If a company does not fully understand the cost of its human capital, it leaves a large amount of expenses unmanaged. In order to fully understand the cost of human capital, direct and indirect labor costs need to be integrated.
Integrating direct and indirect labor costs creates a more complete idea of human capital expenses. A human capital supply chain (HCSC) management program requires technology across "organizations, business units, and suppliers" to work together.
There are some discrepancies between human resources and procurement's points of view that make collaboration difficult. While HR feels that they are responsible for making sure that the company does not liken people to "widgets," procurement does not want to deal with the messiness of emotions.
HR and procurement need to compromise on their perspectives in order to incorporate efficient financial management on workforce planning. In order to be successful, the organization must become a team that speaks a common language and shares the same goals.
Top executives need to become more active in managing their workforce. The workforce is almost always the company's greatest asset and cost and should be managed accordingly.
In order to make the HCSC efficient, a company must understand their total cost of human capital. Even small adjustments in the HCSC can create meaningful savings for a company.
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