Defining “Human Capital”
Much of the content on this site is dedicated to the discussion of Human Capital and all that those words encompass. As a HR professional, the discussion of “Human Capital” is common. But, in a discussion with a C-level executive the other day, I realized that there are many business people out there who are not well-versed on Human Capital and what it should mean to them. In further discussion with other professionals, I found out that even those who understand the importance of Human Capital may have a different definition, or their expected outcome of this area of focus may be different.
How do you explain the term “Human Capital”and what it should mean to executives?
This entry was posted on Thursday, October 9th, 2008 at 8:15 am and is filed under Current Topics, Issue Discussion. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
October 19th, 2008 at 8:43 pm
I don’t like the term human capital. Human Resources was a better term.
December 21st, 2008 at 9:50 pm
This is a great question, in part, because Human Capital has a very specific definition and application outside of HR. The economic development community, including the UNDP, have been applying the term Human Capital in very concrete ways to measure, for example, levels of development. It could be worthwhile to start integrating some of these concepts into how we define Human Capital, if for no other reason to imbue the term with greater credibility.
All in all, it requires much greater attention, but important points in my mind:
- The KSAs that exist within an organization
- The degree of match between this KSA inventory and the skills required to move the organization forward. In other words, the degree to which these abilities are put to work.
- Some multiplier that takes into consideration technologies or processes that allow human capital to be shared and accessed on an on-demand basis.
February 2nd, 2009 at 6:58 pm
I like the term human resources as well. However, it has not gotten us very far. I recently took the SPHR exam and was closely reminded of the expanded role that HR plays in an organization and the grand scale of decision making that it entails. Like many of its business counterparts, the management of human resources involves more than its fair share of risky resolutions based on statute, common law, history, consistency and educated intuition. So why does it time and again fall short on the value scale…”inability to measure or score effectively”. Figure this out for your organization, and then human capital will be a CAPITAL they can understand.
March 25th, 2009 at 2:39 pm
Hi Tony,
Do you subscribe to CEO.Inc, an online publication about business, education, corporate practices, career, and much more? The other day I read and replied to a university professor who published an article about the worthlessness of HR. I am in IO Psy but nevertheless, I challenged many of his biased, unprofessional, uninformed, and hurtful comments. Actually “challenged” is putting it nicely. I was amazed that this was written by a university professor. I’m not naming him or the article (you can probably find it online) but my reply was entitled “Careful About Pointing Fingers.” I have questions about your comments- just for clarification but I might go over the limit so I’ll pass except for the pressing need to know what I should call myself as an IO Psy doctoral student as well as an organizational development consultant. I think there’s a difference but referring to myself as a psychologist is not ethical. Do you agree? So … what kind of Capital am I???