What is the Definition of Human Capital?

Definition Knowing

Human capital is the value given to the capabilities of the personnel working in a company, that is, level of education, general knowledge, skills and accumulated experiences, based on generating greater productivity and economic development.

The productive capacities of the people are those that matter because with them the economic, material and intangible capital of the company is manipulated according to their development and competitiveness.

To achieve the optimal performance of human capital, staff must be continuously trained, which generates well-being and work performance through motivation and proportion of the right tools.

Characteristics of human capital

  • It is part of the analysis of the new economic dynamics.
  • Promote organizational culture.
  • It refers to the effective use of technological resources for the company and its environment.
  • Seeks to expand market reach.
  • Productivity, creativity, innovation and competitiveness are optimized.
  • Enhance the value of the company or organization.

With these characteristics the importance of human capital is explained by its contributions in the development and continuous progress of a company.

For this reason, companies have a department of administration or human resources designed to assess when it is necessary to invest in the training and tools of personnel, to improve productivity and work results.

Theory of human capital

The term human capital originated in the mid-twentieth century, and has been studied and developed through the lines of research in economics and sociology, given its impact on these areas.

Among the authors who made important contributions to the term can be named Adam Smith, Theodore W. Schultz and Gary Becker.

From the different lines of research on human capital, it has been considered that the term can be applied as a variable in various investigations. For example, as a variable to explain various economic growth models of both a company, institution or country.

Importance of human capital

Physical and heritage assets can be maintained over time. However, human capital is an intangible resource, composed of people who have goals or purposes that motivate them to change jobs at any time according to their particular needs and conveniences.

For this reason, the organizational culture emphasizes that the education and training of employees must be understood as an investment that will bring profits by having a qualified, productive and competitive staff, to achieve a high position of the company.

On the other hand, if the perspective of human capital is broadened, one can even understand the impact that the term has in terms of the economic, political and social development of a country, including moral and ethical aspects that relate to productive capacities from qualitative and quantitative views.

Examples of human capital training

  • Hire staff with a high academic degree, for example, a master’s degree.
  • Offer competitive salaries.
  • Having benefits such as cafeterias or free restaurants, nurseries, among others, that can lead to savings for employees and less concern for daily tasks.
  • Encourage employees to generate or innovate projects.
  • Constantly invest in staff training.
  • Each employee must meet a goal or objective in a given time.
  • You can work from home, which means saving transportation or fuel.