HUMAN CAPITAL MANAGEMENT
Human capital management: efficiency,
business reputation, creative potential
The personalization of management, including the qualities that make up human capital, is considered. The factors influencing the growth of efficiency of management of this capital are analyzed.
· Human capital management refers to the knowledge, skills and abilities of a person
· The formation of human capital is influenced by the system of motivation for high performance results, production experience, level of education, qualifications, health status of the individual.
· The manifestation of these signs depends directly on management
· The effectiveness of modern management is largely determined by the priority of human capital. An important consequence of this is the business reputation of the organization and the increase in the creative potential of management.
The human factor of management is most clearly manifested in the problem of personnel management. The main content of the concept of “personnel” is to focus on the role of a person in management processes. The word “personnel” comes from the word “person”, and a person is always not something impersonal, but something that has individuality, a feature in something. The concept of “person” reflects the attitude in management towards people from the standpoint of accounting, vision and respect for their individuality, their personality. And this is more consistent with the idea of increasing the role of the human factor in modern management than the use of concepts such as personnel or human resources.
The system of working with personnel in the entire complex of its characteristics should be aimed at developing the special qualities of a person and his activities in the group. The concept of “human capital” corresponds to the further development of the idea of personalization of management and its human factor.
The concept of “capital” means the main, main, capital in any processes of social development. Capital is a special type of relationship between people that determines the success of their overall economic activity. A person can be considered as labor, but can also be valued as capital. A person who performs functions and orders (and the required number of such people actually exists) is the labor force. But a person of a certain individuality, intelligence, psychology, a person who organically fits into a group is something more than labor power, it is capital. In management, a person can act either labor force, i.e. a soulless object of management, or capital. It all depends on what the attitude towards a person is in management, how the work of personnel management is structured, what his qualities are.
In a generalized and simplified view, human capital refers to the knowledge, skills and abilities of a person that contribute to the growth of his productive power. Human capital also includes the motivation and energy that human beings are endowed with and which can be skillfully used in management to organize the successful performance of work.
Intensive development in the late 50s of the 20th century of the idea of human capital in Western economic theory caused by objective reasons, including the desire to take into account real socio-economic changes generated by the scientific and technological revolution. The growing need for crisis management also played a role.
One of the outstanding economists, professor of economics and sociology at the University of Chicago, Gary S. Becker, received the Nobel Prize in 1992 for the development of the ideas of human capital. A significant contribution to the development of human capital theory was made by Gary Becker's colleague at the University of Chicago, Theodore Schultz, who was also awarded the Nobel Prize.
CONTENT OF THE CONCEPT OF HUMAN CAPITAL
The wealth of society as a whole can be viewed as a combination of human capital and material (physical) capital not directly related to people. According to experts, human capital accounts for up to 50% of the total wealth of the United States.
Thus, the concept of human capital in a generalized and systematized form can be characterized by the following features.
1. A person’s education and his ability to continuously improve his educational level.
2. The system of professional knowledge, skills and abilities in the dynamics of their development and replenishment.
3. Level of competence, readiness for functions and role structure professional activity.
4. Development of individual abilities, mobility, motivation, dignity and health.
5. Creative potential as a consequence of education and developing abilities, motivation for development and improvement.
6. Social and psychological relations in an organization that characterize the culture of activity.
7. Components of the value system.
The understanding of human capital is based on the realization that the potential of workers is increasingly becoming a critical development factor and in many cases it turns out that there is not just enough human resources, there is not enough human capital, i.e. such specialists who would be capable of highly effective work and interested in creative output. From the idea of human capital grows not only the idea of social partnership, but also the idea of modern personal cooperation.
The formation of physical capital and the formation of human capital have a certain similarity: both require the diversion of significant funds to the detriment of current consumption, the level of economic development in the future depends on both, and both types of investments provide a long-term productive effect.
But the formation of human capital sometimes requires significant investments, these include, in particular:
· direct investments, including costs of training and education, change of place of residence and work, provision of necessary conditions return of energy potential and creative abilities;
· investing in health and motivation healthy image life;
· lost earnings, which is an element of opportunity costs, since obtaining education or work may be associated with loss of income;
· moral damage, since getting an education, for example, is a difficult and not always pleasant activity, strains the nervous system, and moving leads to the loss of old friends and acquaintances.
The most important types of investments in a person are usually considered to be education, industrial training, medical care, and various types of motivation. Education and training on the job increases a person's level of knowledge, i.e. increase the volume and change the quality of human capital. Health protection, by reducing morbidity and mortality, extends the life of a person, and also increases the intensity of its use. Motivation helps improve human performance.
The formation of human capital is influenced by many different factors. But the main role in its formation belongs to management, if it has mechanisms for the conscious, consistent and purposeful formation of human capital, if the goal and mission of the organization, its culture contribute to these processes.
The role of human capital in modern management is extremely important. It manifests itself in the following factors.
Firstly, this prevention of crisis situations. The quality of human capital influences the number and nature of errors in decision making, timely perception of cyclical development signals, objective assessment of situations, design of anti-crisis activities. After all, personnel only become human capital when their professionalism, motivation and attitude towards the organization determine high quality activities. With the presence of human capital, the likelihood of a deep and destructive crisis is reduced.
Secondly, during a crisis human capital acts as a stabilizing factor. Educated people have a deeper understanding of the events of the surrounding reality and, therefore, react to them with fewer elements of panic, relaxation, and indiscipline. Many believe that this is determined by the nature of the individual, his character. Partially agreeing with this, one cannot help but see that many personality traits, in particular confidence, composure, efficiency, are formed in the processes of acquiring professionalism, implementing education, manifestation of corporate culture, i.e. everything that reflects the concept and reality of human capital.
Third, when emerging from a crisis, human capital plays a significant role in accelerating this process. Here, such traits as professionalism, enthusiasm, promising thinking that general education provides, and innovative potential are of great importance. In anti-crisis management, the harmony of human capital as an object and as a means of management is especially important. In an effort to mitigate the crisis or resolve it in favor of the development of the organization, the development of human capital should be promoted. Invest in education, a healthy lifestyle, etc., motivate creativity at work, create favorable socio-psychological conditions, form traditions and values, promote the accumulation of experience, and improve the level of corporate culture. Human capital acts as a means or as an element of the management mechanism when, based on its reality and peculiarity, the problems of overcoming the crisis, modernizing production, designing and using various innovations, updating technologies, etc. are solved.
Fourthly, The implementation of the idea of human capital is greatly facilitated by the humanity and sociality of modern management. It involves seeing and taking into account the values and interests of a person; it promotes the intellectualization of work and the determination of promising directions for scientific and technological progress.
Fifthly, human capital focuses on sustainable development, which does not deny its cyclical nature, but smoothes out cyclical deviations from the general development trend.
At sixth, human capital is a factor in the business reputation of an organization, on which the success of her relationships with partners depends, her competitive advantages.
Seventh, human capital contributes to increasing the creative potential of the organization as a result of educational and motivational processes.
Of course, spontaneous formation of human capital is possible. But it will not be formed in the full range of all its positive characteristics if this process is not consciously and purposefully managed. One of the global trends in the development of management theory and practice is the transition from the paradigm of human resource management (personnel management) to the management of human capital development, which should become a top priority.
It is with this priority that the formation of human capital begins. But priority alone is not enough. Another mechanism is needed - resources, knowledge of interests, a value system, social responsibility, etc. To manage human capital, it is necessary to have a full set of its characteristics. However, it should be recognized that the characteristics of human capital are such that it is difficult to accurately assess them “in their entirety.”
EFFECTIVENESS OF HUMAN CAPITAL MANAGEMENT
The system of motivation for high performance results, production experience, level of abilities and education, qualifications, health status - all this, one way or another, should be reflected in the amount of salary and work on the formation of human capital in management processes.
But at the same time the leading role is played education. It is useful to think about whether education in general is capital or whether the concept of capital is based on the nature and specificity of education corresponding to the type of practical and professional activity. Indeed, with a certain type of organization of activity, a situation is possible when education is “anti-capital”, interfering with professional activity or giving rise to “professional cretinism”.
Health status each person is interpreted in the concept of human capital as health capital, one part of which is inherited and the other is acquired. Investments related to health protection can increase human performance and productivity. The flow of services produced by the health fund is thus reduced to “sickness-free time.” It has been noted that people with better educational preparation are more effective in producing and using their “health capital”: they lead a healthier lifestyle, choose, on average, less harmful and dangerous professions, use medical services more wisely, etc.
At the same time, high education and good health may be independent consequences of some common cause. For example, the lower a person’s so-called subjective norm of time preference (i.e., the degree of his preference for present goods compared to future ones), the more actively he cares about his tomorrow today. Both education and health-related activities involve current costs for future benefits. Individuals, and organizations in general, vary in their willingness to make such forward-thinking investments.
Rational use natural abilities is also a function of human capital management. An analogy can be drawn - the natural abilities of a person are in a certain sense comparable to the original qualities of the land that generate rent. The most important factor in managing human capital is investing in its increase and quality.
Human capital is not only an object of management, but also a means of solving many problems of the company's development, therefore, a means of management. The purposeful formation and development of human capital of a certain type enriches the management mechanism and thereby makes it possible to successfully solve many problems associated with increasing the competitiveness of the company, the use of new modern technologies, increased efficiency and productivity of production.
