraisal is a formal assessment of how well employees are doing their jobs. Employee’s performance is evaluated for various reasons. It is important for validating section devices or assessing the impact of training programs. Second reason is administrative- to aid in making decisions about promotion, appraises, & training. Still another reason is to provide feedback to employees to help them improve their present performance & future careers. Common Appraisal: Two basic appraisal methods, objective method & special performance test. Objective method includes actual output, scrap rate, dollar volume of sales. It is a bias method of evaluation. Special performance appraisal test in which each employee is assessed under standardized condition this kind of appraisal also eliminates appraisal bias. Judgment methods including ranking & rating techniques are the most common way of measuring performance. Ranking & rating compare direct with one another & order them form best to worst but it is very difficult for large groups. Errors in Performance Appraisal: Errors & bias can occur in any kind of rating & ranking system. One common error is recencys error- the tendency to base judgments on the subordinate’s most recent performance because it is most easily recalled. Halo error is allowing the assessment of an employee on one dimension to “spread” to rating of that employee on other dimensions. For instant, an employee is outstanding in quality of output; a rater might tent to give her or him race, sex, age discrimination, intentionally or unintentionally. Performance Feedback: The last step in most performance appraisal is giving feedback to subordinates to their performance. This is generally done in a private meeting between the person being evaluated & his or her boss. (Source: Management, Ricky W. Griffin, 9th edition) Making a commitment to Human Resources    Establishing HRD systems, policies, and procedures needs a long-term commitment by an organization’s managers and leaders. Generally, it requires willingness for taking the time to involve employees in developing and maintaining these systems and applying them consistently and fairly. A responsive, participatory system that is flexible enough to cope with the changing needs of the organization over time that will help one be more effective at meeting the needs of both client populations and employees.  Managers and leaders should view themselves as human resource champions. They should take responsibility for creating links between the public and private sectors and with the different organizational actors who affect human resource decisions, such as unions, registration bodies, and universities. Developing and maintaining a fair, equitable, and effective HRD system that provides opportunities for staff development, among other things, will motivate staff and increase their level of job satisfaction. This can result in improving the quality of services. HRD should be an important part of long-term strategy to make your organization more sustainable. Ultimately, an HRD system is the responsibility of all employees—leaders, managers, service delivery, and administrative personnel. Human resource leaders create the organizational and management structure for HRD, and managers and employees at all levels implement the HRD system. A human resource partnership between senior managers, supervisors, human resource professionals, and staff is what makes an HRD system work.  Summary of Findings This analysis exposed that newly professional hires were well organized to perform their activities. Employments were designated to co-operate the business plans and most organization had goodwill among candidates the interested places of work. The outcomes showed that the respondents agreed the primary role of managers was to teach & monitor employees. The organizations were flexible in work times & arrangements & that the organizations give importance employment safety. The outcomes directed that pay related to firm`s business strategy. The Pearson correlation (derived from a recent study of role of HR department & management, 2012) represents that there was a low positive correlation of 0.102 between turnover growth and recruitment excellence as a human capital management practice. This analysis also examined that recruitment excellence was negatively correlated with return on assets (-0.055).This analysis examined that Collegial and flexible work place had a positive correlation with turnover growth (0.023) and also with return on asset. Communication integrity was also examined to have a negative correlation with turnover growth but a positive correlation with return on assets. Rewards and accountability was positively correlated with turnover growth but negatively correlated with return on assets. Conclusion This analysis attempted to fix up the human capital management practices adopted by the business organizations. It was cited that the most human capital management practices were in employment excellence, flexible and favorable workplace and performance and accountability. The lowest used practice was via integrity. So it can be terminated that most organizations practice human capital management to a medium degree. This analysis also attempt to set up the relationship between human capital management practices and firm performance. The outcome specified with the exception of communication integrity, other human capital management practices had a positive influence on turnover growth. In addition, recruitment and performance were negatively related to return on assets while flexible and favorable work place & communication process had positive correlation with return on assets. It can be specified that human capital management practices normally have a positive impact on performance as measured by turnover growth and return on assets. Tips & Suggestions: The outcomes of the analysis are attractive in a number of ways but especially due to the fact that the relationship between human capital management practices had no important impact on performance. As such, the analysis provides the following recommendations:- There is need for organizations to take more steps by improving the human capital management practices as the scores are still in the lowest level. This can assist in developing the effect that a human capital management practice has on performance. Interaction is a great problem in many organizations. There is necessity for management to take serious evaluations that will aid enhance the interaction between top management and other employees. This communication gap between top management and other employees have to be shrunk by employing more communication measures. This can be completed by means of rigorous training and workshop for managers and employees. References: Management, Ricky W. Griffin, 9th edition http://en.wikipedia.org/wiki/Human_capital Fundamentals’ of Human Resource Management by David A. DeCenzo & Stephen P. Robbins, Eighth Edition, 2009-2010 Organizational Behavior by Keith Davis, 12th Edition, 2011-2012 Economic Development by Michael P. Todaro & Stephen C. Smith http://wps.prenhall.com/wps/media/objects/728/745520/chapter13.pdf International Business- Environments and Operations by Daniels, Radebaugh, Sullivan; 12th Edition, 2011-2012