Human Capital Management

2/02/2016 -Martina Macpherson

Human capital is the knowledge, talents, skills, abilities, experience, intelligence, training, judgment, and wisdom possessed individually and collectively by individuals in society and in business. It’s the total capacity of people and represents a form of wealth which can be directed to accomplish the goals of a nation or a corporation.

Increasingly, the developed world has evolved into a service and information economy and as much as 80 per cent of a company’s worth is now tied to its people. Access to financial capital is no longer a source of competitive advantage, instead, competitiveness increasingly derives from know-how – people’s abilities, skills and competence.

Human capital is also a driver of economic and business growth – and is therefore vitally important for a country’s and an organization’s success and increases through education, experience and opportunity. The OECD’s Human Capital Project researches methods to include HCM into national accounting and the UK Office for National Statistics (ONS) has measured the value of the UK’s human capital since 2004. There are also interesting studies, e.g. by PWC in 2014, that aim to ‘measure the economic value and impact’ of HCM practices at country level. The OECD’s Human Capital Project also researches methods for including human capital in national accounting. Read more