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What Is a Director of Human Capital?

By K. Kinsella
Updated: Mar 03, 2024

Employees are sometimes referred to as human capital because like other assets, employees are regarded as income generating assets. The director of human capital is responsible for the recruitment, training and management of employees. In many instances, the job duties of the director of human capital overlap with the duties of human resources (HR) personnel. Despite some obvious similarities, HR personnel are mainly concerned with employee relations whereas the director of human capital is concerned with maximizing the firm's return on its investment in its workforce.

The human capital director develops the staffing model for a business or organization. Directors carefully review departmental expenses and production processes before deciding how much human capital to allocate to each division of the firm. Aside from allocating employees, the director must also decide how much money to allocate each department to cover wages and employee benefits. A director may decide to allocate the majority of the firm’s resources to the most critical divisions of the company. During recessionary periods, the director may have to make decisions about laying off large numbers of employees in order to reduce the upfront cost of human capital.

To maximize efficiency, a director of human capital must look for ways to streamline company operations. When employees in separate departments perform some of the same types of functions, the director may decide to assign all of those responsibilities to one of the departments so that the workforce in the other department can be reduced. Additionally, local laws, taxes, and utility expenses may mean that it is more cost-effective for a firm to employ large numbers of workers in one region rather than another area where operating costs are higher. The director must ensure that suitably qualified candidates can be found to fill job positions before operations are moved from one area to another region.

Over the course of time, business needs and technological advancements mean that the job duties performed by most employees are subject to change. The director has to liaise with departmental managers to ensure that job descriptions for vacant positions accurately reflect the nature of the work. Companies waste time and money if job descriptions contain inaccurate information because large numbers of ill-qualified candidates may end up being interviewed for these jobs. Additionally, technological advancements make certain types of positions obsolete so the director must make sure that the firm takes advantage of these advancements and reduces its human capital costs.

The human capital director must make arrangements for new employees and existing workers to receive any necessary on-the-job training and instruction. Directors must decide whether it is more cost-effective to hire and train employees as opposed to hiring already experienced personnel. Additionally, the director must decide whether it is more cost-efficient to employ in-house trainers rather than contracting independent contractors to lead employee training seminars.

Most of the time, human capital directors have an undergraduate degree in business administration or a related field. Some firms require directors to have an advanced degree in human resource management or business. Typically, most directors work in HR or management for several years before transitioning into the director position.

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