Human Capital is an expression used to indicate the levels of knowledge, experience, capacity or motivation of people in an organization.
It is considered an intangible asset for the company – which generates value for the business – without being recognized in an accounting manner, but by its management.
The term refers to the human factor related to the company’s capital, as well as all the investment made to generate its earnings and its wealth.
By the same logic, human capital can be increased when the company invests in training in order to increase the group’s productivity.
Human Capital Management
People are responsible not only for their functions but also for the success of an organization, and all of this is involved by the skills and abilities that the group has.
With the adequate acquisition of workforce, the company is able to standardize its necessary human capital for the best possible productivity.
To train and develop it in a business, management is under the responsibility of the human resources (HR) sector or specialized managers.
This sector also works to keep human capital at a good level, motivating the team, boosting good performance and ensuring the level achieved so far.
In doing all this, HR serves as an essential support so that talent retention and all the training offered are not lost to high staff turnover.
How human capital can be measured
Human capital differs from standard capital as we know it, and is usually related to money. The latter can either be measured, or is part of the financial decisions of companies.
Even without a direct measure, the team’s skills and competences can be closely monitored by human resources managers or administrators in general.
The remuneration paid to each worker is more than a liability recorded in the company’s balance sheet: they are economic values that must be monitored by HR.
With this it is possible to plan the payment of bonuses, incur expenses for the training of the teams and organize events.
All of this is done with the aim of adding value to the company, reducing staff turnover and increasing team productivity.
Human capital and economic growth
The concept of human capital goes beyond the business sphere, leading to the growth not only of a single company, but of the entire economy of a country.
This intangible asset is also part of all societies, which differ according to the education offered and the skills developed.
In this scenario, both private and public initiatives are present, which are essential for the development of human capital in society.
Like companies, a region or country may also face problems similar to company turnover. In this case, it may happen due to the immigration of human capital to other locations.
If this happens, it means a big loss in productivity for the economy and a consequent drop in the Gross Domestic Product (GDP).
To solve this, many authorities resort to public investments accompanied by tax incentives with the aim of attracting talents to the country.