The main means and methods aimed at increasing the efficiency of human capital management are the following.
1. Investments in quality and development of human capital , contributing to the high efficiency of investments in technology development and increased labor productivity.
2. Motivation for the formation and manifestation of those human qualities that characterize the signs of human capital . This motivation leads to increased management efficiency, the creation of a favorable socio-psychological atmosphere in the team, and a creative spirit in activities.
3. Remuneration system , corresponding to the principles of motivation of activity and personal development, accumulated positive work experience.
4. Values , which are used in management processes.
5. Qualifications and Competence , increasing the level of professionalism, developing skills and abilities for effective activities.
6. Information field of activity . Providing information on the criteria of new knowledge, functional content of activity, educational and qualification level of the employee reflects the competence factor.
7. Culture – general, organizational, corporate, methodological, etc.
8. Organization of activities , which can open up opportunities for creative approaches or restrain them, motivate education or ignore its role in the development of the individual and the team as a whole.
All these means and methods are closely interconnected, and only their systematic use makes it possible to obtain the real effect of human capital. In practice, this is not an easy task, but it is possible if there is a system for monitoring human capital according to management priorities and methods for assessing its condition. The simplest assessment method is method for calculating direct personnel costs. It involves economic costs for personnel wages, taxes, security and improvement of working conditions, costs of training and advanced training. But such an assessment does not reflect the real value of human capital, because it does not take into account the motivational aspect of creativity and self-education.
An alternative to this method is the method competitive assessment of the value of human capital. It involves creating better conditions for its own personnel than the working conditions of personnel in a competing organization. This helps attract human capital and its transfer from competing firms. But here it is necessary to assess not only the costs, but also the potential damage to the company in the event of the possible departure of its employee. This method can be called a method of regulating staff turnover. It becomes of great importance in crisis situations. Exiting a crisis always presupposes maintaining, or better yet increasing, human capital. At the same time, increasing human capital does not at all come down to simple staff growth.
There is also method of prospective assessment of the value of human capital, taking into account the dynamics of the value of human capital for the future 5, 10, 20 years. This method not only turns out to be very effective, but sometimes it is simply necessary for large, long-term innovative projects. As the most important and significant results are achieved, the value of some employees may change, and their possible departure is associated with large economic losses that also need to be taken into account.
Understanding human capital requires thinking about it not only as a complex of characteristics of individuals. A summary characteristic is needed separate groups personnel and the entire team of the organization. This characteristic can be called the “integral capital of the organization.” This characteristic is a set of indicators that reflects the properties of the group and team according to such characteristics as general creative potential, general level of education of personnel, structure of employees according to social characteristics (experience, age, length of work in the organization, marital status, etc.), business activity, health status, etc.
By purposefully changing these characteristics, it is possible to manage human capital, shape and change its quality. In this case, human capital acts as an object of management. But at the same time, it is also a means of achieving goals, i.e. element of the control mechanism. By forming human capital, the manager influences the development process of the organization, accelerates it, changes its direction as necessary, eliminates or weakens the negative factors in the functioning of the organization. Each of the characteristics of human capital becomes a means, a kind of leverage.
BUSINESS REPUTATION
One of the most important characteristics of a manager, an individual employee, and the organization as a whole is business reputation. It reflects not only the results of work, but also those qualities that characterize human capital. That is why business reputation management becomes in some cases an acute, but in any respect an important issue.
The financial aspects of business reputation are called goodwill. . The existence of goodwill directly depends on the organization having some advantage that provides it with profits that exceed the industry average. The role of human capital in obtaining such advantages is very large.
Goodwill as an element of business reputation and a market indicator financial situation company can be positive or negative. A positive goodwill value means that the financial analyst (or the market) believes that the value of the company is higher than the value of its equity capital (net assets), a negative value means that the value of the company is lower than the total value of the assets and liabilities of this company. A zero reputation is usually characteristic of companies that have recently entered the market and have not had time to form an opinion about themselves.
Goodwill assessment can be used as an independent and effective criterion for the financial stability of an organization. This is due to the need to calculate the company’s capitalization and its economic added value. Negative goodwill values can be considered as a signal of a potential danger to the existence of the company (bankruptcy, hostile takeovers). A positive business reputation becomes an important means for strengthening the position of an organization, since it allows it to have certain competitive advantages in the markets of labor, capital, resources, securities and, thanks to this, generate additional income. A positive reputation not only facilitates the company’s access to various resources (credit, material, financial, etc.), but also ensures reliable protection of the company’s interests in the external environment and affects the validity of management decisions.
A distinctive feature of business reputation is that it does not exist outside of connection with a specific legal entity or a specific organization. It cannot be alienated, disposed of or accounted for separately from the company.
Business reputation has a significant impact on the sustainability of the functioning and development of an organization. The sustainability of an organization's development is understood as its ability to maintain positive trends of change in conditions of instability of the external environment, increasing competition and uncertainty of the situation. This ability is determined by a whole complex of factors (see figure).
CREATIVE MANAGEMENT
Modern development of management, especially in the aspects of human capital and the increasing role of intangible assets, confirms that today it is impossible to solve complex management problems, relying only on the elementary use of knowledge contained in recommended and proven techniques. There are such rapid changes in life that it becomes more and more difficult to take into account their features. The problems a manager faces change. The person the manager manages changes, his value system is revised, etc. These changes in a very specific way require a change in the type of management: from administrative-organizational to socio-psychological (with the priority of the human factor) and then to creative, which most fully characterizes the role of human capital.
In modern management, there are noticeable trends in strengthening the role of intelligence; management increasingly depends on the deepening and mastery of intellectual activity techniques by both managers and staff. The processes of increasing complexity of modern management increase the cost of mistakes and increase the role of intelligence, on which the scientific approach, mastery of new technologies and their improvement depend. But intelligence can be different. A special type of it is the implementation of creativity and creative interaction between people. This is reflected in creative management, which is a type of management that relies on the creativity of staff and involves a manager’s creative approach to solving any problems. At the same time, creativity is classified as the search for extraordinary, non-standard approaches, the emancipation of intellectual imagination, the desire to see the future, the desire and possibility of realizing individuality. Moreover, creativity is not only and not so much an insight (eureka), it is based on the study of situations, problems, trends, factors, etc.
The management of any organization can be considered from the standpoint of the magnitude and level of its creative potential - one of the most important characteristics of management.
The concept of “potential” is widely used in characterizing human activity. It means the possibility of using various resources in their totality and systemic connection. The main ones among them are the resources of knowledge, information, experience, time, technical means, etc. This concept includes economic, including financial, resources, as well as social resources (a resource of trust, respect and support) and organizational (proven experience of certain types of organizations ). Intellectually - Creative skills of a person are also his resource successful activities. And the possibility of using this resource reflects the concept of “creative potential”. Investments in human capital.
Potential and resource are often considered identical concepts. However, it makes sense to distinguish them. Potential characterizes the possibilities for the combined use of various resources. And this depends on their structure, on the skills and education, experience of the manager, and the system of organizing activities. Potential is not only the supply of resources, but also the attitude towards them.
Modern management, reflecting the characteristics and conditions of development of production and society, technology and man himself, increasingly needs a research approach. It contributes to the dynamism and perspective of management, the growth of its creative potential and increased professionalism in making management decisions, scientific management.
Study is a type of human activity whose purpose is:
· recognize problems and situations;
· determine their origin;
· identify properties, content, patterns of behavior and development;
· establish the places of these problems and situations in the system of accumulated knowledge;
· find ways, means and opportunities to use new ideas or knowledge about a given problem in the practice of solving it.
Research has a richer content and includes a wider range of methods than, say, analysis, design or diagnostics. This includes observation, evaluation, conducting an experiment, classification, constructing indicators and much more. Research certainly includes analysis, but is not limited to it. Thus, research represents a higher level of human creative activity.
In the processes of management development, new realities and new needs arise, which in a certain way are reflected in its content. Today, one of the main functions of management is the research function. It is a consequence of the increasing dynamism and diversification of management, an important factor in anti-crisis management, and the increasing role of professionalism in management.
In modern management, research activities should account for at least 30% of a manager's working time (or effort). If he has success, he must understand why he achieves it and how he can consolidate it. If a manager's decisions are unsuccessful, then one must see the true reasons for this failure. In this case, it is necessary to rely not only on intuition, but also on the methodological apparatus of research.
Subsequently, the share research activities will apparently increase. This is a natural trend in the development of management, since today in management, as a rule, there are no simple solutions. It is necessary to study situations, problems, conditions, factors of the effectiveness of human activity; we need a well-founded choice of solutions from the increasing variety and number of their options.
The organization is in constant development. This gives rise to many problems that need to be addressed and resolved in a timely manner. Many situations and problems arise unexpectedly, manifest themselves acutely and do not allow time to think. Postponing or delaying their solution threatens a crisis, and maybe even a catastrophe. Timely problem solving is one of the tasks of creative management.
In modern management, an increasingly important role is played foresight, forecasting. Today, making predictions based solely on intuition or simple extrapolation of current events into the future is unthinkable. And here we again come to the idea of the benefits of research as a management function for predicting crises, sudden changes, for preparedness for the paradoxes of the future, for assessing the chances of success, which must not be missed, assessed, and realized. You can see the future only by relying on a deep understanding of all the trends of the present - small and large. Successful and reliable forecasting cannot happen without research. Management research makes management itself exploratory, and therefore effective, sustainable, viable, and adaptive to any changes.
