The importance of human resources is to Improving the effectiveness system of labor markets performs its allocative function. The setting of the goals is a part of the logical process of planning any activity. Educational policy has helped us toward the goal of manning our industrial establishment, but it has also help us toward the goal of rounded achievement and the advancement of individuals. For some people they might describe this goal as “improving the quality of the labor force.” It is important to recognize that a society can overinvest in education, training and health care as well as underinvest. This goal actualy to improve the funtioning of labor markets and helping to train the labor force. The quality of human resources can be upgrade and increases because we know that human resources can be developed compared to the natural resources which is high level of risk. To reinforce the fact today industrial sector and global economy are no longer looks for a natural resources but they are looking for a educated human resources with high of skilled. So that the quality of human resources obtained through investment in human resources is the most important asset for a nation, especially for nations that are short of capital and actual physical resources.
Human resources also known as human capital is one of the fundamental towards developmental process. This importance of human resouces because human capital will lead to the economic growth such as education, training, better health facilities, sanitation, water supply and shelter are essential sources of increasing labour productivity. Natural resources in whatever form will not on their own contribute to the development of the world to the extent that can be seen today. It is clear that the human factor plays a decisive and active role in economic and social progress, while at the same time it becomes the ultimate beneficiary of this development. For the information, human resources development is evidently much more than an instrument for development because it is ultimate objective of the development process itself. The concept of human resources development assumes that human beings are a great asset in the organisation.
The function of human resource management refers to the work and the work done by a small or large organization in order to provide and coordinate human resources. These functions include a variety of activities that give significance to all parts of the organization. There area six functions of human resource management, namely human Resource Planning, Human Resource Development, Compensation and Faclities, Health and Safety, Industrial Relations, and Human Resource Research. Human capital has been argued to be mostly important for young organizations.
Young organisations suffer from the effect of newness and challenge, which refers most of the young organisations have a higher propensity of comparing them with older and more established enterprises, especially when implementing new projects, and development plans. The main reasons is less experience and skill shortage. The liability of newness is partially due to skill gaps and lack of information and therefore, human capital can reduce the liability of newness. As example, young businesses are mostly mostly confronted with many different and potentially new issues and tasks. For the existence in the business they have to respond to those situations as well as may require immediate decisions and actions. Routines and strategies, however, have yet to be developed. High level of human capital assists such organisations to learn new tasks and roles and to adapt to new situations . Thus, human capital should be more important in the initial years of business rather than during later stages to implementing and maintaining all necessary human resource policies and procedures to enable the organization to achieve its objective (Barry Cushway 1999).
Human capital is an important factor for those industries with higher level of technology. Because skilled and experience human resource is the only way to adopt new knowledge and skills. And apart from those, Human capital is mostly important for young business than, established organization. Young organization need to compete with other established and needs expertise knowledge and skills to take quick decisions. And as the Nobel Prize winning economist Gary S. Becker, who coined the term “human capital,” says that “the basic resource in any company is the people. The most successful countries will be those that manage human capital in the most effective and efficient manner. Human capital is a valuable resource to any organization because that people should be treated as assets, rather than asan experts.