Invest in People – Why Human Capital Matters

human capital

Talent is valuable. That’s the takeaway statement that permeates the recently published Human Capital Reporting – Investing in Sustainable Growth report that has called to action companies and investors to recognise that human capital has value.

Intangible Value

Businesses over the last 40 years have evolved from the world of physical manufacture into the realm of knowledge based economies, where concepts like the production line and menial labour no longer apply. Now employers don’t buy the hands of the worker; they purchase their minds.

Ideas in businesses continue to adapt, and with companies moving towards more investment of “intangible” assets such workplace training, it’s clear that we recognise that practices are changing. Over £34.3bn was invested in workplace training in 2011, but the return on investment remains an unmeasured spectre in budgets and asset assessments.

Unofficial Recognition

There needs to be a fundamental shift in the mindset and attitudes of company accountants. Covertly, many companies already recognise that talents does have a financial value and can be honed and improved, with people receiving performance based pay and careers being developed in appraisals. What isn’t happening, however, is the useful measurement of this kind of financial investment, and with companies still focusing their efforts on pushing non-human metrics people become further isolated from their work.

The benefits of measuring talent

Helena Morrissey recently wrote in The Sunday Telegraph “If talent is valued as a financial metric, human resources will be upgraded, and businesses can genuinely start creating a people-first culture”. This kind of attitude will help many people have their faith restored in business, with many still viewing the sector through the negative lense of financial strife and exploitation. By ascribing real monetary value on talent and not output, companies will see not only improved bottom line profits but also be internally motivated to be socially conscientious.

It’s time for businesses to become custodians of talent; to discover, cultivate and most importantly, value it. The evolution of education in the workplace starts with hiring potential and then driving up the value of employees through training and guidance. With this kind of attitude, businesses will win more than big profits, they’ll win back the trust of the public and help contribute to a better society.