Research is not only a function of modern management, but also the style of functioning of the entire management system, a certain type of organization of personnel activities (requirements, responsibility, motivation, standards).
Note that the concepts of innovative management and creative management are very close. However, there is no absolute identity between them. Innovations are not always based on research and forecasting. They can be introduced based on experience, and sometimes common sense. Creative management is based on a research approach, the study of trends, creative activity, the search for fundamentally new innovations, and sometimes even the denial of generally accepted and generally accepted experience. The best management option is a combination of innovative and creative approaches.
Management must not only be creative and exploratory, but also be influenced by the exploratory approach in all rationalizations, modernizations and improvements. In other words, it is necessary to study not only the processes of the management object, but also the processes of functioning and development of management itself. There is specificity here with respect to both the nature of the problems being studied, and the methods of studying them, and the use of the results.
In management research, the subject of study may be management organization, informal management, personnel professionalism, motivation mechanisms, saving time, using computer technology, etc., as well as combinations of various problems. Selecting a subject of study and focusing both your own and your staff’s attention on it is the art of management. Of course, a modern manager should not be a scientist in the full sense of the word, but he must master the basic techniques of research work and be able to organize it to find new factors for increasing management efficiency.
Thus, today research acts as one of the main functions of management, as an approach to management that ensures the quality of management decisions, as a means of improving management (professionalism, innovation, motivation) and as a factor in the formation of human capital and managing its development.
The formula of modern management is “manage by improving and improving.” Only management research will allow this formula to be realized. Thus, research is the main factor for success, increasing management efficiency.
The development of professionalism in various fields of activity leads to an understanding of research as a logical and natural element of its practical effectiveness. Increasing the efficiency of human capital management requires many of the modern trends. The economic and social efficiency of human capital management, its use and implementation depend on "tension fields". They are determined by the characteristics of the management system and are as follows.
1. A combination of centralization and decentralization of management. This determines the freedom of creativity and initiative, the freedom to express human qualities and the likelihood of their vision, as well as appropriate assessment at different levels of management. Sometimes a person has a feeling that the manager does not understand his abilities, potential and interests. Individuality often disappears in collective reports, general decisions, certificates, reports, reviews. Prospects for development disappear, enthusiasm fades. The man turns into best case scenario into a conscientious, good performer. The possibilities for forming human capital are deteriorating.
2. Integration and differentiation of activities. Integration is the most important factor in successful management, but it must be built in such a way as not to destroy individuality, but to promote its manifestation, affirmation and development. This is possible if there is an appropriate setting in the system of working with personnel, if personnel research is focused on finding such means and conditions for working with it that would not turn integration into a mechanistic association that destroys any manifestation of individuality.
3. A combination of collectivism and individualism. Each person has individual and personal interests, but for each person they are in their own combination, according to priorities, role in behavior, attitude towards people, signs of development. There are cases when collectivism practically destroys any manifestation of individual qualities, causes a painful idea of justice, fetters and limits the possibilities for the development of individuality. Opposite situations are also possible, when individualism crosses out collectivist interests and subordinates them exclusively to individual interests. Both extremes characterize the “field of tension.” When forming human capital, it is necessary to resolve this tension.
4. Contradictions between economy and ecology of personnel. This tension depends on the personnel management system and is one of the factors in human capital management. Saving personnel is the desire to get from them the return that reflects their capabilities and potential. It is necessary for the company and characterizes the real conditions of management organization. Personnel ecology – careful attitude to it, protection from possible overloads or stressful situations, support for positive changes. After all, motivation can be built in different ways: you can give a salary bonus for a healthy lifestyle, increasing your educational level, but you can limit the terms of bonuses only to production successes without taking into account the costs of effort, health and time.
5. Foreign and domestic policy. Policy is a combination of strategy and management tactics. But politics is always closely connected with economics, and there can be harmony or sharp contradictions between them. A person is always in the field of these contradictions, in the tension of interaction between economics and politics. And this cannot but affect his activities, the manifestation of his individual qualities and his attitude towards work, towards people and towards the organization as a whole. Only management that harmonizes the relations between politics and economics helps to unlock the potential of a person’s personality and transform it into capital.
Modern management ideas should reflect the real needs and problems of improving the management of organizations, in particular the problems of human capital. However, these problems are presented in sufficient detail in the management literature. Management science should enrich practice with new approaches and methods, see the tasks not only of the present, but also of the future. Understanding the issues related to human capital development is not yet sufficient. In many ways, these are problems of the future, but it is necessary to work in this direction today.
LITERATURE
1. Bukovich U., Williams R. Knowledge management: a guide to action / Transl. from English – M.: INFRA-M, 2002.
2. Daft R.L. Theory of organization / Transl. from English – M.: UNITY-DANA, 2006.
3. Korotkov E.M. The concept of Russian management. – M.: DeKA, 2004.
4. Kreiner S. Key ideas of management / Transl. from English – M.: INFRA-M, 2002.
5. Chernyshev V.N., Dvinin A.P. Person and personnel in management. – St. Petersburg: Energoatomizdat, 1997.
Human capital is a set of competencies, knowledge, abilities, skills used to meet the diverse needs of an individual and society as a whole, as well as social attributes of an individual, including creative, cognitive abilities, embodied in working abilities.
Human capital is seen as an activity that cannot be delegated to third parties. Human capital cannot be sold or transferred to others.
The term “human capital” was first coined by Theodore Schultz.
According to Theodore Schultz, “one of the forms of capital is education, it is called human because this form becomes part of a person, and capital is due to the fact that it represents a source of future satisfaction or future earnings, or both together.” Schultz later expanded his theory as follows: “Consider all human abilities as either innate or acquired attributes... that are valuable and that can be developed with appropriate investment will be human capital.”
Classification of human capital:
- individual human capital – individual level;
- human capital of an organization (firm) – micro level;
- regional human capital – meso level;
- national human capital – macro level;
- supranational (global) human capital – global level.
Human capital provides for a multi-level development model. Human capital lower level originates in the cognition, learning, skills, behavior and other characteristics of individuals. Individual human capital produces knowledge and innovation. Then individual human capital is strengthened by interaction with the environment, and manifests itself as human capital of a higher level as a collective phenomenon - the human capital of an organization, national human capital, supranational human capital. At the same time, the collective phenomenon of human capital is manifested and at the same time remaining part of individual human capital.
Individual human capital, in contrast to collective human capital (human capital of an organization, national human capital), is a non-renewable source.
Individual human capital it is an economic type of talent that includes the inherent personal qualities of a person, tied to his body and accessible only through his own free will, for example:
- physical and mental health;
- knowledge, skills, abilities;
- natural abilities, ability to set moral examples;
- education;
- creativity, inventions;
- courage, wisdom, compassion;
- leadership, indescribable personal trust;
- labor mobility.
In a narrow sense, the value of individual human capital can be described through the formula:
Where,
Zi – human knowledge;
Ui – human skills;
Oi – human experience;
AI – human initiatives.
The intellectual, emotional and motivational skills that individuals possess determine their potential and importance in society or an organization. Each of these elements of individual human capital contributes to success not only in a person's professional life, but also in a person's personal life.
The skills that a person acquires are a form of capital—individual human capital. Skills are acquired through intentional investments in education. Human capital theory views education as a commodity that must be used for economic gain. Individual human capital includes expenses and investments for obtaining education and maintaining health, which leads to an increase in the productivity of the bearer of this human capital.
The relationship between knowledge and individual human capital can be understood if a person realizes that capital is formed through investment. Investments in human resources are intended to increase productivity and the ability to earn more.
The value of individual human capital in a broad sense is determined by the formula:
Where,
CCi – the cost of individual human capital;
PSi is the initial cost of individual human capital;
SUZi=γ1× PSi – the cost of outdated knowledge of individual human capital;
SPZi=γ2× PSi – the cost of acquired knowledge, skills of individual human capital;
SIi is the cost of investment of individual human capital;
SZNi=γ3×PSi – the cost of tacit knowledge, abilities of individual human capital;
γ1, γ2, γ3, γ4 - weighting coefficients determined by experts.
Knowledge quickly becomes outdated, so it is important for a person to constantly acquire and apply useful knowledge. People accumulate knowledge and skills, which are considered one of the main forms of capital in the modern economic system. Analyzing the components of formula 2 of individual human capital, we come to the conclusion that the amount of human capital depends on the production of knowledge.
- knowledge embodied in physical tools, machines, developments, research, that is, accumulated knowledge that becomes obsolete over time;
- knowledge embodied in individuals for the purpose of obtaining education, qualifications, and acquiring skills;
- non-embodied (implicit) knowledge, for example: books, textbooks, instructions, guides.
Knowledge transfer helps increase human capital. Knowledge transfer includes components such as the source (sender) of knowledge, the recipient of knowledge, the relationship between the source and recipient of knowledge, the transmission channel, and the overall context. Knowledge transfer occurs at the individual level, micro level, meso level, macro level and global level.
Human capital of the organization (enterprises, firms)
Knowledge within the organization is used to ensure innovation, productivity, quality and is a determining component for winning the competition in finding customers, technologies, technical solutions, specialist knowledge, financing, which creates intangible advantage. Economy of knowledge, dynamics of development of organizations and local systems based on the exploitation of cognitive and intangible resources and intangible objects. An intangible advantage is formed by the assortment of attributes of an enterprise's intangible assets.
