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Article
Publication date: 1 January 1998

MIECZYSLAW DOBIJA

Progress in human resources accounting must continue to find a clear constructive definition of terms pertaining to human capital and human assets. The present paper is…

Abstract

Progress in human resources accounting must continue to find a clear constructive definition of terms pertaining to human capital and human assets. The present paper is comprised of considerations leading to the proposal of more general definitions of capital that involve human capital. As a complement to Fisher's concept of capital measurement, the present definition explains capital based on the capitalization process. Capitalization should be viewed as an essential attribute of capital. Human resources accounting (HRA) can benefit from improvements in the definition of certain terms related to human capital. Of particular importance is a proposal of a more general definition of capital. The definition leads to an alternative measure,which is more useful in the HRA field than the Lev‐Schwartz model. The proposed measure compliments Fisher's concept of capital measurement and utilizes a compound interest approach. Capital is perceived as a value of economic means capitalized in physical and human resources. The rate of capitalization is determined through natural and social conditions of the environment. The mode of capital measurement results from the above definitions. Moreover, the measure of human capital appears as a generalization of the historical cost concept. The valuation model of human capital involves capitalized costs of living, costs of professional education and value of experience measured by a slightly modified learning curve. Having human capital redefined and measured in these terms, we can introduce human resources into the balance sheet using a set of relevant journal entries.

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Journal of Human Resource Costing & Accounting, vol. 3 no. 1
Type: Research Article
ISSN: 1401-338X

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Article
Publication date: 1 March 2006

Susan Cantrell, James M. Benton, Terry Laudal and Robert J. Thomas

Over the past three years Accenture developed and applied a new measurement tool that assesses the maturity of an organization's human capital development processes

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7780

Abstract

Purpose

Over the past three years Accenture developed and applied a new measurement tool that assesses the maturity of an organization's human capital development processes, benchmarks the processes' performance against other organizations, and determines the relationship of each process to bottom line business results. It is designed to help executives make significantly more informed choices about their investments in human capital. This article aims to look at this tool.

Design/methodology/approach

The tool, known as the human capital development framework, now has been tested in more than 60 organizations. This case describes how one organization used it to help turn around a struggling division.

Findings

Results of the initial implementations of the framework suggest that financial performance improves as a company improves its scoring in those critical human capital processes with strong relationships to financial success. As an organization moves from one benchmarking quartile to the next in these processes within the framework scoring, its capital efficiency – or the ratio of total annual sales to the capital invested in the operations of the business by shareholders and creditors – improves from 10 to 15 percent.

Practical implications

The framework outlined in this article provides a tool that enables company leaders to make clear‐eyed assessments of the payoff from human capital investments. It helps organizations diagnose their strengths and weaknesses in key human capital practices, to set investment priorities and track performance, and to establish an empirical link between human capital investments, business practices, and overall business performance.

Originality/value

Those organizations in the study with more mature human capital processes have better financial performance than those organizations with less mature processes. Specifically, those organizations that focus on processes devoted to three key areas – creating a people strategy aligned with the business strategy, providing supportive work environments, and developing employees by giving them ample opportunities to learn and grow – achieve far greater economic success than those that do not.

Details

Strategy & Leadership, vol. 34 no. 2
Type: Research Article
ISSN: 1087-8572

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Article
Publication date: 4 September 2007

Larry Nash White

The purpose of paper one of the two‐article series exploration of human capital assessment is to examine the strategies by which library administrators can assess and…

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1609

Abstract

Purpose

The purpose of paper one of the two‐article series exploration of human capital assessment is to examine the strategies by which library administrators can assess and benefit the human capital performance of their library and to lay the groundwork for the discussion of the strategic challenges of assessing and valuing human capital in article two.

Design/methodology/approach

This paper uses a literature review to identify potential strategies and metrics for library administrators to assess human capital productivity.

Findings

Human capital is an increasingly essential element of organizational performance assessment. Effectively assessing library staff expenditures (which generally receives the largest expenditure allocations within the library's budget) and the resulting performance generated by the staff, who are the primary knowledge tools and providers of the library's services, is an ever increasing possibility to account for greater amounts of tangible and intangible organizational performance. Library administrators have multiple options for developing effective strategies and metrics by which to assess their libraries human capital performance.

