You have probably heard the common analogy used to explain how companies and even small-time businesses work. They say that it functions like a machine, comprised of different parts with different purposes. Each employee acts as the cogs of the machine, possessing a specific set of skills to fulfill different goals. Collectively, these goals fall under the company’s predetermined objectives. With the efforts put in by each employee, hopefully within a set time frame, those objectives have already been satisfied.
These efforts and skills are termed “human capital.” But what is it, and why should you, as a business owner, invest in it?
What is human capital?
The talent pool required for a company to succeed has been referred to as “human capital” – a term coined by Gary Becker and Jacob Mincer. Basically, it is how one measures the economic value that a person who is hired can provide …