www.tjprc.org editor@tjprc.org MAKING HUMAN CAPITAL A SOURCE OF COMPETITIVE ADVANTAGE FOR EDUCATIONAL INSTITUTIONS SIDDIQUE KADAVATHE PEDDIKAYIL 1 & A. ABBAS MANTHIRI 2 1 Assistant Professor in Commerce, Sir Syed College, Taliparamba, Kerala, Affiliated to Kannur Univeristy, Kerala, India 2 Associate Professor in Commerce & Principal, Dr. Zakir Husain College, Ilaynagudi, Tamil Nadu, Affiliated to Alagappa Univeristy, Karaikudi, Tamil Nadu, India ABSTRACT Traditionally, human capital has been considered as a necessary expense, rather than a source that contributes value to the organization.The value is associated with capital such as equipment, technology, and infrastructure. In recent years, numerous studies have demonstrated that spending in human capital development can be significantly valuable. Managerial decisions pertaining to hiring, reward and recognition, training and development, and evaluating employees’ performance, etc are found to directly affect employees’ motivation and improved performance, helping the firm to attain a competitive edge. In today’s competitive business world, the knowledge, talents and skills that people in a firm possess have become increasingly important elements of intangible assets and potentially powerful source of competitive advantage. The purpose of this paper is to examine how an educational firm can invest in its human capital in order to make it a source of competitive advantage. KEYWORDS: Human Capital, Selective Hiring, Training and Development, Reward and Recognition & Performance-Based Pay Received: Feb 15, 2018; Accepted: Mar 08, 2018; Published: Mar 20, 2018; Paper Id.: IJHRMRAPR20183 INTRODUCTION Until the 1950s, economists considered only four factors of production, namely land, labor, capital, and management. However, in the early 1960s, researchers in the field of economic growth faced difficulty to explain the growth of the US economy in terms of these four traditional factors of production. The residual thus identified were attributed to human capital (Nafukho, Hairston, & Brooks, 2004). Human capital, which represents knowledge, skills, talents, capabilities and competencies possessed by individuals, is absolutely comparable to other resources involved in the production of goods and services (Nafukho, et al, 2004), and are indisputably the most powerful and influential assets as compared to other resources (Fitz-Enz, 2009). In today’s rigorously competitive business contexts, it is very important for business organizations to measure the value of human capital, and to make it a potentially powerful source of competitive advantage. Raising competitiveness, combined with the frequently occurring technological changes in today’s global age, increases the importance of human capital, both in manufacturing and service sector firms. Human capital is perceived to be the most long-term, enduring form of intellectual capital that some literature argued that the only significant differentiator between organizations is their unique capability to create value through human capital (Foster, 2014). Unlike other resources, human capital is one that helps the management gain control over the organisation. This assumption has helped managers of successful companies to base their competitive advantage in the past. The human Original Article International Journal of Human Resource Management and Research (IJHRMR) ISSN (P): 2249-6874; ISSN (E): 2249-7986 Vol. 8, Issue 2, Apr 2018, 19-26 © TJPRC Pvt. Ltd.