This AMP is carried out as a research toward finding and relating the company’s Human Capital with its desired performance. It has also suggested the method by which the company can reliably reports its Human Capital as the strongest company’s asset in its financial statements. From the Background context of given issue the evidence looks prominent and right that in the current scenario Human Capital is considered to be as the key success factor. The Literature Review section, in relation to the definition of Human Capital, the arguments of both Becker (1993) and Davenport (1999) makes sense and also looks generous. Becker (1993) defined Human Capital as a composition of four characteristics (Credentials, Reputation, Personality and Appearance). While on the other side, Davenport (1999) made a figure of by combining all aspects (Employee effort, behaviour, ability & time) together to give final shape to undergoing definition. In relations to the measurement methods of Human Capital, there are many Scholars who came forwards and proposed different methods. It has been regarded and acknowledged that work of certain Authors: Kaplan & Norton (1992), Monti-Belkaou & Riahi-Belkaoui (1995), Brown (1999) and Weiss (1999) is prominent. Out of these four studies Monti-Belkaou & Riahi-Belkaoui (1995) took the fame as their model have both aspect: practical implementation and recognition of value added by the company’s demployed Human Capital in its overall financial performance and operational excellence. The objectives of this AMP have been achieved. From the models like Balanced Scorecard and Kaplan’s Seven Step Framework and also from the case studies like Huselid, et al (1997) and Delery & Doty, (1996), it has been cleared and understood that the company’s Human Capital has implications on its business performance (success). From the studies like Kaplan & Norton (1992), Monti-Belkaou & Riahi-Belkaoui (1995), Brown (1999) and Weiss (1999), it has illustrated that these are the certain methods by which the company could include Human Capital as the company’s most significant in its financial reporting. Out of these four studies, Monti-Belkaou & Riahi-Belkaoui (1995) took the fame. So the need of an hour is to select it as the common framework for the reporting of Human Capital as the company’s most powerful assets.
Table of Contents
1. Chapter:1 – Aims & Objectives
1.1. Background Context
1.2. Problem Discussion
1.3. Problem Statement (Question)
1.4. Aims
1.5. Objectives
1.6. Summary
2. Chapter:2 – Literature Review
2.1. Human Capital
2.2. Linking Human Capital with Profitability
2.3. Human Capital Measurement: An Evolution
2.4. Why it is Important to Report Human Capital (HC)
2.5. Summary
3. Chapter:3 – Case Studies
3.1. Case-Study 1: (Ichniowski, et al., 1997)
3.2. Case-Study 2: (Huselid, et al., 1997)
3.3. Case-Study 3: (Delery & Doty, 1996)
3.4. Case-Study 4: (Youndt, et al., 1996)
3.5. Summary
4. Chapter:4 – Conclusion & Recommendations
4.1. Discussion
4.2. Conclusion
4.3. Recommendations
5. Chapter:5 – References
Objectives & Core Themes
The primary aim of this project is to investigate the correlation between Human Capital and business success while evaluating potential methods for integrating Human Capital as an asset within corporate financial reporting. The research seeks to address the gap between recognizing people as key assets and the current lack of transparent, standardized financial disclosure.
- The link between effective Human Capital Management and organizational performance.
- Evaluation of standardized frameworks, such as the Balanced Scorecard, for measuring Human Capital.
- Challenges in the current financial reporting of intangible assets in a service-based economy.
- Analysis of empirical case studies demonstrating the impact of HR practices on profitability and enterprise value.
Excerpt from the Book
2.1. HUMAN CAPITAL
Human Capital (HC) is significant in creating high performance working environment. Organisations should need to control and manage HC from all the stage’s of employee’s or worker’s work life. So it means it should be started to be managed from the recruitment process to the training & development phase and then afterward to the retention phase, This overall process is known as Human Capital Management (HCM). And this process all about acquiring right people with right capabilities (skills) at the right employment level (position) at the right time and then rewards him/her with right compensation & benefit plan in order to make him/her to perform right task (function) in the right working environment with an intention to himself/herself effective and efficient in the desired profession, This process sometime also includes training and development of capital in order to enhance employees’ out/productivity level. The overall aim of HCM is to maximise organisation’s Human Capital which made possible the accumulation of all organisation’s individual human capital. Strategically Human Capital Management (HCM) is form of workforce’s employ, deploy, development and evaluation model, which emphasis more on result rather than on the processes.
