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The importance of human capital within companies

Companies have multiple assets, each with its own value. However, the level of importance of each and every one of them is not the same. If we are looking for the most relevant asset, we must look at the importance of the human capital.

Yes, the people of a company are the most important asset, which really can give them an advantage in the market and differentiate them from the competition. Hence, companies compete with each other to attract and retain talent.

Table of Contents

What is human capital?

It is known as human capital economic value of a person's set of professional skills

As is logical, the greater the human capital that a company has, the more value it will have in the market. The importance of human capital becomes indispensable.

The concept was devised by Theodore Schultz and Gary Becker, who considered that this capital was like any other. That is if you invest in it, it brings important profits for society as a whole, and for workers and companies in particular.

Each employee has a value for the organization in which he works, based on his professional skills and his personal abilities and characteristics. Nevertheless, this capital, like all capital, can degrade over time. It is the responsibility of both the worker and the company to take measures so that, far from losing value, human capital continues to gain it.

For this reason, corporations are becoming more and more aware of the importance of ongoing training of your employees, pose new challenges, and keep them motivated.

Having better human capital does not always necessarily imply hiring more people. In many cases it would be enough to invest in improving what you already have.

The profile of workers is changing

One thing that companies must take into account when improving their workforce and revaluing it is that labor relations have changed. The employee profile of the new generations has little or nothing to do with that of a few decades ago.

In the case of people who are now 50 years old or older, it is normal for them to aspire to develop their entire career in the same company. The most common thing was to start very young, and go up the ranks.

Today this is no longer the case. The members of the millennial generation, and even more those of generation Z, know that working all their lives in the same company is not for them. Because what interests them most is to develop professionally, and that implies the need to look for new challenges. Challenges that, generally, they will find in other companies.

It is precisely this way of approaching the career what is making talent retention so difficult.

But companies cannot ignore this phenomenon. In fact, what they have to do is take advantage of it.

Human capital comes and goes, so you have to try to make the time you spend in the company as beneficial as possible for both parties. This implies that the profile of what is considered the “perfect” employee has to be changed a bit. Promoting flexibility, creativity, innovation orientation... that is, soft skills or soft skills.

This task falls directly to the Human Resources team. Fortunately, professionals in this sector increasingly have more advanced tools for selection, such as psychometric tests.

What is the importance of human capital?

We already know what it is and what challenges companies face to have the best talent. But, what is the reason that makes this capital something essential to succeed in the market?

Task automation processes are advancing at a good pace. Robotics and state-of-the-art software already allow certain jobs to be carried out very quickly and with no margin for error. However, this will not end human employment. It's just going to change the way you work.

Namely, no matter how advanced a company is in the field of automation, it will always need human capital.

The true importance of this factor lies in the fact that it is a source of competitive advantage. It allows a company to differentiate itself and distance itself from its competitors. Because workers perform tasks that are essential for achieving business goals. And, the greater the ability of the employees, the more effective the organization will be in achieving its goals.

human capital vs. automation, a practical example

Imagines company A and company B compete directly in the car manufacturing market, and both are highly automated. Company A always makes more profit than B. But company B has discovered that the secret to A's success lies in a manufacturing robot that allows it to assemble cars much faster, cutting down on the time customers have to wait for their delivery. new vehicle, which makes it sell more.

Company B can go to the market and acquire that same manufacturing robot. In a short time the differences between the two companies will have disappeared. Neither will have a competitive advantage over the other.

Now imagine that B buys that robot that makes cars at the speed of light, but still falls short of A. Company A continues to stand out in the market. And now B perceives that his opponent has a competitive advantage because he has a team of designers who create vehicles that fit perfectly with what consumers demand at all times.

That human capital is what is truly giving company A a competitive advantage, and it is something that B will never be able to copy.

We must take care of it

Returning to the previous example, suppose that company B launches an offensive to take over A's design team and thus put its competitor at a disadvantage. It's not very ethical, but it's legal, so it can happen.

This serves as a starting point to talk about how necessary it is for the company to take care of its human capital. It is not enough to hire the best, it is essential that they feel good in the company, that they are integrated. In this way, the company ensures that they will not be so easily tempted to go to work for the competition if they receive a good offer.

The key is in the motivation. Organizations must ensure that each and every one of their employees is motivated and engaged, from the highest-ranking manager to the lowest-ranking employee. Because the talent of all of them is needed for the gear that is the company to move easily towards its goals.

How are employees motivated to give importance to human capital?

You have to go beyond economics

Human Resources theories have focused, for decades, the motivation of employees on salary. Understanding that human beings only fulfill their obligations because they receive an economic consideration for it.

However, this conception changed with the emergence of the emotional salary. This lacks an economic component and, contrary to what was previously thought, it has a direct and very positive effect on people's motivation.. Makes workers feel more comfortable in their position and with the company, increasing loyalty towards it and increasing the desire to work giving the 100%.

It is necessary to listen to the team

Talented employees may end up leaving the organization if they don't feel valued and heard. This can be fixed through a improvement of communication that includes active listening.

All staff members must be given the opportunity to express themselves. In fact, hearing their complaints and suggestions first-hand may be the best way to implement changes in the company that improve motivation and productivity.

We must set new challenges as a way to give importance to human capital

Even the employee with the most complex job becomes bored if all his work days are exactly the same. You always have to carry out the same tasks, over and over again.

People need to develop, also at a professional level, and in order to do so they must face new challenges. For this reason, as far as possible, we must try to ensure that the worker does not feel stuck in his work.

For example, a well-qualified employee can get out of his rut by tutoring a new employee. While a worker with an unskilled position can do so by developing new tasks that help him develop other skills.

Human capital is extremely important for companies. It is the basis of your competitive advantage and your best tool to achieve the goals set. But it is not enough to attract talent, you also have to know how to motivate and retain it. Undoubtedly, a challenge that companies are already beginning to face successfully.

Hirint allows you to get to know your candidates and employees better, allowing you to create a development plan for them within the company and so they can develop their best version. Book a meeting with us here to tell you better how soft skills can help you.

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