hrm human capital valuation

7/28/2019 HRM Human Capital Valuation

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Overview

What is human capital and its measurement scope?

Key Challenges

Research Methodology

Key experimental statistics and major findings so far

Relevance to policy analyses

Possible future directions


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What Is Human Capital and Key Definitions

Human capital can be broadly defined as productive capacity embodied in

individuals

Input view of human capital: innate ability, education, training, experience,

health care, etc.

Output view of human capital: enhanced earnings, better health, informed

political participation, better parenting, etc.

Human capital theory focuses on relationship between education and wages


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Capital theory is one of the most difficult and contentious topics in

economic theory

The measurement of capital is one of the most complex dimensions in the

official national accounting system

More challenging for human capital

Many unknown factors that serve as inputs in the production of human capital

Data available does not directly measure the theoretical concept of human

capital

The value of human capital has to be imputed

Key Challenges


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List of Some Companies

Standard Chartered Bank

Unilever

Kingfisher

Co-operative Group ltd

Barclays

Home Retail Group

Vodafone Group


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These organisations were selected randomly

Large enough sample to gain an idea of the standard of the

HCM reporting

The criteria used in the research were using variousexisting reporting criteria and in-house expertise

The criteria were split into three key groups

Strategic intent

Governance and assurance

Policy and performance

Research methodology


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Research methodology

The percentage score in each group of criteria was worked

out by calculating the percentage of the total possible

number of points for that group

This technique was also used to calculate the overall

percentage scores


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Groups of Criteria

Strategic Intent - This group of criteria was concerned with disclosures on

HCM strategy setting; key and material HCM issues for the business;

evidence of engagement with employees on material issues

Governance and assurance- This group of criteria related to evidence inthe organisations report as to whether there was a robust governance

structure in place to manage HCM and sustainability issues and a whistle-

blowing process for grievances to be aired

Policy and performance - This group of criteria related to evidence thatperformance in material HCM areas was both managed and measured in

terms of key performance indicators and narrative disclosures.


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Overview of Groups of Criteria


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Key Findings from Measures of Per Capita Human Capital

Average human capital for men grew at 0.6% annually

Average human capital for women grew at about 2.8% annually

Overall average human capital grows at 1.3 % annually

Narrowing gaps may be mainly due to

Increasing labor force participation rate for women and

decreasing labor force participation rate for men

Narrowing gaps between male and female earnings


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Significantly increased proportions of more-educated workers, in

particular for women

Annual growth rate of human capital stock for men is 2.0% between

1981-2001

Annual growth rate of human capital stock for women is a massive

4.2% between 1981-2001

Overall growth rate is 2.8% between 1981-2001

Key Findings from Measures of Per Capita Human Capital


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Possible Future Directions

Construction of database linking Census data, labour force statistics, data on

labor earnings and hours of work, education and migration statistics

Refining estimates by relaxing some assumptions and incorporating latest

developments in relevant fields

Measuring the contribution of human capital to social well-being

Construction of education and health satellite accounts using human capital

approach


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Questions/Comments

hrm human capital valuation

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