Investing in Core Human Capital and Its Effect on Operating Performance

The purpose of this paper is to identify the core human capital in the organization and find out the effect of investment in core human capital to firm operating performance. First, we use an integrated structure based on the theory that proposed by Flamholtz (1999) and the architecture that constructed by Lepak and Snell (2002), to identify the core human capital in a textile company. Second, by using the investment in core human capital, we verify the validity of the structure and find out the relationship between human capital investment and company performance. There is little human resource management research that focus on core human capital investment and its utility to firm performance. Our result shows that human capital can be identified by strategic value and uniqueness. Also, the strategic value and uniqueness of core employees are the higher than all other employees in the corporation. Third, the investment in core human capital has significant influence on company performance.