Skip to main content

Human Capital: The development of success


Human Capital Theory postulates that the more biological, psychological, creative, knowledge, social, and work skills a person develops the more successfully they are going to be in life.  The theory is often broken into intangible capital that focuses on things like social abilities and tangible capital that focuses more closely on skills and education. In many ways educational attainment and skill development are used to measure human capital. Generally, the human capital a person retains, or can develop, the more beneficial they become to the organization and society. 

Human capital creates an incentive for developing employees to their highest possible skill level. By raising the human capital of an organization it is believed that the organization will become more efficient, creative and productive. The time, effort, and costs are some of the detractors associated with the developing employees. Yet those organizations that do not engage in training generally have stagnant workers stuck in low skilled jobs and in turn maintain lower profits. 

Assuming that each organizations is a process that takes inputs and transforms them into greater outputs it is possible to see how low skilled labor minimizes the opportunities to make profits out of the process. For example, a plant that simply nails a few boards together to create a box, but must purchase pre-cut boards, will make less money per transaction than one that can process the entire chain of development from uncut board to box. When employee skill levels are low the organization must focus on automation and volume to develop enough products to raise profit margins. 

In highly competitive markets it is necessary to move beyond basic rudimentary skills into highly developed reasoning and decision-making abilities. Specialization often occurs as people seek to maximize a smaller set of skills for higher productivity. At the executive and management level a greater level of general skills are needed to complete a variety of reasoning tasks on a complex global scale. Education becomes a medium to this growth.

The very education a person chooses to raise their human capital is based in expectations, perceptions and beliefs (Van der Merwe, 2009). Such people who choose to pursue a high level of education do so because of an expected economic, personal, and social return. Intellectual markets seek to recruit from that education and experience to maximize their market opportunities. 

On a macro level human capital, education, and skill obtainment have something to do with the overall productivity of a nation. When regions, nations, and cities retain more skilled employees they are able to foster more productivity and earn higher profits than areas where low skills abound. According to research by Neagu (2012) on 22 countries it found that nations with the highest level of productivity also had the highest level of human capital. 

Whether one is discussing the individual level, the organization level, or the national level the development of human capital is important for economic success. Where productivity and creativity are high so are the opportunities for financial success. In today’s world, many emerging countries can compete on low skilled labor and therefore nations must adapt and develop to retain their financial strength. Through organizational training, formal education, and experimentation people develop higher sets of skills that they can use to enhance their own earning power and sell on the market for larger economic improvement. 

Neagu, O. (2012). Labour productivity and human capital in the EU countries: an empirical analysis. Annals of the University of Oradea, Economic Science Series, 21 (1). 

Van der Merwe, A. (2010). Does human capital theory account for individual higher education choice? International Business & Economics Research Journal, 9 (6).

Comments

Popular posts from this blog

The Meaning of A Boundless Moment by Robert Frost

A Boundless Moment by Robert Frost He halted in the wind, and — what was that Far in the maples, pale, but not a ghost? He stood there bringing March against his thought, And yet too ready to believe the most. "Oh, that's the Paradise-in-bloom," I said; And truly it was fair enough for flowers had we but in us to assume in march Such white luxuriance of May for ours. We stood a moment so in a strange world, Myself as one his own pretense deceives; And then I said the truth (and we moved on). A young beech clinging to its last year's leaves. The poem is one of seasons changing and the cycle of life. Each May the bloom comes out and brings life to the death of winter. The poem is about a single moment when the characters see that life has changed. The layers of meaning can be deep but on the surface it appears Robert Frost is discussing nature and its cyclical momentum.   Everything in nature moves through patterns. The poem indicates that

Art Review: The Kiss by Gustav Klimt

The Kiss is Gustav Klimt’s most famous and well known painting. Produced in 1908 in Vienna, Austria and incorporated oil and gold life on the canvas ( 1 ). This was unique for his time and represents both tile works with Asiatic influence. The painting and the romance it brings forward is still wonderment to onlookers. The picture depicts a passionate relationship between a man and woman in a sort of perfect place.  The couple is embracing, bodies entwined, wearing robes of wealth and decadence. It provides linear constructs of the Art Nouveau style and the movement of arts with crafts ( 2 ). The male is square and masculine while the woman painted is in curves to represent femininity. The couple is a pair with the woman and man equal in stature. They are in a field of flowers and appear to rise above it.  To many this painting represents the concept that love has no bounds. Social position or worldly wealth cannot hide what goes on under the fancy clothes and standard m

The Nine Parries of Saber Fencing

The Parry is important for defending against attacks and offers an opportunity to counter attack. Without learning parries it will be difficult to effectively compete in fencing. Your body will be generally open to seasoned fencers. Practicing defending against attacks using multiple parries is important for creating the highest levels of competitive skill. The most common parries used are Parry of Four, Parry of Six, Parry of Seven, and Parry of Eight ( 1 ). They are designed to protect your right side, left side, lower stomach, middle of your stomach. They are parries designed to cover the core areas of your body and help you defend against the majority of fencing attacks.   Prime: Stops a cut to the chest. Seconde: Stops a low cut to the flank Tierce: Stops high cut to the flank Quarte: Stops high cut to the chest. Quinte: Stops cut to head. Sixte : Stops cut to head. Septime: Stops cut to back. Octave: Stops cut to flank. Neuvieme: Protects Back Mic