What to do when people are your most important asset

Abstract

The article describes the constraints of the current system for accounting for the value and importance of an organization’s human capital. It describes the Human Capital Capability Scorecard (HCCS), which allows for better valuation of human capital, and examines the implementation of that HCCS system inside diverse organizations, and analyzes the relationship between human capital indices and organizational outcomes. The article describes the composition of five human capital indices, and examines their relationship to key organizational outcomes in a manufacturing firm, public school district, and consortium of banks and finds that human capital indices are positively related to a variety of organizational outcomes, including sales office effectiveness, student achievement test scores, and summary financial measures such as net income per employee. Future research should focus on the application of standard measures of human capital across additional organizations, and seek to more fully explore the effects of specific human capital items. The article suggests that organizations should devote significantly more attention to measuring their human capital in a way that recognizes its value, and that reporting such information publicly will help publicly traded organizations to avoid the too‐common short‐term focus on quarterly earnings. New quantitative evidence is provided to executives about the importance of human capital and methods for human capital and people‐related factors to be more appropriately measured, valued, and reported by organizations are suggeted.

Citation

Bassi, L. and McMurrer, D. (2005), "What to do when people are your most important asset", Handbook of Business Strategy, Vol. 6 No. 1, pp. 219-224. https://doi.org/10.1108/08944310510557503