Human capital: its value

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 Value of Human Capital


Of course, human resource professionals have long understood the value of human capital and they have struggled to find a way to communicate this value. That is the very essence of human resource management today: to define the value of human capital, to find ways to accurately measure it, and to ensure the investment in and protection of this human capital. Anything less, and HR professionals have failed their organizations.

And yet this process is replete with problems and obstacles. Calculating the value of our employees is difficult because they are not like any other asset; they are simultaneously the greatest potential asset and the greatest potential liability that an organization has at any given time. They are the only intangible asset that can be influenced but never completely controlled. A company can invest heavily in its human capital, or it can waste it without a care. Either way, the human capital still has its inherent value, but perhaps  tragically  with another organization if the employee resigns. In the book, The Wealth of Knowledge, Tom Stewart writes: It is incontrovertibly true that present financial and management accounting does not give investors, directors, the public, or management the information they need to make informed decisions. 

The unique nature of human capital requires vigilant and proficient consideration and management. Organizations should seek wisdom in their management of human capital; whether from within or from external third-party sources. In the future, we may well see new ways to identify and measure human capital. Companies that recognize the inherent and crucial value of their employees will be miles ahead of those companies that fail to recognize this imperative intangible asset. In addition, the development, fortification and nurture of employees will make all the difference in the market value and success of the company that handles human capital as its most valuable asset. No worthy CEO or CFO would misuse financial resources and assets. In the same way, human capital must be wholly and correctly leveraged. That means we must do all we can to cultivate our human capital.

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