Human Capital Investment

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Human Capital is the economic significance of a workforce’s ability and productivity. It is derived on the basis that there is little equality among employees’ inability and that such can be revamped through investment, or in some situations, reinvestment (Centre for Educational Research and Innovation, 1999).
The term is a Victorian invention of Theodore Schultz, an economist of the 60’s. The building blocks of the concept classify labor among the varied forms of capital. As such, investment can be through training, education and even improved benefits that aim at putting the entire workforce at the best of its abilities. Investment in human capital is primarily concerned with improving the aspects of income not necessarily at the present but for the future (Centre for Educational Research and Innovation, 1999).
Authors have given varied contemporaries about the same, with some aspects of similarities and others expressing different comprehended mechanisms of human capital. This paper analyzes some of these presentations mainly; People Equity, Raging Debates, Missing Link, Balanced Scoreboard and Maximizing Impact (Centre for Educational Research and Innovation, 1999).


The above authors/economists develop their ideologies around the same projection. They illuminate the significance of investing in human capital to improve company production through first, enhancing the productivity of the human personnel. For instance, Kaplan and Norton, in highlighting the procedurals employed in implementing the scorecard to fulfill productivity point out the remedies that companies should take. Using the scorecard involves four different steps the first of which is the translation of business strategy and vision. The step implies the expression of business ideas through objectively set plans. At the first step alone, the scorecard is very essential as it highlights the shortfalls and gaps that plague companies, among which is the employees’ ability and skills.
The second step, linking and communication, involve enlightening the staff about the objectives of the company and preparing them to meet these goals. Procedurally, this step requires education as the first measure so to broaden the understanding of the staff on the responsibilities that they are expected to mete out. Objectively, it promotes commitment and accountability. The last procedural of the step proposes rewarding of employees based on the nature of their performance. Reward in that sense motivates the workers to perform even better in the future.
As the peak of the scorecard, the step of business planning requires the integration of strategies into budgeting to ensure efficiency. The integration involves the creation of initiatives, empowerment of workers, timely management, and reengineering and complete quality management. The underlining factor in this case is the advancement of employees that is very essential in every one of the initiatives. Planning the industrial future of a company requires the recognition of the vital aspects and roles that are played by workers in every step.
The last step in the scorecard expresses the significance of correlating the employees’ morale with customer satisfaction. As such, it becomes a lot easier to measure the perspectives of conception and growth. Such correlations affirm the strategies and goals that have been set in a business.
Bassi and McBassi, on the other hand, also have ideologies that support the same. In the Raging debates, clarity is made on how Human Resource analytics software/mechanism can be used to measure both productivities and to gain competitive advantage over rivals in trade.
HR analytics is defined as the tools and methodologies that are used to integrate and improve the quality of an organizational workforce. It requires the use of an evidence-based approach to the motivation of employees. As such, rewarding is based on the quality of the performance of an individual, not through a standardized scheme that recognizes not the level of input of the worker(s). In every sense, the analytics betters the decisions the human sides of productivity.
Basically, the HR analytics is meant for the purpose of improving individual performance. Moreover, it also serves in trimming the HR workload for credibility enhancement.
In the application of the HR analytics, the HR is required to enhance performance by extending the skills, capacity, and required capability. The HR functions should bear the knowledge of leading the analytics from the ends of IT and finance. The skills are very vital in improving the performance of an organization.
Vitality in production is maintained and even enhanced by enhancing a staff’s ability to comprehend some of the more than core competencies in production. A skilled workforce according to the Raging Debates authors is a derivative for successful growth and expansion. Every employee is such capable of assisting almost in any situation be it technical or manual.
Frank, the Link author, identifies that industry and success are determined by financial and human capital. Furthermore, he states that human capital marks the definite bloodline in organizational production. In this sense, HC metrics isolates the investments in human capital and determines its progress or degeneration, all in a bid in measuring the performance of the business.
A complete metric should, therefore, aggregate all internal cost and even external factors of the HC costs. Hence, a link would be created between overall productivity and the workforce performance. The metrics are also used to measure the return/profit gained from the incisive investment made in the Human Capital. Investment in labor is hence used to increase the profit margins as considerations are made that they should only be implemented if the returns can supersede the financial costs. The drivers of human capital project results uncover opportunities and increase the economic impact of interventions.
In assessing productivity, there are formulas that are used to predict the effect of HC performance. Intelligence is used to determine the level of investments that should be made into human capital.
To sum the argument projected by Frank, investing in human capital and coming up with measures to monitor the results is what really companies should employ to make sure that productivity is maintained on highs. In the execution of HR analytics, Mondore makes the suggestion that the cause-effect and regression should be analyzed to help in deciphering the data about HR and the productivity.
Building and execution of a program requires an investment in the workforce to polish their processes, attitude and skills. Such actions have direct impacts on the growth of the organization, well beyond the assumed factors.
People equity stipulates an approach that should be employed in measuring the returns of investment in human capital. Failure to align and improve the capabilities and engagement of the HR diminishes productivity and create adverse impacts on the customer relations.
The investments made are aimed at bringing the human assets to exceptional competitive levels. The author as such points out that organizations that aim at improving the shareholder equity must create focus on the employees and other labor resources to build fairness in the investment. Primarily, all the five articles agree with the cautious nature with which the human resource factor should be used. However, the materials do not fall short of differences.


Kaplan and Norton have expressed the scorecard as a very vital aspect of HR analytics. It hence becomes the ultimate measure of performance and productivity based on the nature and level of investment made in human capital. The scorecard is, by the authors, elevated to such level of significance that without which, organizational performance is derailed in very many aspects. The issues may range .............

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