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.asp