Human capital refers to the intangible assets of an organization that do not have physical fitness, but at the same time has a certain value for the organization. Human capital turns into organizational assets. Human capital is not fungible. In an organization, individual human capital forms corporate culture, Wednesday. Human capital is inherent in people and cannot be owned by an organization.
The concept of human capital of an organization (firm) can be interpreted in different ways. This can be a resource that belongs to the organization - ideas, technologies, know-how, equipment, scientific research, job descriptions, etc. . On the other hand, human capital is the wealth of an organization in relation to the qualifications of its personnel. An organization's human capital is created through employees, their innate and acquired knowledge, skills, abilities, talent and competencies. Therefore, the human capital of an organization represents the total value that the company’s employees create in accordance with their knowledge, skills, capabilities, using the organization’s resources.
The formation of human capital of an organization is carried out using the following methods:
- acquisition (selection and hiring);
- attraction and retention;
- development and training;
- merger and (or) acquisition.
Ways to increase the human capital of an organization:
- trainings;
- performance monitoring;
- direct communication;
- certain job responsibilities;
- motivation.
The most common professional development tool is employer-provided training.
The cost of human capital of an organization (firm) depends on the category of employee (unskilled and skilled workers, creative specialists, managers, etc.). The value of an organization’s human capital is influenced by: high professional competence, intellectual and creative potential, the ability to perceive innovation and be a participant in innovation, adaptability to rapidly changing production conditions, mastery of several specialties, professional mobility, responsibility, personal characteristics. The cost of an organization's human capital is probabilistic in nature.
An organization's human capital has a value that must only be understood in economic terms. This type of value does not take into account the importance of the individual to family, society, or other aspects of one's social network. The primary focus of an organization's human capital value is strictly on the skills, knowledge and experience that an individual possesses and how much these assets are worth in relation to a particular employer. An organization's human capital creates other forms of capital.
An example of how a person acquires human capital is the professional training of athletes. Often, an athlete begins the process of preparing for a sports career by learning the basics of this sport: receiving an education, participating in sports events, and gaining experience in a particular sport. Assuming that the combination of knowledge, talent and experience is sufficient, then the athlete is offered the opportunity to play professionally, where he gains additional experience. This entire process has economic value because the athlete's human capital is this species sport increases, and this leads to sporting achievements (results) in various competitions. The value of such an athlete’s human capital increases as a result of his performance, and he becomes a salable “brand.”
The human capital of an organization (HC) can be represented as the sum of the individual human capital of the employees of this organization:
An organization's human capital is a source of competitive advantage and includes collective competencies, know-how, innovation, organizational procedures, intelligent technologies, corporate culture and relational capital. Armstrong identifies the three most important factors in achieving competitive advantage: innovation, quality and cost of leadership, but all of these depend on the quality of the organization's human resources. In the modern economy, the very existence and development of an organization depends on its innovativeness.
Human capital, as an asset of an enterprise, needs accounting.
The reputation of the organization and the employer brand influence the attraction of human capital to the company. Human capital may leave the organization in search of better opportunities for the work environment, training and development, for better evaluation and recognition.
Regional human capital
Currently, human capital is the main factor in the socio-economic development of the region.
The economic development of the regions should include the formation of a “resource portfolio” that ensures the growth of the competitiveness of the regional economy due to (see Figure 1):
- investments;
- innovation and technology;
- accumulated funds.
Figure 1. Stages of growth of competitiveness of the regional economy.
The economic success of a region depends on the population living in a given territory, the capabilities of regional human capital, and the level of unemployment. In regions with high unemployment rates, there is an outflow of labor, and as a result, a decrease in regional human capital. At the same time, dynamically developing regions experience a shortage of labor resources. On January 1, 2015, the labor mobility program for Russians is being launched, for which 6 billion rubles are planned to be allocated from the federal budget in the next three years.
The property of human capital mobility is used in regional labor markets for intraregional movement of human capital. The mobility of the regional population is determined by economic and social reasons. Most household families at the regional level support the migration of their grown children to big cities to study, search for a better-paid job, labor mobility.
Intraregional migration of human capital does not require the cost of moving the whole family, and reduces tension in the labor markets of underdeveloped and depressed territories and single-industry towns in the region. Educational and labor migration of human capital within the region reduces pressure on the regional labor market. IN modern conditions labor migration of highly qualified workers is an important source of human capital accumulation, ensuring prosperity and economic growth in the region. Population mobility is modernizing the economic space of the region. With increasing population mobility, the unemployment rate decreases, and this leads to a change in the demographic structure of the region.
The human capital of the region is based on public consciousness and socio-political development. Regional human capital is assessed as the share of the population with a certain level of education in total economic activity, income or output per capita. The knowledge and skills of the region's people are a key contribution to the region's business competitiveness and ability to grow in the future. The importance of a region's human capital is reflected in the depth and breadth of education, training, qualifications and professions of the region's population.
The effect of human capital at the regional level depends on economic indicators:
- impact on the productivity of the region in the area of employment;
- expanding employment opportunities for individuals endowed with a certain level of individual human capital.
The effect of regional human capital depends on the level of wages in the region, the migration of university graduates to economically developing regions, the migration of students, the creation of local developing agglomerations, and the development of the region’s infrastructure.
The pattern of student migration is observed from places of permanent residence to places with a higher level of education and subsequent first employment after receiving higher education. The flow of applicants to universities largely depends on the economic or innovative characteristics of the region. Migration of human capital contributes to the production of regional knowledge. The regional knowledge base plays an important role in attracting university graduates into local employment. The regional university system promotes the growth of the local regional knowledge base.
The region's innovation indicators are directly related to the number of university graduates remaining in the regional economy. Innovative regions that demonstrate significant regional knowledge assets tend to demonstrate a rich pool of skills, ideas and technologies, cultural environment, and business development. Skills, ideas and technologies are embodied both in the human capital of the region's workforce and in the physical capital of the region's population.
The deficit in regional human capital is a factor in reducing investment in the region's economy, and as a consequence, economic decline. Retaining professional and highly qualified personnel is one of the problems of retaining regional human capital. Globalization and dynamically developing regions influence the outflow of talent from less developed regions.
Innovative regions create a dynamically competitive economic environment that shapes the market. The presence of regional knowledge assets through local universities and research institutes ensures the innovativeness of the region. Local research develops regional business structures and generates a local workforce.
National human capital
Demography makes strict demands on future trends in the development of the national labor market and national human capital. The age structure of the population is shifting towards an increase in the number of people older than working age. The working age population is declining. These trends lead to a significant increase in the demographic burden on the working-age population.
National human capital is the human capital of a country, which is an integral part of its national wealth. The condition for the accumulation of human capital is a high quality of life. The development of human capital and improving the quality of life is significantly based on the implementation of national projects. Human capital is the ability of the population to ensure economic growth.
National human capital includes:
- social capital;
- political capital;
- national intellectual priorities;
- national competitive advantages;
- natural potential of the nation.
Increasing national competitiveness is a complex task, the success of which is determined by the development of human capital, economic institutions, the implementation and strengthening of Russia’s existing competitive advantages in the energy and raw materials industries and transport infrastructure and the creation of new competitive advantages associated with the diversification of the economy and the formation of a powerful scientific and technological complex and economy knowledge
National human capital is part of innovative (creative) labor resources, accumulated competitive and highly productive knowledge, an innovation system, intellectual capital and innovative technologies in all spheres of life and the economy, as well as the quality of life, which together ensure the competitiveness of the country’s and state’s economy in world markets in conditions of globalization.
National human capital is measured by its value, calculated by various methods - by investment, by the discounting method and others. The value of national human capital is calculated as the sum of the human capital of all people.
National human capital makes up more than half of the national wealth of each developing country and over 70-80% of the developed countries of the world.
The characteristics of national human capital determined the historical development of world civilizations and countries of the world. National human capital in XX and XXI centuries was and remains the main intensive factor in the development of the economy and society. National security of the Russian Federation is achieved through the development of a national innovation system and investment in human capital.
Tax incentive measures aimed at supporting investment and human capital development in the Russian Federation:
- providing benefits for personal income tax;
- tax incentives for investment;
- support for production modernization;
- simplification of tax accounting and its convergence with accounting.
Supranational (global) human capital
Globalization refers to the free, natural movement of all resources: capital, goods, technology and people. The globalization of the economy forms a supranational, global level of human capital development. Globalization provides the opportunity to access new pools of human capital around the world. The mobility of human capital and talent across national borders creates a risk of economic growth for organizations, regions, and countries that leave the pool of human capital. Global mobility of human capital within global corporations and companies increases their economic returns. Cross-border migration of skilled labor over the next 20 years could lead to increased unemployment and social unrest.
Global human capital is the combination of education, experience, personal qualities and competencies that are represented in the workforce around the world that contribute to the development of the global economy. The concept of workers as important assets that have measurable economic value has led to development policies by international organizations in less developed countries. Much of international law revolves around workers' rights and recognition of the importance of creating high cost human capital for the health and stability of the country. The most competitive human capital is labor from China, India, and South Korea.
Analysts and international economic development organizations evaluate the potential of developing countries and the success of investment efforts through economic indicators such as the rate of human capital formation. The rate of formation of human capital is determined through the “Human Development Index” (HDI), which includes information on life expectancy, level of education and average personal income.
