This website uses cookies to ensure you have the best experience. Learn more

Human Capital Theory Essay

2873 words - 12 pages

An organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage. Jack Welch.

Human Capital Theory (HCT) purports that peoples learning capacity when effectively utilised results in profitability for the individual, organisation and society at large. It underlines or seeks to explain why Human Resource Development (HRD) is beneficial not only for the individual, but for the firm and the macro-economy.

The extent to which firms undertake training is important in establishing the amount of support for human capital theory. During 2001 – 2002, the Australian Bureau of Statistics reported 81% of all Australian employers provided ...view middle of the document...

Research of various academic papers will be undertaken with a view to obtaining evidence that supports the view that training in isolation cannot achieve the human capital outcomes or returns. Lastly a review of the latest available research will be undertaken to ascertain current trends. For this paper HRD and training is viewed as a practice in its own right separate to other human resource factors.

Human Capital and its Origins

The early economists were the first to use the term Human Capital. Schultz (1961) defined Human Capital as the knowledge and skills that people acquire through education and training that yields returns. Denison (1962) further analysed its contribution to economic growth not explained by increases in other capital, labour and productive land.

Economists gave voice to the advantages human capital had on employees as individuals in their own right or as employees of an organisation. Becker (1964) was one of the first to associate human capital with both improved income to the individual and to society in general given the improved productivity as a result of the education. Blaug (1976) presented human capital as the idea the people spend on themselves in diverse ways by purchasing education and training for their own future pecuniary and non pecuniary gains.

Later papers were prepared in support of human capitals effect on society or the macro-economy. Becker et al (1990) defines human capital in the form or a fertility model and argues there is a correlation between family size and the decision to invest. Becker (1993) looked at the economic effects of investments in education on employment and earnings.

Support for Human Capital Theory in Isolation

The increasing level of competition at the macro-economic level has led manager’s searching for ways to improve performance of the business by seeing human resources as representing a source of sustainable competitive advantage (Barney, 1991).

The changing focus to improving Human Capital stems from the proliferation of organisational change programs introduced by enterprises in an attempt to improve their global competitiveness (Hilmer & Donaldson, 1996). HRT stresses the importance of raising individual productivity. Theories of human resource development view training as part of the strategy to increase employee commitment to the organisation (Smith & Hayton, 1999). Not only has this change led to an increase in the provision of training but it has changed the type of training from specific training to general training,raining is seen as a necessity, given general training more aligns with change programs. Specific training is skills which can only be used within the same organisation. This type of training lessens the risk of losing employees as the skills are not transferrable to other organisations. General training is learned skills that can easily be transferred to another organisation, for example interpersonal, team building and...

Other Papers Like Human Capital Theory

Organizational Behavior At Whole Foods Essay

1293 words - 6 pages Organizational Behavior at Whole Foods Introduction This paper will discuss the organizational behavior concepts that relate to Whole Foods. These concepts include Theory X and Theory Y, human and social capital, the profile of the 21st century manger, Carroll’s Global Corporate Social Responsibility Pyramid and the seven moral principles. Whole Foods Market is a supermarket chain that functions through several completely maintained

Mr. Wilson Odhiambo Essay

3191 words - 13 pages diversification; however, the magnitude of capital flight could explain other causal factors including country-specific risks. Capital flight conforms to the portfolio allocation theory, which states that capital flows are determined by rates of return and risk. Until recently, capital flight has not received attention as required yet it constitutes outflow of scarce resources which could be used for domestic investment and other economically

Gender Inequality in Workplace

601 words - 3 pages . In fact, these skills are not natural. Women have many other skills and are not naturally suited for any certain work, but have been socialized into these positions. Within our society and many others, women have been shunned out of many fields and higher education. Here are a few theories that have been used to explain workplace gender inequality. The human capital theory asserts that inequalities between men and women in the workplace are due

Criminal Law

4081 words - 17 pages people the topic is so troublesome because the concept of death is so permanent. The death penalty is the ultimate, irreversible denial of human rights. Absent the moral struggles that encompass this controversial issue, the certainty of death and its application in capital punishment must be carefully weighed when considering such an extreme measure. Additionally, the certainty of death leaves no opportunity to rectify a wrongful conviction

Content and Description of Courses in Economics Department at the University of Jos

