Human Capital – Definition and Explanation

Human capital is considered to be the economic value of the thinking, knowledge, skills, judgements and capabilities of individual employees[i] and is a core factor in talent management. 

The concept of Human Capital sees people and their abilities as resources to be utilised for value creation in organisations by getting people to change their behaviour to more economically viable behaviours. Human capital is usually assessed by examining employees experience, education, training and skills[ii].  

 

[i] Barney, J. B., & Wright, P. M. (1998). On becoming a strategic partner: The role of human resources in gaining competitive advantage. Human Resource Management, 37, 31–46. https://doi.org/10.1002/(SICI)1099-050X(199821)37:1<31::AID-HRM4>3.0.CO;2-W.

[ii] Harrison, J. S., Hitt, M. A., Hoskisson, R. E., & Ireland, R. D. (2001). Resource complementarity in business combinations: Extending the logic to organizational alliances. Journal of Management, 27, 679–690. https://doi.org/10.1177/014920630102700605.