The concept of global human capital compares and evaluates labor force indicators in different countries. The globalization of human capital stimulates organizations to innovate and transform human capital management practices.
The formation of human capital in any country can be carried out through investments in education, the healthcare system, and strengthening conditions family life, civil rights.
The theory of human capital began to be studied back in the 19th century. Then this became one of the promising directions for the development of economic science. Already from the second half of the twentieth century. it became a major achievement, primarily in the economics of education and labor. In the economic literature, the concept of human capital is considered in a broad and narrow sense. In a narrow sense, “one of the forms of capital is education. It was called human because this form becomes part of a person, and capital is due to the fact that it represents a source of future satisfaction or future earnings, or both.” In a broad sense, human capital is formed through investments (long-term investments) in a person in the form of costs for education and training of the workforce in production, health care, migration and searching for information about prices and incomes.
In the "Economic Encyclopedia" human capital is defined as "a special type of capital investment, a set of costs for the development of human reproductive potential, improving the quality and functioning of the workforce. The objects of human capital usually include knowledge of a general educational and special nature, skills, and accumulated experience. For more a complete and detailed description of human capital uses a functional approach.The principle of functional definition characterizes a phenomenon not only from the point of view of its internal structure, but from the point of view of its functional purpose, final intended use.
Therefore, human capital is not simply a set of skills, knowledge, and abilities that a person possesses. Firstly, it is an accumulated stock of skills, knowledge, and abilities. Secondly, this is a stock of skills, knowledge, and abilities that are expediently used by a person in one or another sphere of social reproduction and contributes to the growth of labor productivity and production. Thirdly, the appropriate use of this reserve in the form of highly productive activities naturally leads to an increase in the employee’s earnings (income). And, fourthly, an increase in income stimulates and interests a person through investments that may relate to health, education, etc., to increase, accumulate a new stock of skills, knowledge and motivation in order to effectively use it again in the future.
Features of human capital:
1. In modern conditions, human capital is the main value of society and the main factor of economic growth;
2. The formation of human capital requires significant costs from the individual himself and the entire society;
3. Human capital in the form of skills and abilities is a certain reserve, i.e. may be cumulative;
4. Human capital can physically wear out, change its value economically and depreciate;
5. Human capital differs from physical capital in terms of liquidity;
6. Human capital is inseparable from its carrier - a living human personality;
7. Regardless of the sources of formation, which can be state, family, private, etc., the use of human capital and the receipt of direct income is controlled by the person himself.
In the economic literature, there are several approaches to classifying types of human capital. Types of human capital can be classified according to the elements of costs, investments in human capital. For example, the following components are distinguished: educational capital, health capital and cultural capital.
From the point of view of the nature of promoting the economic well-being of society, a distinction is made between consumer and productive human capital. Consumption capital creates a flow of services that are directly consumed and thus contributes to social utility.
This can be a creative and educational activity. The result of such activities is expressed in the provision to the consumer of such consumer services that lead to the emergence of new ways to satisfy needs or increase efficiency existing way their satisfaction. Productive capital creates a flow of services, the consumption of which contributes to social utility. In this case, we mean scientific and educational activities that have direct practical use namely in production (creation of means of production, technologies, production services and products).
The next criterion for classifying types of human capital is the difference between the forms in which it is embodied. Living capital includes knowledge embodied in a person. Non-living capital is created when knowledge is embodied in physical, material forms. Institutional capital consists of living and non-living capital associated with the production of services that satisfy the collective needs of society. It includes all governmental and non-governmental institutions that promote the efficient use of the two types of capital.
Based on the form of on-the-job training for employees, we can distinguish special human capital And total human capital. Specialized human capital includes skills and knowledge acquired as a result of special training and are of interest only to the company where they were acquired. Unlike specific human capital, general human capital represents knowledge that can be in demand in various fields human activity.
Thus, while there are a large number of definitions and types of “human capital”, this concept, like many terms, is “a metaphor that transfers the properties of one phenomenon to another according to a common characteristic for them.” Human capital is the most important component modern productive capital, which is represented by a rich stock of knowledge characteristic of a person, developed abilities, determined by intellectual and creative potential. The main factor in the existence and development of human capital is investment in human capital.
Man, his creative qualities, strengths and abilities, with the help of which he transforms himself and the world, have traditionally occupied a central place in economic and social sciences. At the same time accelerated development The material and technical base of production associated with the industrial revolution obscured the problems of human development and his productive abilities, creating the illusion of the superiority of physical capital in ensuring economic growth. As a consequence of this, long years Human productive abilities were considered and assessed as one of the quantitative factors of production. The task was only to successfully combine labor, fixed and working capital.
The evolutionary development of society is accompanied by the evolution of human status in the economic system of society. Labor, which is a conscious, purposeful and effective activity, is the most essential part of human life, and concepts in this area are being transformed most dynamically.
At the stage of the emergence of capitalism, the basic concept for the development of production was the concept of “labor power”, or the ability to work, “the totality of physical and spiritual abilities possessed by the organism, the living personality of a person, and which are put into action by him whenever he produces any use values." A person here was considered as a means of labor, as a productive force, and his abilities were assessed only in the production process economic benefits. Physical and spiritual abilities had a qualitative dimension, but were not structurally represented and were assessed in simplified quantitative terms.
With the increasing role of scientific and technological progress in economic growth, the attitude of Western economists to the problems of reproduction of the labor force has changed. The focus of attention of scientists has focused on the problems of creating a qualitatively new workforce, while previously the main problems were the problems of using this workforce. The comprehensive automation of production processes and the commissioning of mechanisms that were difficult to manage required a revision of the attitude towards the “basic material”, which gave rise to the concept of “human resources”, which expresses a different essence and a different quality of labor and labor relations. Human resources include the level of education, creativity and potential for the comprehensive development of employees, their health, general culture and morality, improvement of labor relations, motivation, entrepreneurship, etc.
Structural changes in the total labor force, interest in factors of economic growth and economic dynamics were the reason for the emergence and development of the theory of human capital.
Under the influence of the scientific and technological revolution, automation and mechanization of labor, transformation of the social structure of society, increasing in these conditions the importance of qualifications, the level of education of each person individually and the population as a whole, the traditional point of view on the strict distinction between labor as the primary factor of production and capital as a factor derivative, inherited from the industrial revolution, has lost its original meaning.
In this regard, ideas about the ability to work itself are modified. The concept of “labor force” no longer fully expresses the increased role of a person in the economy, who no longer simply influences material capital, but manages it; he is required not just to have professional knowledge, but to be able to make informed decisions.
A person’s abilities are the result of purposeful efforts made by both the owner himself and the people around him. Therefore, it can be argued that any person contains a certain amount of past labor, which is used by him and serves as a kind of capital, i.e., unlike labor power, which is sold or bought in the wage labor system, human capital is advanced and reimbursed as fixed capital, requiring significant investments in the process of its formation and development.
Taking into account the intangible nature and multidimensionality of human capital, various authors freely formulate the concept of human capital and place ambiguous emphasis on its individual components: some tend to focus on the functional side of human capital, i.e., its ability to generate income, while others provide it essential characteristic - as a form of personal factor of production. In almost all definitions after the 60s. in the twentieth century the principle of an expanded interpretation of human capital is observed: not only realizable knowledge, skills and abilities, but also potential ones (including the possibility of acquiring them); not only external stimulation, but also intrinsic motivation worker, which, in essence, does not change the economic content of human capital.
Human capital can be most fully characterized as follows: it is innate, formed as a result of investments and accumulated a certain level of health, education, skills, abilities, motivations, energy, cultural development, both of a specific individual, group of people, and society as a whole, which are appropriate are used in one or another sphere of social reproduction, contribute to economic growth and influence the income of their owner.
Human capital, being part of total capital, is a combination of its constituent elements, i.e., it has its own internal structure.
Most economists form the structure of human capital according to the cost principle, based on various types of investments in human capital.
As a result, I. V. Ilyinsky identifies the following components: educational capital, health capital and cultural capital.
F. Neumann considers a combination of the following four components to be the main components of human capital: cultural and ethnic characteristics; general education; professional education; key qualifications.
E.V. Vankevich highlights: education and vocational training, awareness; physiological characteristics of the individual and health status; professional and geographic mobility; psychological characteristics personality, driving needs, motivation, values.
Depending on the degree of generalization of human capital in its structure, the following components can be identified: individual, collective and social. The first two are considered at the micro level, as the human capital of an individual person and a group of people united by a certain sign: company staff, members of a socio-cultural group, etc. The social component is human capital at the macro level; it represents the entire human capital accumulated by society, which, in turn, is part of the national wealth, a strategic resource and a factor in economic growth.
The most generalized approach to determining the components of human capital is the approach of Yu.G. Bychenko, according to which the structural structure of human capital is as follows:
- - biological human capital - the value level of physical abilities to perform labor operations, the level of public health;
- - cultural human capital - a set of intellectual abilities, education, abilities, skills, moral qualities, qualifications of individuals that are used or can be used in labor activity and legitimize the possession of status and power.
Biological human capital consists of two parts: one part is hereditary, the other is acquired. Throughout an individual's life, wear and tear of this capital occurs, accelerating more and more with age (death must be understood as a complete depreciation of the health fund). The implementation of investments related to health protection is capable of only strictly limited development of the biological capital of the employee. Its main purpose is to increase the period of active life of the individual.