HC is first time used as a term by Scholars named Laureate & Schultz in 1961 in the Economic Review Article (Investment in Human Capital). The HC is used as a term to reflect the combination or collection of person’s skills, knowledge and experience (Flamholtz & Lacey, 1981). But another author has further elaborates HC as the skills, knowledge, competencies and other characteristics developed in an individual or in group which are acquired through their working life which thus help them in producing specified products or services (Westphalen, 1999). HC not only makes an employee productive but also helps him to earn income in return as well.
Summary of Chapters
1. Chapter:1 – Aims & Objectives: Outlines the background context of Human Capital in a service-based economy and identifies the core problem of its absence in financial reports.
2. Chapter:2 – Literature Review: Reviews academic definitions and various models—such as the Balanced Scorecard—that link Human Capital Management to corporate profitability.
3. Chapter:3 – Case Studies: Examines specific empirical studies by Ichniowski, Huselid, Delery & Doty, and Youndt to confirm the practical impact of HRM practices on business success.
4. Chapter:4 – Conclusion & Recommendations: Synthesizes findings from the research to argue for a standardized reporting framework, concluding that Human Capital is a key driver of modern enterprise value.
5. Chapter:5 – References: Provides a comprehensive list of academic sources and journals utilized throughout the study.
Keywords
Human Capital, Human Capital Management, Financial Reporting, Intangible Assets, Balanced Scorecard, Corporate Performance, Value Addition, Human Assets, Employee Productivity, Service-Based Economy, Business Strategy, Competitive Advantage, Stakeholder Transparency, Human Resource Management, Strategic HRM.
Frequently Asked Questions
What is the core focus of this research project?
This project explores the critical relationship between a company’s Human Capital and its overall business success, focusing on the necessity of including Human Capital as a tangible asset in corporate financial reporting.
What are the primary themes discussed in the project?
Key themes include the definition of Human Capital, the transformation of the UK economy toward a service-based model, the limitations of current accounting standards (IAS-38), and the impact of HR practices on organizational profitability.
What is the main objective of the research?
The project aims to identify the link between Human Capital and performance and to evaluate specific models and methods that allow companies to reliably report Human Capital to their shareholders.
Which scientific methods are employed?
The research relies on secondary data analysis, synthesizing academic journals, literature reviews, and empirical case studies to evaluate the effectiveness of various Human Capital Management models.
What is addressed in the main part of the report?
The main body covers the theoretical foundations of Human Capital, models like the Balanced Scorecard and Causal Model, and detailed case studies (e.g., Ichniowski, Huselid) that demonstrate the positive correlation between HR practices and firm productivity.
Which keywords characterize this work?
The work is defined by terms such as Human Capital, Intangible Assets, Financial Reporting, Competitive Advantage, and Strategic HRM.
What does the "Causal Model" represent in this context?
The Causal Model, analyzed by Gratton, links employee behavior and the corporate people context directly to firm performance and financial outcomes.
Why is the "Value Added" statement considered important for Human Capital?
The Value Added statement is highlighted as a practical method to illustrate the contributions of employees, investors, and the government to a corporation's wealth, thereby providing more transparency than traditional historical cost reporting.
What role do case studies play in this project?
Case studies provide empirical evidence that strategic HR investments, such as training and incentive programs, lead to measurable improvements in productivity and financial performance across different industries.
- Quote paper
- Junaid Javaid (Author), 2012, Human capital as an essential and measurable asset, Munich, GRIN Verlag, https://www.grin.com/document/281639
