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Saturday, September 23, 2023

What Is Human Capital?


Almost 83% of employers cite their ability to attract and keep good talent as a growing challenge.

When you have great talent in your company, you can be confident that they are capable and confident when doing their tasks. This ensures better products and enhanced customer service, which translates to greater sales and profit.

You too can achieve this for your company with human capital investment. But exactly what is human capital? Read on to find out what it is and why it’s important.

What Is Human Capital?

The human capital definition encompasses the knowledge, personality, social skills, and habits that an employee needs to perform at an optimal level. This level of performance results in greater economic benefits for your company.

This often means finding candidates with a specific mindset that allows them to develop these qualities. Your responsibility, as an employer, is ensuring they receive the right training and benefits that will help them to attain these attributes. Human capital examples include education, training, and health.

Incorporating these into your business begins with effective human capital management.

The Fundamentals of Human Capital Management

Human capital management is one way to increase productivity and improve performance within your organization. It involves viewing your employees as assets that add value to your business and proactively looking for ways to help them achieve success.

Elements of Human Capital Management

Human capital management focuses on specific areas to achieve better results. They include the following:


This involves looking for candidates who are the right fit for your organization. These candidates should be able to add value based on their personality, experience, and education.


This is your opportunity to make a good first impression. It sets the tone for what a new employee can expect from your company. The training involved will introduce new candidates to your vision and the steps necessary to achieve it.

Professional Growth

Human capital management looks at each employee and identifies what they need to develop professionally. It is a way of providing your employees with the opportunity to continue to learn and grow while employed by you.

Performance Management

This provides a way to review an employee’s performance. It allows you to provide them with relevant feedback, mentoring, motivation, and incentives. Employees can also express their needs and concerns to ensure you are both on the same page.


Benefits for your employees are an essential part of your human capital investment. It is a way to show your employees you value them and their contributions to your organization.

Benefits of Human Capital Management

Making your employees the focus of your business, regardless of the size or the industry you’re in, will result in numerous benefits to your business. These include the following:

  • Employees that excel and are highly productive
  • The ability to quickly adapt to changes
  • Attracting and keeping great talent

There are many tools that you can use at your company to ensure you effectively manage your human capital and achieve these benefits.

Focusing on the Capital That Truly Matters

So, what is human capital? This article should provide you with a better understanding. Human capital investment is essential to any business but requires effective management for you to benefit from it.

To find out other essential investments your company should focus on, check out our Business section.

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