Increasing Human Capital and Corporate Profits

Human Capital is the skills and experiences that people bring to their workplace. It follows the mentality of "garbage in and garbage out". If your employees are poor so will be your company, your products and your sales revenue. The concept that "employees are your most important asset" holds true.

T.W. Shultz first came up with the idea of Human Capital when he determined, "Human capital is the knowledge and skills people acquire through education and training. This capital is a direct investment with yielded returns" (Shultz, 1961).

If it is possible to get returns on employees' skills and experience then it stands to reason that companies that retain the best employees, invest the most employees and recruit the best employees are the best. The companies are the best because they can maintain high levels of productivity and decision making ability with the least amount of people. This is called talent.

Talent means that employees are aware of their responsibilities, know how to work in a corporate environment, have a "can do" attitude, and get the best results with the resources that they have control over. They are not the type of employees that sit back and wait for something good to happen to them; they make it happen.

Companies have a responsibility not only to their shareholders but also to the other people who work for the organization. If the company fails everyone will lose their jobs and if the company succeeds people will obtain a certain level of security. Therefore, companies must make every effort to encourage the right people to take the right positions so that the company can succeed.

Consider Macintoshs...
"The people who are doing the work are the moving force behind the Macintosh. My job is to create a space for them, to clear out the rest of the organization and keep it at bay." - Steve Jobs.

Promoting competent people to proper positions that help them express their creativity and skills is important. These competent people will help carry the organization to new heights and positions. They are simply more proactive and more competent utilizing the resources they control. Allow people to move up the organization based upon their skills and abilities and not their patronage.

In order to recruit such talented people organizations must consider their compensation structure, their internal culture, and power laden within these positions. For example, if you are paying a competitive market wage there is a high likelihood that the star performer will not be satisfied with that. They will want more because they have earned more in their fields. From an organizational stand point it makes sense to pay an extra ten thousand or so if you are going to save hundreds of thousands of dollars due to their ability.

The company must also be willing to make an investment in its workers. This investment comes in the form of training, tuition reimbursement and long-term relationships. A direct investment in the betterment of the employees will have a reciprocal affect on employee's abilities and their competency within the organization. Increasing your human capital is the goal.