Originality/value

Developing an effective human capital assessment process as a standard component of the library's performance and budgetary assessment processes would benefit libraries and their administrators by increasing the organizational performance information available for resource allocation decisions regarding library staff development, recruitment, and retention in the larger overall management decision making and planning processes.

Details

The Bottom Line, vol. 20 no. 3
Type: Research Article
ISSN: 0888-045X

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Article
Publication date: 4 April 2019

Alix Valenti and Stephen V. Horner

Human capital has been traditionally viewed in terms of how an individual’s investment in knowledge, skills and abilities can lead to higher pay or promotions. More…

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1336

Abstract

Purpose

Human capital has been traditionally viewed in terms of how an individual’s investment in knowledge, skills and abilities can lead to higher pay or promotions. More recently, human capital has been regarded as a unit-level resource using the term “human capital resources” to consider the aggregate effects of human capital. The purpose of this paper is to examine the collective human capital present in a firm’s board of directors as a valuable resource leading to superior firm outcomes.

Design/methodology/approach

The study examined the effects on firm innovation of the scientific expertise of corporate directors, average board tenure and the presence of a firm’s founder on the board. Data from a sample of pharmaceutical firms were analyzed with the dependent variable, innovation, measured as patent applications and both individual and unit-level human capital measures of the predictor variables.

Findings

The results show that the presence of a founder-director is positively related to innovation and more pronounced when combined with the board’s scientific expertise. Board tenure shows a relationship to innovation and is more evident in combination with the board’s aggregate level of scientific expertise. The effect of directors’ scientific expertise is also greater when measured at the board level of scientific expertise.

Research limitations/implications

Future studies should examine these relationships within a broader context extending the research to other industries thereby incorporating wider variation in both the antecedents and measures of innovation. In addition, future studies might investigate a likely non-monotonic relationship of board tenure with strategic outcomes, recognizing the non-linear nature of effects of board tenure.

Practical implications

In addition to the theoretical and empirical implications, this research may also inform practicing managers charged with constituting their boards of directors and provide some guidance for the recruitment and retention of board members. The research may also assist top managers and investors in knowing when the presence of a founder on the board is useful and supportive of the firm’s strategic direction.

Originality/value

The study extends scholarly understanding of human capital theory beyond the top management team to boards of directors demonstrating the importance not only of directors’ individual capital but also how it combines with that of other directors. Moreover, it enhances understanding of board characteristics beyond the bounds of demographic characteristics to show that additional qualities affect firm strategy. This research also informs managers, boards and investors how boards might be more effectively constituted to impact firm strategy.

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Article
Publication date: 20 November 2007

Larry Nash White

This is the second of two papers on the benefits and challenges of human capital assessment. The purpose of this paper is to review the most common challenges that library…

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969

Abstract

Purpose

This is the second of two papers on the benefits and challenges of human capital assessment. The purpose of this paper is to review the most common challenges that library administrators may encounter when developing and implementing a human capital assessment process in their libraries and offer suggested counter‐responses to reduce implementation challenges.

Design/methodology/approach

This paper uses a literature review to identify potential challenges and resolutions for library administrators who are developing and implementing human capital assessment. In reviewing human capital assessment from the literature from both outside and within the library profession, it is hoped that the most common challenges can be identified to allow library administrators an effective opportunity to plan and account for these challenges during development and implementation.

Findings

Human capital assessment is an increasingly essential element of organizational performance assessment for library administrators. There are several types of common challenges in developing and implementing human capital assessment processes: a lack of consensual operational definitions and assessment values for human capital valuation and assessment, complexity of process, subjectivity in application, and misaligned information needs of mid‐level administrators. However, if these development and implementation challenges can be reduced or eliminated through prior planning and aligning the valuation and assessment processes to the organization and its assessment information needs, there are multiple potential benefits for library administrators who wish to assess the human capital of their library.

Originality/value

Identifying the implementation challenges of human capital assessment for library administrators could reduce the initial challenges of in assessing the human component of the library's performance in meeting stakeholder's needs and accountability concerns.

Details

The Bottom Line, vol. 20 no. 4
Type: Research Article
ISSN: 0888-045X

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Article
Publication date: 1 June 2001

Lars Nerdrum and Truls Erikson

In this article, intellectual capital is seen as complementary capacities of competence and commitment. Based on theoretically and empirically robust human capital theory…

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11244

Abstract

In this article, intellectual capital is seen as complementary capacities of competence and commitment. Based on theoretically and empirically robust human capital theory, we define intellectual capital as individuals’ complementary capacity to generate added value and thus create wealth. Resources are then perceived to be both tangible and intangible. This view is an extension of human capital theory to include the intangible capacities of people. Implications for future research are discussed.