Cultural capital is a person’s linguistic and cultural competence, wealth in the form of knowledge or ideas that legitimize status and power, support the established social order, the hierarchy existing in society. The cultural capital of an individual is characterized by the following indicators: intellectual culture (intellectual capital), educational culture (educational capital), moral culture (moral capital), symbolic culture (symbolic capital), social culture (social capital).
To reproduce human capital, significant costs and various types of resources are required both from the individual and from society (government institutions, private firms, families, etc.). Emphasizing the similarity of such costs to investments in other types of capital, economists refer to them as investments in human capital. The sources of such investments are the costs of employers, government budget expenditures, and individual expenditures of citizens.
Thus, human capital is very important view investment in the modern economy.
Human capital differs markedly from physical capital, firstly, in that it is inseparable from a person, it cannot be bought, it can only be taken or provided for use for certain conditions, and, secondly, the fact that knowledge and skills can be acquired without additional investment, but in practice, through on-the-job training. At the same time, human capital, like physical capital, is subject to physical and moral wear and tear: human capabilities (physical, mental, psychological, etc.) may decline over time, knowledge may become scarce, its bearer may degrade, and the knowledge itself may simply become outdated
The following types of human capital are distinguished.
Total human capital- this is knowledge and skills, regardless of where they were acquired, they can be used in other workplaces.
Specific human capital is knowledge and skills that have value where they are obtained.
The production of general human capital is ensured by a system of formal education, including general and special education, which improves the quality, level and stock of human knowledge. Specific human capital is formed by spending on training to train workers directly on the job.
Human capital can be positive or negative.
Positive human capital is defined as accumulated human capital that provides a useful return on investment.
Negative human capital is the portion of accumulated human capital that does not provide any useful return on investment.
The accumulation of human capital depends on the human potential available in a given society. To assess it, the currently widely used human development index (HDI) is used, which characterizes different aspects of the development of society. The HDI of a country or region reflects the three leading factors of life: income, longevity, and education.
The development of human capital is perhaps the most important task of the company. Moreover, this question has recently been raised on the scale of an entire country as an indispensable condition for its development and prosperity on the world economic arena.
You will learn:
- What is the basis for the formation and development of human capital.
- What kind of investments can be made in the development of human capital.
- How human capital can influence the innovative development of an enterprise.
- Why manage human capital development.
- How to assess the level of human capital development in an organization.
- What problems does the development of human capital have in Russia?
How companies can properly develop human capital
The more mental baggage a company has, the higher its competitive advantages, the better and more efficiently it can organize its production process, ensuring the optimal transformation of intangible resources into tangible capital.
Highly qualified specialists can increase the attractiveness of a brand and influence the profitability of an organization. To a large extent, the value of an enterprise is determined by innovation; it can be easily increased by financially motivating employees.
That's all today more companies come to the realization that not only financial capital determines the actual value of a business. Intellectual capital is the main strategic element of industry. In the figure you can see the relationship between intellectual capital and the actual value of the organization:
Financial capital of the organization- This is not only cash, but also shares and other securities.
Intellectual capital of the organization– this is the mental baggage of the staff. Knowledge is the basis of an enterprise’s wealth, intangible assets that improve the quality of production processes. They are the ones who create added value for the enterprise.
Improving business with the help of intellectual capital is not theoretical research, but actual practice. Through this asset, you can successfully manage profits, create new products and attract customers.
Intellectual capital should be understood as all those information resources that are at the disposal of the company. Intellectual capital is a combination of human, structural and relational capital. Intellectual capital also includes information capital, intellectual property, customer capital, brand awareness and learning capital.
The knowledge that forms intellectual capital can be explicit or implicit, but it always has a useful function.
Human capital of the organization arises due to the presence of personnel. It is formed through the knowledge, talents, abilities and competence of employees. This process is long-term and goes through several stages.
- Initially, there is a search and selection of candidates who will later form human capital, then the relationship is formalized.
- In the future, the employer interests and motivates employees to work more actively and productively.
- In the process of cooperation, investments are made in human capital through the development and training of employees.
- And finally, a merger and/or acquisition occurs.
In general, a company’s human capital consists of several elements that can be reflected in the form of formula (1):
The share of influence of human capital on the value of a business ranges from 30 to 80%, depending on the sector of the economy. But one way or another, the contribution of people to the profitability of the organization is the determining factor. Human capital improves competitiveness. And capital is directly formed from the skills and abilities of employees, through whose efforts goods and services are produced.
Some people confuse the concepts of human capital and human potential. The main difference between these interchangeable terms is that capital creates the market value of a company through employee participation in building success. This is a very important factor in the development of an organization. It is the employees who create the added value of the enterprise.
What does the formation and development of human capital depend on?
Due to the fact that the development and economic prosperity of the country directly depends on the specialists who inhabit it, the priority concern of the state can be called ensuring the improvement of the capabilities of citizens (intellectual, physical and spiritual). This task is being solved within the framework of achieving the goal of human capital development, which will inevitably lead to an increase in the potential of the entire society, as well as an increase in the resource of the country as a whole. High opportunities for society depend on the dynamics of economic growth. So, the development of human capital is one of the key tasks of our time. What is needed to solve it?
- First of all, to develop the abilities of each member of society and company employee, the most favorable environment should be created, which is practically unattainable without improving living conditions in general.
- Secondly, it is necessary to increase the competitiveness of not only human capital itself, but also those sectors of the economy that provide it socially.
Specialists who work to solve the problem of improvement human resources, – sociologists, economists and psychologists. Their tasks include developing issues of human capital development at three levels:
- development of the individual (micro level);
- development of the state as a whole (macro level);
- development of enterprises, commercial companies (meso level).
At the state level, human capital is collected through the efforts of all members of society and is a national wealth and asset. Within each region, its own similar resource is formed, and then it is combined throughout the country.
In order to ensure the development of human capital at the regional level, the economic activities of economic entities in a given area should be improved. Next, the human resource is summarized based on the results of each enterprise in the region. Accumulated human capital ultimately determines the level of socio-economic development of the territory.
To measure human capital, adding up the number of employees is not enough. It is necessary to calculate all their abilities, knowledge, and the amount of available information. After all, it is this potential that activates production at one level or another and determines the degree of performance of the company.
Each person has personal capital; within a social group, all individual achievements are collected into subsystems with a hierarchical structure. By connecting with each other, personal capital forms social capital. If human capital for one individual plays an important role in terms of opportunities to achieve a certain quality of life, then across the entire region or country as a whole, this resource can serve as a means of achieving more global goals.
A person exists in the labor market with his own abilities, skills, and abilities. He brings income to his family and the enterprise where he works. But within the whole region it also acts as a social link. It can be called the building block of the economy of the region and the country as a whole.
An individual worker gives his abilities to the commercial or state enterprise (municipal) where he works. And such an enterprise, together with many others, creates a social or economic basis for the life of society.
Those talents and abilities that a person has are partly innate and partly acquired by him throughout his life. The task of the enterprise is to create for its employees such socio-economic conditions in which it will be easiest to increase human capital. Ultimately, all acquired knowledge will be spent for the benefit of society and will be released into the environment where the highest quality of life and the most comfortable conditions for work, development and intellectual activity are achieved.
The development of human capital is a long-term process; it can take many different forms and types, passing through all stages of the life cycle and being influenced by various social circumstances. All these factors can be divided into groups: economic, production, demographic, as well as socio-demographic, socio-economic, environmental and many others.
Human capital is formed and improved in the process social production. The optimal environment for its development is comfortable living conditions. If a person has an increase in income, has affordable and high-quality medical and educational services at his disposal, an excellent cultural environment and comfortable living conditions, then the development of human capital will occur in the best possible way. Such conditions can be achieved with the help of appropriate state policies in the field of education, culture, healthcare, improvement, infrastructure, etc.
The numerical expression of the common resource can be viewed in the indicators of the human capital development index. These values are directly related to the level of education, access to quality food, and healthcare. They reflect:
- percentage of the population deprived of adequate food;
- percentage of child mortality (under 5 years of age);
- percentage of children completing secondary education;
- percentage of literacy among adult citizens.
To ensure the formation and development of human capital, the state must take measures to:
- increasing the affordability of housing, creating favorable conditions for mortgage lending, and using such financial instruments that will contribute to the development of the housing market;
- increasing the accessibility of the consumer lending sector, increasing information openness;
- increasing opportunities for citizens to use educational loans;
- ensuring a high level of well-being of citizens, personal security, development of life and property insurance programs;
- improving the conditions of additional pension insurance.
A person achieves his highest potential by overcoming a long continuous process of formation and development of human capital, which involves factors such as education, employment, and the presence of favorable conditions for improving skills and becoming an individual.
On average, the period of human capital development takes from 15 to 25 years. We take the zero level as the initial level. Each member of society begins to develop their knowledge, skills, and abilities from scratch.
The process of human capital development begins in childhood, at the age of three or four. The child is provided with information with which he gets the opportunity to develop his talents, improve and increase his knowledge and skills. How successfully he studies will determine his future self-determination and the opportunity to realize himself and find application for his abilities in the employment market. But potential still plays a huge role, given to a person from birth.
