I browsing the internet when I happen to stumble on the word Human Capital. This is the first time I read about this terms and I got interested to know its meaning.
According to this article[1] Human Capital is explained as an intangible asset stemming from a person's talent and experience although it can't be put on our balance sheet but it is very important economic value for a company.
Investopedia also explained Human Capital as[2]:
"The term human capital refers to the economic value of a worker's experience and skills. Human capital includes assets like education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality."
The article also stated that Human Capital can be made of several factor such as shown in the picture:
It is also stated that there are different types of Human Capital Namely:
- Knowledge Capital: Trade School Education, College Degree, Hard skills, Work experience, Situational Knowledge and Intelligence.
- Social Capital: Relations, Fame, Social Status, Professional Network and Health.
- Emotional Capital: Emotional intelligence, Creativity, Problem-solving, Personal resilience, Critical thinking, Loyalty, Leadership behaviors, Other soft skills
The article also gives a tips on increasing Human Capital like:
Human Capital can be increased by hiring more people but it is also possible to improve within the workforce.
- Improve education for your workforce
- Provide a work culture that encourages creativity
- Divide labor into specialized niches
- Hire a diverse workforce
- Provide ongoing coaching
The importance of human capital.
Human Capital are people that make up a company workforce. So choosing people with higher human capital simply means more beneficial for a company. This is also the reason why many companies are spending lots of funds to give training to their employees. Through it was stated that these training expenditures may temporarily decrease the company funds, the company will surely benefits from it since the investment will allow the employee to do their task efficiently thus delivering more profit to the company.
So for any investors that are aspiring to put up their company own company, one should consider learning about Human Capital because it will really lead a company to success if one manage it successfully.
For
FAQ about Human Capital you can check this site:
https://www.worldbank.org/en/publication/human-capital/brief/the-human-capital-project-frequently-asked-questions
[1]
https://www.betterup.com/blog/human-capital[2]
https://www.investopedia.com/terms/h/humancapital.aspHuman capital is one great asset a company that desires to grow must have. Multinationals like Banks and oil companies spend a lot on human resources manager. The reason is to strengthen the mental capacity of their workforce, because they believe those workers are their image makers. The marketing department of any organization, does a lot of training and retraining of their staff, because this staff's go out to sell the companies product to the outer world and as such, they should be well informed.
China today is one of the leading force in the manufacturing industry in the world, this is because they have a high level of productive workforce (Human capital) that are well trained in different fields of production and manufacturing. So human capital is one key aspect of an emerging economy or a business that shouldn't be toyed with but rather be harnessed and improved upon.