Thursday, June 04, 2015

Human capital with reference to economy

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.