Type: Management
Pages: 3 | Words: 709
Reading Time: 3 Minutes

Human capital is a vital commodity in running of an organisation. It is one of the major aspects of a successful enterprise. Hence much emphasis is enhanced on human resource to nurture and grow the capital base of an entity. It is enhanced through education, training and experience to equip the relevant skills and knowledge in the respective fields. Therefore, there is a need to coordinate different human skills to increase the productivity of an entity. Alongside other factors of production and infrastructure, human capital should be integrated to yield organisations goal and ensure continued growth.

Importance of human capital to a corporation

Human capital is an integration of all other factors of production. It forms the backbone of the capital base of an organisation. With well trained and informed human resource, an organisation is in the right track of development. An organisation that does not undertake serious investment in the development of human capital is doomed to fail. Generally human capital should be designed in such a way as to adapt to changes in technology to upgrade the productivity through training. More so, invoking the right attitude to the employees in line with the company goals ensures efficient and effective running of the enterprise. Therefore human resource should be treated more importantly than the other capital. Valuation in the financial statements should be considered to evaluate going concern concept of the corporation.

Many economists have come up with theories expounding on the importance of human capital to an organisation (Maria, 2011). Labour is one of the major components of human resources which enable the integration of other factors of production to yield the output. The human capital can be viewed as intangible asset though hard to value. It is the knowledge, training and the experience gained that makes human capital unique. The skills acquired are crucial in the production of services and goods for an enterprise. A well nurtured human resource is highly skilled to handle complex technological advancements. This gives a corporation an upper hand in tackling the economical challenges and improving its productivity.

The world at large is turning its attention towards the development of the right employees in an organisation. Advanced modes of valuing the workforce in a more productive way rather than as an expense have yielded the recognition of human capital in the financial statements. The human resource is seen as an investment (Maria, 2011). Globally corporations are adopting school students with theoretical knowledge and impacting skills through on job training. Such individuals grow in skill and knowledge. In return they dedicate their time in service to the organisation. As skills and knowledge are enhanced, they lead to high yields and productivity. This in turn reflects to the books of account as growth in human capital. Therefore the human capital can be attributed to growth of the organisation’s profits.

Globalisation has brought the concept of knowledge based society. The world is moving towards the eradication of poverty (Maria, 2011). Therefore education forms the basis for equipping the necessary skills to tackle the current global challenges. To enable tackle the economic challenges the society needs highly qualified personnel for the task to handle the unemployment problem. This requires creation of more jobs. Better skilled jobs and improvement of the existing ones in the market must be emphasized. Thus human capital needs to be enhanced each day to tackle the current and future needs. Entrepreneur skills must be enhanced and integrated with the necessary physical infrastructure to ensure global economical growth. Hence, research is crucial for human infrastructure development.

Apart from the physical infrastructure, to build a successful organisation, human resource is another factor to put into consideration. To make a difference the right individuals should be employed (Maria, 2011). Equipped with necessary skills and knowledge, the management should teach on the right altitude alongside the organisation values. A good corporation among the employees ensure efficiency in production. Moreover, high output is enhanced and smooth operation management is the norm. This leads to high quality output at low cost which creates a competitive advantage for global competition. Therefore, human capital is of great importance to the organisation. Alongside other factors of production, human capital enhances high output. Hence should be valued as an asset in the books of account.

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