The most significant period in the process of human capital development is the teenage period (13–23 years). It is impossible to form and develop human capital without regularly replenishing the arsenal of skills and abilities. If a person is not engaged in vocational training, if he has not devoted time and effort to his education, there is no need to talk about the development of human capital. The higher the level of knowledge a person has, the more he can improve the life of society. It turns out to be a continuous process. Highly qualified professionals create comfortable living conditions for humanity, contribute to the growth of production and economic advancement, enrich the national culture, thereby creating the prerequisites for the formation of even more highly developed individuals.
The development of human capital is a task that directly contributes to the growth of investments, the introduction of new technologies and increases the rate of return of employees from such investments.
- Investments in business: step-by-step instructions for finding and attracting investors
A practitioner tells
Creating conditions for staff self-development is a strong foundation for the formation of the organization’s human capital
Marat Nagumanov,
Director of the research and production company "Packer", Oktyabrsky (Bashkortostan)
We have set ourselves the goal of achieving a leading position in the sector of self-learning companies. My firm position is that without developing a production culture and creating comfortable conditions for people to work, it is impossible to demand self-improvement from them. And comfort in production means not only the presence comfortable furniture, a modern computer, creating a sufficient level of lighting, providing clean and comfortable uniforms. For favorable working conditions, it is important to achieve a number of other factors.
We need a leader whose example will captivate employees. In order for the employee to receive more, the return on capital must be increased. It's not just about salary. Total income also includes social payments. In our case, these are paid sessions in the pool, fitness classes, trips to a sanatorium, lunches at the expense of the company, and high-quality medical services on the job. The more comfortable the employer creates conditions in the workplace, the more willingly people give their strength, capabilities, and abilities for the benefit of the enterprise. Moreover, they strive to improve their level in order to become more indispensable and in demand at their job. But here the figure of the leader is also of great importance. The most visible and respectable employee in the team is an example and incentive for colleagues. I won’t lie, I try to be that kind of leader myself. Employees see my determination: I often attend various lectures and conferences, thematic events, trying to improve my own competence. Following me, many employees express a desire to participate in seminars and study modern equipment in different cities and countries.
The motivation system should be aimed at improving qualifications. It is very important to create a holistic remuneration mechanism that will be transparent to the entire team. If employees understand how they can increase their salaries, they are more likely to work in this direction. At the moment, our company is planning to introduce job descriptions, which will include information about the scope of issues for which the employee is responsible, about the skills that he should have and that he should develop, and about the projects in which the employee should take part , and about the indicators that should be achieved by him as a result of his work. Each instruction will be valid for a year. The increase in the employee’s salary will directly depend on compliance with its points. For example, according to an employment contract, a person has a salary of 10 thousand rubles. To increase it, you will have to acquire new skills, which will be listed in detail in the instructions. At the end of the year, management will check the level of achievement of new knowledge and skills. If the outcome is positive, the employee’s salary will be increased.
But managers should remember that any innovation brings results after a certain period of time. We are currently building a new system, but we expect results no earlier than after a year of putting it into operation. We can feel the initial dynamics already at the start. Thus, we see that an employee’s efficiency directly depends on his level of satisfaction with working conditions.
Investments in human capital development
The development of human capital, like any other asset, requires investment. Investments made to develop human capital are certain actions carried out with one goal - to increase labor productivity. We can include the following events:
- organizing ways to maintain health;
- incurring expenses associated with obtaining education;
- organization of vocational training in production;
- costs of finding a job, collecting information on prices and wages;
- expenses associated with migration, as well as with the birth and upbringing of children.
All investments in the development of human capital are usually divided by specialists into:
- investments in education (special or vocational training, on-the-job retraining, self-education);
- investments in health care measures, including disease prevention, special nutrition, improving living and working conditions, as well as improving the quality of medical care;
- investments in the migration of workers to places with more favorable working conditions.
Investments in education can be divided into formal and informal. The first type involves various types of educational services offered by the state or organizations with the issuance of final documents confirming completion of training. This includes secondary school education, special education, higher education, including a second higher education, postgraduate studies, doctoral studies, on-the-job training, as well as advanced training courses.
Informal learning is training that does not have supporting documents, but is also capable of enriching a person with knowledge and increasing human capital. This includes reading literature, independently mastering any sciences, playing sports and art.
Equally important to improving productivity are health-related costs. By reducing the number of diseases and mortality, we increase the duration of the working period, the working life of a person. In this way we prolong the validity of human capital.
Each of us understands that it is possible to improve health to a certain extent, but its quality largely depends on hereditary characteristics. It is very important for an individual, as well as for society as a whole, to invest in acquiring health throughout life. Human health is an asset that is subject to wear and tear. Investing in health can slow down the process of aging and decline.
Features of investments in human capital development are as follows:
- Their effectiveness is directly related to the lifespan of the wearer. The more investments, the longer the working period of a person’s life. And the sooner investments begin, the sooner the return will be visible.
- The ability to multiply and accumulate, despite the gradual tendency towards moral and physical wear and tear.
- As human capital accumulates, it brings more and more profit, but the limit of profitability is still limited by the end of working age. As soon as a person retires or stops working for other reasons, the effectiveness of his human capital drops sharply.
- Not all investments in increasing human well-being can be recognized as expenses for the development of human capital. For example, if costs are associated with criminal and illegal activities, it is difficult to attribute them to investments in the development of human capital due to their social harmfulness and even danger.
- The nature of investments is determined by the characteristics of the culture, nationality and historical development of the society in which they are made.
- If we compare investments in the development of human capital with other types of investments, it turns out that the former are more profitable both for the carriers of capital themselves and for society as a whole.
Sources that can carry out investment activities may be:
- state;
- foundations of state and non-state importance, public organizations;
- regional associations;
- organizations, legal entities;
- individual entrepreneurs;
- supranational organizations and foundations;
- educational institutions, etc.
The state plays the most significant role among all types of sources.
But do not underestimate the importance of individual companies, organizations, and entrepreneurs. It is enterprises that are employers who have all the opportunities and conditions to engage in personnel training and development. Moreover, organizations have an information base that allows them to gain a clear understanding of the most promising areas for investment in education and training. An important factor in investing in enterprises is the net income that this type of investment brings. Once there is no profit, funding will also stop.
Ultimately, what is all this investment in personnel for? To strengthen the company's competitiveness. Consequently, the employer strives to use working time and human capital in general in the most rational way.
A practitioner tells
Self-training of personnel as a contribution to the development of human capital of the organization
Sergey Kapustin,
CEO and co-owner of the STA Logistic group of companies, Moscow
From my own experience, I know that allowing subordinates to independently control their work is simply unacceptable. Each of them, knowing that no one is checking their work, will try to rest more and work less. Many people have the same attitude towards learning: if management doesn’t force you to study, it’s better to save your energy.
As the philosopher from Ancient China Sun Tzu: “Hold with harm, move with gain.” In other words, I must interest the employee so that he actively engages in self-training.
Of course, employee education comes with additional costs. The company only spends the first two months of training on scholarships equal to the salary. Following the example of successful enterprises in other countries, we draw up employment contracts with a clause that allows us to demand reimbursement of training costs from an employee who fails the pre-employment test. This approach creates in people a sense of the value of education; we get employees who are interested in self-development. Already at the initial stage, it is easy for us to determine who is most responsible for learning.
Newly hired employees are required to undergo basic training. The learning process is not based on printed lecture material. We decided that it would be much more interesting to organize the preparation in the form of watching video lectures. In total, we have about 20 courses posted on our portal. Training involves initiation into the company’s values, explanation of work technology, document flow rules, and familiarization with regulations. The courses are divided into basic, suitable for everyone, and special - for individual specialists (accountants, marketers, etc.). Each newcomer studies from 10 to 15 courses over a month and a half. Upon completion of training, the employee takes an exam in electronic form. This exam is similar to the one accepted by the traffic police.
Human Capital Development Management
We are observing a number of unfavorable factors that make us more sensitive to the issue of human capital development. These factors are:
- reduction in the number of workers due to mortality in working age;
- an increase in the number of diseases due to an unhealthy lifestyle (drug addiction, smoking, alcoholism, gambling addiction);
- progressive rates of disability;
- loss of moral values and ethical standards in labor relations;
- the declining role of education or its obsolescence;
- lack of opportunity to get modern education(lack of funds, time and effort, declining quality of education, etc.).
Human capital development is important for solving many organizational problems. Human capital needs to be managed, but it itself subsequently acts as a means of managing business profitability. With its help, you can stimulate the scientific and technological progress of an enterprise, the use of new technologies, and increased efficiency. The main approaches to the use of human capital today are competent motivation systems, leadership, the right style of management, organization of activities and prioritization. When using such approaches, human capital turns into a real tool for influencing socio-economic processes.
The possibility of chaotic formation of human capital cannot be denied. But if we expect this phenomenon to develop all its positive characteristics, then the process of formation and development of human capital must be managed consciously. All over the world, there is a shift away from the personnel management paradigm; more and more enterprises are moving directly to the administration of human capital development.
Prioritization is a key point in human capital management (Schemes 1, 2). Despite the fact that the desire to maximize human life is bearing fruit, it has not yet become a priority in management. But the formation of human capital is based precisely on this desire. In order for the priority to be realized, knowledge of people's interests, the construction of a value system, the establishment of social responsibility and the availability of appropriate resources are needed. It is important to pay enough attention to working with personnel. Look at how job search advertisements are most often formulated today: “employees with experience are required” or “qualified specialists, responsible and communicative, are required.” The set of requirements is very limited. Of course, experience is important, but to reveal all the benefits of human capital, it is not enough to accumulate experience alone.
