Today we live in a period with rapid changes in economic and demography. The demographic trends in the European Union refer mainly to increasing of the age and change of a structure of labor force. Therefore one of the most important and topical issues in all sectors of the economy of Latvia is human capital enhancement and development. The article is devoted to human capital development in institutions of higher education. The authors have done review on theoretical aspects of human resource management process; they have analyzed the concept of human capital, the concepts of human resources management as well as competence models’ concept. On the basis of theoretical studies, the authors have developed the outline for evaluation of employees in higher education institution. By combination of theoretical background and practical experience the recommendations for evaluation of performance and competences of human capital in higher education institution were developed. Developed innovations are approved in praxis.