1194 words - 5 pages capital markets; Capital reorganization/reconstruction; The interest factor in financial decision. ECO239 – Basic Accounting for Economics The nature scope and purpose of accounting; Basic financial statements; accounting conventions; Theory and mechanics of double entry book-keeping; Books of original entry; The cash book, the ledger; Classification, recording and summary of business transactions; The revenue accounts and balance sheets of

Shaw and Barry

1357 words - 6 pages 1. Export capital for production abroad: According to Shaw and Barry, deciding what sort of economic arrangements would best promote human happiness requires the utilitarian to consider many things. It is unethical to export capital for production abroad because this capital can be used for production facilities domestically and by exporting this capital, the opportunity is available for local and domestic use is restricted. Each person is to

Neoclassical Growth Theory

3068 words - 13 pages inputs involved. Human capital can be measured by the number of workers, the number of workers adjusted by their working experience, or the total number of working hours. If any input is not measured properly, the measurement error will be included in the residual, thus distorting the figure. As mentioned by Nellis and Parker (2004) neoclassical theory also misses out the growth in natural resources, from the production function. In this

The Death Penalty Is Ethical

1316 words - 6 pages victim’s family, and protects citizens from criminals under the Constitution. One of the reasons that capital punishment is ethical is because it is a deterrence factor for criminals. The theory concerning the death penalty is that the threat of death discourages criminals from a life of crime. This theory has not been proven or disproven thus far. The FBI Uniform Crime Report from 2009 showed that the highest murder rate was in the south and

Classical V Positivist

804 words - 4 pages thought process was in the beliefs of the classical theory. The Classical criminology theory is established on the thought process that committing a crime is a “choice” that individuals make on their own. It is only human nature to know the difference of right from wrong; the classical view depicts that one “knowingly” decides to do wrong not caring the consequences. This is where Cesare Beccaria comes into play, he decided that “do the crime

Belief and Support of Human Capital: Case Study Analysis of Whole Foods

1270 words - 6 pages Lella McLemore Duane Saari BME-214614-04 Organizational Behavior 18 February 2013 Belief and Support of Human Capital: Case Study Analysis of Whole Foods What role, if any, does McGregor’s Theory Y play at Whole Foods? Explain? The primary focus of this case study analysis shall be to examine the methods of Whole Food’s distinctive approach and development to the implementation of creative management strategies and how they can continue

Macro Notes

1258 words - 6 pages resources are to be owned and how decisions about their use are to be made * Factors of production: the resources available to the economy for the production of goods and services * Utility: the value or satisfaction that people derive from the goods and services they consume and the activities they pursue * The factors of production in an economy are: labor, capital, and natural resources * Labor: the human effort that can be

Related Essays

Human Capital Theory Essay

551 words - 3 pages Daria Sociology B2 Human Capital Theory What is human capital? According Schultz (1993), the term “human capital” has been defined as a key element in improving a firm assets and employees in order to increase productive as well as sustain competitive advantage. To sustain competitiveness in the organization human capital becomes an instrument used to increase productivity. The theory of human capital is rooted from the field of

Intellectual Capital Essay

864 words - 4 pages rights such as copyrights and trademarks. Intangible assets are all of the other talents and theory by which an organization is run. Relational Capital Consists of more identifiable items such as trademarks, licences, franchises, but also the less definable, such as customer interactions and relationships. The notion that customer capital is separate from human and structural capital indicates its central importance to an organization’s worth

Development Economics: Nature And Sources Of Economic Growth

2605 words - 11 pages - a new school of the 1980s which focuses upon government involvement*Questions law of diminishing returns in neo-classical model - Paul Romer:*Endogenous growth theory says that government policy to increase capital or foster right kinds of investment in physical capital can permanently raise economic growth.*if capital broadened to include human capital, law of diminishing returns may not apply - increasing returns to investment from education

Evolution Of Trade Theories Over The Years

1315 words - 6 pages . This new era that is unfolding amidst us is characterized by ideas and innovation. It took thousands of years for human society to progress from an agricultural economy to an industrial economy. Here are the trade theories which discussed on self sufficiency and free trade policies. Mercantilist policy tries to make a country self sufficient. Interventionist Mercantilism: According to this theory a country’s