Details

Journal of Intellectual Capital, vol. 2 no. 2
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 11 October 2021

Nnachi Egwu Onuoha

The purpose of this paper is to explore human capital and corporate financial performance link from the perspective of human capital theory, resources-based view and…

Abstract

Purpose

The purpose of this paper is to explore human capital and corporate financial performance link from the perspective of human capital theory, resources-based view and balanced score card approach, and the mediating role of structural capital in this relationship.

Design/methodology/approach

Overall, a data set was drawn from five-year annual reports of deposit money banks (DMBs) in Nigeria. Additionally, the bootstrap procedure was performed to test the mediating role of structural capital.

Findings

Specifically, the paper results indicate that whereas human capital has significant positive effect on corporate financial performance and structural capital, structural capital has significant positive effect on corporate financial performance. Additionally, the study finds structural capital to mediate the effect of human capital on organizational financial performance.

Research limitations/implications

This paper focused on 12 DMBs in Nigeria and their five year annual reports. Accordingly, future studies in this area should increase the number of banks and years, and include firms operating in insurance, manufacturing, telecommunication and oil and gas industries to permit comparability of results and broader basis for generalizability. Moreover, the study results provide insights that would serve as robust empirical basis for policy makers to insist on enhancement of the value of human and structural capital variables.

Practical implications

The managers of DMBs should commit to development of their employees through improvement in their training and health programs, among others. Also, they should ensure continuous improvement of their structural capital to enable the investments in their employee to translate to enhanced corporate financial performance.

Originality/value

To the best of the author’s knowledge, this is the first study to explore the mediation effect of structural capital on the human capital-corporate financial performance link using evidence from DMBs in Nigeria and, thus, extends and deepens extant literature on human capital-organizational performance nexus.

Details

Measuring Business Excellence, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1368-3047

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Article
Publication date: 14 September 2021

Soran Mohtadi

The purpose of this paper is to investigate the resource rents–quality-adjusted human capital nexus and the impact of quality of institutions.

Abstract

Purpose

The purpose of this paper is to investigate the resource rents–quality-adjusted human capital nexus and the impact of quality of institutions.

Design/methodology/approach

For a large data set of 161 countries for the period 1996–2018 (yearly and 4-year periods), fixed effect estimation method is applied to investigate the impact of resource rents on quality-adjusted human capital and the role of quality of institutions on this relationship.

Findings

The paper found little evidence on the negative, significant and direct impact of total resource rents on quality-adjusted human capital. However, the results show that the negative effect of resource rents can be mediated by the quality of institutions. This result is robust to a long list of controls, different specifications and estimation techniques, as well as several robustness checks. Therefore, institutional quality seems to play a critical role in determining the indirect impact of natural resources on human capital. Moreover, the obtained results demonstrate that this resource adverse effect depends on the type of resource rents; in particular, high dependency on oil rents in developing countries appears to harm human capital.

Research limitations/implications

The paper shows that it is not obvious that total resource rents decrease human capital and found that the coefficient is no longer significant in the two-way fixed effects model. However, the analysis has emphasized the crucial role of political institutions in this relationship and has shown that countries with higher quality of institutions make the most of their resource rents transiting to a better human capital environment. This result is found to be robust to a list of controls, different specifications and estimation techniques, as well as several robustness checks. In addition, we demonstrate that not all resources affect human capital in the same way and found that oil rents have a significant negative effect on human capital. This is an important distinction since several countries are blessing from oil rents. From this we conclude that the effect of natural resources on human capital varies across different types of commodities. On the other hand, the interaction between institutions and the sub-categories of resource rents shows that oil rents can increase human capital only in developing countries with higher quality of institutions (above the threshold). This result is also still hold while using alternative measures of political institutions.

