A measure of the economic value of an employee's skill
set. This measure builds on the basic production input of labour measure where
all labour is thought to be equal. The concept of human capital recognizes that
not all labour is equal and that the quality of employees can be improved by
investing in them. The education, experience and abilities of an employee have
an economic value for employers and for the economy as a whole.
Economist Theodore Schultz coined the term in the 1960s to reflect the
value of our human capacities. He believed human capital was like any other
type of capital; it could be invested in through education, training and
enhanced benefits that will lead to an improvement in the quality and level of
production.
The value of human resources
contribution for any productive work depends on the deployable skills and
competencies for creating wealth for the organization in terms of sell able
products and services. The skills and competencies of any person are developed
and accumulated as capital over a period of time by means of education,
training, development and employment in the specified work.
The research has clearly shown that the productivity
and performance of human resources will increase with increase in human
capital, so the growth in the employability, remuneration and employment rate
in the country. Human capital management is a strategic activity for the well
being of any organization and the society at large, and is the fulfilling reason
for setting up an organization in the name "Human Capital" for its
systematic development and management.
Companies can invest in intellectual capital, just as
countries invest in human capital, through training programs and hiring
practices. Human resources departments can develop a long-term strategy to
maximize human capital. Social investment in human capital is a matter of
public policy. Examples of policies that tend to increase a country's stock of
human capital include using the human capital of women, investing in higher
education, supporting dropout prevention programs, and encouraging highly skilled immigrants to enter the workforce.
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