The Importance of Human Capital
The Oxford English Dictionary defines Human Capital as “the skills the labour force possesses and is regarded as a resource or asset. These are then used by the organisation to achieve its goals”.
In the current economic environment, it is easy for companies to be pulled in many different investment directions – should they invest in assets such as land and equipment or possibly in the latest technological advancements. An investment move that is highly important and often overlooked by many companies is the importance of investing in the organisation’s most important asset – its people!
Investing in human capital is extremely important for a business to thrive in today’s marketplace, and for economic growth. To be clear – creating a comfortable working environment is a contributor but what is critical to human capital development and thereby increasing the value of this asset is by providing opportunities for growth, skills improvement and advancement to your employees through education, training and improvement programs. Investing in human capital is investing in the skills and capabilities of your human assets- whether that consists of front-line staff, sales representatives, managers, supervisors – organisation-wide. These development programmes have proven to be direct contributors of staff productivity and loyalty and a more dedicated and consistent approach by employees build the company’s brand and help it achieve success.
Many companies profess that the development and upskilling of their staff is a very important and even critical underpin for achieving their strategy. However, in times of financial pinch usually the first item that is cut is the training budget.
Great people who are skilled at what they do and motivated to do it are the pillars that support the productivity and great service delivery within a company.
Human capital is directly related to economic growth. The knowledge people gain through education helps develop an economy and leads to economic growth. Workers with more education tend to have higher earnings, which then increases economic growth through additional spending.
With more than 50% of workers saying that career advancement and upskilling opportunities are more important than just salary – the importance of and focus on human capital improvement cannot be underestimated.