HUMAN CAPITAL
(A Reflection Paper)

Human capital is just one of an organization’s intangible assets. It is basically all of the competencies and commitment of the people within an organization i.e. their skills, experience, potential and capacity. Other examples of intangible assets include: brand, software, design, working methods and customer relationships. The human capital asset captures all the people oriented capabilities we need for a business to be successful. It’s important to remember, however, that individuals are only an asset insofar as they choose to invest their human capital in an organization.

Some people find the term Human Capital somewhat mechanistic, but human capital is not about describing people as economic units, rather it is a way of viewing people as critical contributors to an organization’s success. This then throws the spotlight on how businesses invest in their human capital asset, in order for it to add value. For any commercial organization, this is an important component to understand. If a company understands how its human capital contributes to their business success, it can then be measured and managed more effectively.

Human capital management is a reciprocal relationship between supply and demand: employees, contractors and consultants invest their own human capital into business enterprises and the business enterprises need to manage the supplier. Any organization interested in its performance will naturally ask how well they are managing this asset to ensure maximum return on their investment. In the same way, all employees, contractors, consultants and providers of human capital want to ensure they are getting the appropriate return for their own human capital investing through salary, bonuses, benefits, and so on.

Human capital may well now be the most critical source of competitive advantage, but it is also