Human Capital

Capital can be defined in many ways. Commonly its own as the amount of money employed to kick start a project or to be invested in a particular project. It can come in form of tangible resources like fixed or movable equipment. However, there is another form of capital that is overlooked a lot when discussing business matters or business start-ups: Human Capital.

Merriam Webster Dictionary defines human capital as: the stock of competencies, knowledge and personality attributes embodied in the ability to perform labor so as to produce economic value. It is the attributes gained by a worker through education and experience. Now why is human capital so overlooked? I will try and assess this through the following points:

• Its hard to measure: Suppose Manager A is a Harvard alumni, and Manager B is an Oxford alumni, both carry MBAs from the same institutions. Now, intuition tells us that the basic assumption to make is they both qualify to run your business. This is due to the attribute of education. Now suppose both have managed a successful firm (a successful firm here by definition is very subjective). Now another attribute comes into play that of experience. However, the outcome of the management skills may differ and only due to the different environments they were exposed to, but the very personalities.
• Intangible: Unlike physical capital (i.e. money, equipment, etc) its something which cannot be felt or seen. To 'see it in action' will be through the labourous input by the person who possesses it.

Now from these couple of points one can realise the inherent obstacle in identifying human capital. This is a basic mistake since all business is conducted through interaction of humans. As someone once said 'business will be easier if there were no people', the fallacy lies in the notion that one needs people to conduct business! Human capital goes a long way in ensuring that operations are run like clockwork. Even if the process is automated, human capital is needed to overlook it in case something goes wrong. Labour is supplied through employment of human capital. Even though corporations have a habit of misleading people and telling them they are 'assets' and when the paycheck comes they are reported as 'payroll expenses'. Well, except if you own a bit of shareholding or your a a manager/owner you are sure of dividends coming your way.

So this is a serious point to ponder. I am in the process of forming a Kick Ass Designer & Developer Team, and am going to unleash the power of human capital. My goal is to try and measure performance based on amount of effort, quality, passion and excellence  employed. Through incentives I intend to advance and develop my Team to be a force to be reckoned. I know by investing in the pool of human capital that my Team offers, the sky wont be the limit ---.

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