Scheme 1. The art of management.
Scheme 2. Typological characteristics of personality in integration intelligence.
Many HR professionals now use psychological tests when hiring. They are also very helpful in personnel research. But tests do not always serve their purpose. They are not able to properly influence the formation and development of human capital.
For example, a large bank uses a 60-question test to find an employee. Vacant position – assistant. And the questions allow you to assess general erudition and partially knowledge accounting. Such a test does not reveal the ability of an applicant for a position to summarize materials, nor does it even make it possible to determine the type of thinking and independence of decision-making in complex and contradictory situations. Consequently, tests are not capable of fulfilling the tasks of forming and developing human capital.
The creation of this asset occurs not only during the selection of personnel; even in the normal daily work of a manager, this process also takes place. The effectiveness of formation is determined by the correct choice of means and methods used by the employer.
Scheme 3. Human capital management mechanism.
The most important means of forming and developing human capital:
- investment;
- stimulating the disclosure of human qualities that contribute to the increase in human capital; they are associated with obtaining an education, maintaining a healthy lifestyle and developing intellectual potential;
- creation of a motivating remuneration system, which involves setting wages in accordance with experience and length of service;
- establishing values implemented in management processes;
- assignment of qualifications in accordance with the level of professionalism and ability to perform effectively;
- manifestation of human capital in the information environment; the competence factor directly depends on the provision of information, the functional content of the activity, as well as directly on the education of the employee;
- development of all levels of culture: general, organizational, corporate and others;
- proper organization of activities that contributes to the implementation of a creative approach, stimulation of educational activities, and encouragement of self-development.
What indicators exist for assessing the development of human capital in an organization?
The factors that we examined in this article affect the development of human capital as a whole. They are all interconnected and form a single system. The process of formation and development of human capital can be facilitated by organizing a monitoring system for this asset, which is created in accordance with management priorities used in the enterprise, as well as employee evaluation methods.
In most cases, enterprises use the method of calculating direct personnel costs. Direct costs include wages, taxes on employees, costs of labor protection and improvement of its conditions, as well as costs of advanced training and training of workers. It is easy to guess that the sum of all these costs is not an indicator of the accumulated amount of human capital, because, in addition to all the above activities, capital carriers themselves can form capital through self-education and creativity.
Another method used is competitive assessment. The enterprise creates optimal conditions for staff. People should strive to work for a company that offers more amenities and benefits to employees than all other competing organizations. With this technique, it is important to assess the costs and expected damage to the company when an employee leaves. It is undesirable for such investments to have turnover. It is especially important that people remain at the enterprise during a crisis period, because a way out of a difficult situation is possible with the presence of human capital and even its increase, which does not at all imply the recruitment of new employees.
A number of enterprises use the method of prospective assessment of the value of human capital. Its essence is that the dynamics of value over a period of five, ten or even twenty years is taken into account. The method is quite effective, especially suitable for long-term large projects related to innovation. As development progresses, the value of individual employees changes. Sometimes people achieve particularly high results, and sometimes they quit, which results in major losses for the organization. These factors also need to be taken into account.
Strategic human resource management:
- SWOT analysis;
- action plan to realize opportunities and neutralize threats to business;
- personnel policy;
- personnel management models;
- personnel indicators in the balanced scorecard.
SWOT analysis of human resources: an example
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Strengths |
Weak sides |
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Possibilities |
Threats |
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How effectively an organization uses human resources can be judged by the following key indicators:
- the employee’s contribution to the organization’s performance (to making a profit per employee, to achieving a certain share of sales, the level of gross margin);
- employee expenses; for assessment, the ratio of human resource costs to total costs, as well as costs per employee, is calculated;
- the state of human resources (level of education, competence, as well as the level of staff turnover, etc.);
- staff involvement (it reflects the degree of employee satisfaction with the conditions provided).
- How a leader can earn authority in a team: 9 qualities
Problems of human capital development in Russia
If we consider human capital in general, we can consider it the engine of the economy, a factor in the development of the institution of family and society as a whole. It consists of able-bodied people with education, as well as tools of intellectual and managerial work located in a certain environment and implementation labor function. If there is human capital, a country can maintain a certain level in the global economy, ensuring competitiveness in the markets. This is of particular importance in the context of globalization, and is also an indicator of the activities of government authorities.
Human capital has value in itself, but its quality becomes increasingly important in a competitive environment. How to evaluate quality? To do this, it is necessary to determine the level of literacy and education, as well as life expectancy of the population, standard of living and the state of medical care. To this it is worth adding the GDP per capita indicator. All these elements are combined into a formula for calculating the Human Capital Development Index (HDI). About 25 years ago, out of 187 countries in the world, Russia ranked 23rd on the list, and according to the results of a 2013 study, our country was in 55th place. This is an inevitable regression, which can be explained by a decrease in investment in such areas as education, culture, science and human health.
It is important not only to develop the professional qualities of specialists. In the development of human capital, it is necessary to engage in the formation of a new culture of behavior of citizens, and this process should begin from a very early age. The development of culture continues throughout life, no matter where a person works - in the civil service or in the private sector of the economy. These tasks were formulated for themselves by the participants of the Open Government session “Human capital is the main asset of the economy”, held as part of the St. Petersburg International Economic Forum.
Mikhail Abyzov, Minister of the Russian Federation for Open Government, said that today in our country there is no system of personal development that meets modern requirements, and without it it is impossible to talk about more or less high positions in the list of economically successful states. The Soviet Union had such a system, but it no longer corresponds to reality. We need to look to the future and develop new mechanisms. Nowadays, everything is not as successful with school education as we would like; children do not develop the qualities of leaders. According to statistics, 70% of schools in the Russian Federation are rural, more than 40% of teachers work in them and at least 25% of them do not have higher education. But we simply don’t have the tools to develop leadership.
Chaotic development of human capital does not imply quality results. This system requires configuration and management so that a person's skills are adequate to the requirements of the modern world. In our country, the ability to organize the development of human capital has been lost. If we previously had a planned economy, it had its own principles of adjustment - they were based on a system of priorities for economic growth. Man was seen as a means for economic development. But in the new reality the system does not exist at all.
Instead of developing human capital, there is an increase in ambition. What do we see these days? People with higher education work in unskilled positions (salespeople, secretaries). More and more young professionals are experiencing problems finding a job. Moving to other regions is also difficult.
It is planned to develop an electronic system that will allow an employer to select a graduate of an educational institution who meets the parameters necessary to occupy a specific position. You will not have to select based on your resume; you will only need to evaluate the student’s academic performance and his scientific and social activities.
In human capital development, basic education is important, but it is neither rare nor in short supply now. Nowadays, it is much more important that a person has leadership qualities. It is not ordinary performers, but leaders who help the company achieve success. That is why the main focus now is on developing leaders. In particular, the Open Government conducts training seminars for members of the Government of the Russian Federation at the Sberbank Corporate University.
The development of science and technology shows that the main engine of the economy is human capital. GDP growth should be invested precisely in human development, in improving the quality of his life, in caring for health, and then we can hope for a transition to an innovative economy and a knowledge economy.
Let us remember the words of the laureate Nobel Prize on economics by Simon Kuznets, written in 1934: “For a scientific and technological breakthrough in the country, the necessary starting human capital must be created (accumulated). Otherwise, a false start occurs.”
State funds should be directed not only to the fight against corruption, but also to finance science, healthcare, education, as well as the protection of motherhood and childhood.
Table 1. Age structure of the population and dependency load
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Age groups of the population, thousand people. |
2002 (census) |
2007 |
2010 |
2020*** |
2030*** |
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Younger than able-bodied |
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In able-bodied |
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Older than able-bodied |
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Whole population |
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Younger than able-bodied |
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In able-bodied |
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Older than able-bodied |
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Whole population |
*Men aged 16–59 years + women aged 16–54 years
**For every 1000 people of working age there are disabled people (children + pensioners)
*** 2020 and 2030 – Rosstat forecast.
Information about the experts
Marat Nagumanov, director of the research and production company "Packer", Oktyabrsky (Bashkortostan). NPF Packer LLC. Scope of activity: design, production and maintenance of packer-anchor equipment and well assemblies for operation, intensification and overhaul of oil and gas wells. Territory: head office – in Oktyabrsky (Bashkortostan); service centers and representative offices in Muravlenko (Yamalo-Nenets Autonomous Okrug), Nizhnevartovsk and Nyagan (KhMAO - Yugra), Ufa, Buzuluk (Orenburg Region), Almetyevsk and Leninogorsk (Tatarstan), Izhevsk. Number of staff: more than 700. Subscriber to the General Director magazine: since 2007.
Sergey Kapustin Graduated from the Belarusian Polytechnic Institute (now – Belarusian National Technical University). Since 1995 - co-owner and general director of the logistics company AsstrA. Since 2003 - in current position. GC "STA Logistics" Field of activity: transport logistics. Territory: Russian head office - in Moscow, branch - in St. Petersburg; representative offices in Minsk and Vilnius. Number of employees: 165. Annual turnover: 32 million euros (in 2012).