Practical implications

The results in this paper have important policy implications. In particular, results highlight important heterogeneities in the role resource rents to the economy. As international commodity prices have shown high volatility in recent years, it is important for policy makers to understand the rents. Rents which are the difference between the price of a commodity and the average cost of producing it can have different effects in the economy, including the human capital. It is shown that in countries with low-quality institutions, natural resource rents negatively affect institutional quality, leading to conflicts, corruption and fostering rent-seeking activities. Overall, this reinforces the elite at the power that, obviously, is interested in preserving the status quo. In other words, there is a vicious circle between resource rents and low-quality institutions that impedes institutional change. How to regulate this in the best possible way requires a good understanding of how resource rents are generated and appropriated for different sectors, their different effects and how people react to these rents. The evidence suggests the policy toward better political institutions may help countries to improve social outcomes such as health and education which offer high social returns.

Originality/value

The paper is part of the author's PhD research and is an original contribution.

Details

Journal of Economic Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 30 August 2021

Rinki Dahiya and Juhi Raghuvanshi

Notwithstanding the findings of several published articles on human capital, there is scarcity of a comprehensive instrument to measure it. In this direction, the…

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74

Abstract

Purpose

Notwithstanding the findings of several published articles on human capital, there is scarcity of a comprehensive instrument to measure it. In this direction, the objective of present research is to develop a valid and reliable scale to assess human capital.

Design/methodology/approach

This research was divided into two parts. Study 1 focused on literature review of human capital measures, development of items and exploring the factor structure of human capital construct on a sample of 184 employees. Study 2 was based on the survey of 212 employees, and reliability assessment and confirmatory factor analysis was performed to validate the factor structure of human capital construct.

Findings

The findings can be summarized in two ways. Study 1 present that human capital scale is multidimensional consisting of employee capability, leadership and motivation, employee satisfaction and creativity. The findings of study 2 confirms the validity and reliability of three factor structure of human capital construct consisting of 18 items in total.

Practical implications

The study provides a multidimensional psychometric instrument which can help in measuring the human capital of the organization from the perspective of capabilities, satisfaction and creativity and leadership and motivation. Moreover, it can serve as an aid to human resource (HR) and human resource development (HRD) professionals for human capital assessment in the organizations.

Originality/value

This study provides a measure to assess human capital in Indian manufacturing sector organizations that makes a novel contribution to the area.

Details

International Journal of Productivity and Performance Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1741-0401

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Article
Publication date: 14 September 2021

Ncamsile Ashley Nkambule, Wei-Kang Wang, Irene Wei Kiong Ting and Wen-Min Lu

The main purpose of this study is to empirically investigate the impact of intellectual capital efficiency on US multinational software companies' performance from 2012 to…

Abstract

Purpose

The main purpose of this study is to empirically investigate the impact of intellectual capital efficiency on US multinational software companies' performance from 2012 to 2016 by applying data envelopment analysis (DEA).

Design/methodology/approach

It adopts a new slacks-based measure (SBM) to obtain a more accurate performance estimation and rank between companies. Regression analysis is used to test the overall IC and each of its elements (Human Capital, Innovation Capital, Process Capital and Customer Capital).

Findings

The univariate result shows that multinational companies are more efficient than non-multinational companies. However, the regression result shows that multinationality can hardly explain the firm efficiency of software firms. Another interesting finding is that intellectual capital has a positive and significant impact on software firm performance in the US human capital influences firm efficiency directly. However, when human capital is combined with the other elements of IC, the contribution of human capital becomes less significant. This is because people may think that innovation capital, process capital and customer capital can replace human capital, but it is not. In short, human capital may affect firm efficiency through other elements of IC (innovation capital, process capital and customer capital) as it is the base of other elements.

Research limitations/implications

The results show that multinational companies have higher efficiency scores than non-multinational companies. In addition, Intellectual capital has a positive and significant impact on software firm performance in the US human capital influences firm efficiency directly. However, when human capital is combined with the other elements of IC, the contribution of human capital becomes less significant. This is because people may think that innovation capital, process capital and customer capital can replace human capital, but it is not. In short, human capital may affect firm efficiency through other elements of IC (innovation capital, process capital and customer capital) as it is the base of other elements.

Practical implications

Overall, the study highlights the needs of having intellectual capital and its elements (Human Capital, Innovation Capital, Process Capital and Customer Capital) to increase firm efficiency.

Originality/value

First, the authors use a more comprehensive elements of IC, which are human capital, innovation capital, process capital and customer capital for a better IC measurement. Second, this study makes the first attempt using the DSBM model via DEA to examine the operating efficiency of US multinational software firms.

Details

Journal of Intellectual Capital, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1469-1930

Keywords

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