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7/28/2019 HRM Human Capital Valuation
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7/28/2019 HRM Human Capital Valuation
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Overview
What is human capital and its measurement scope?
Key Challenges
Research Methodology
Key experimental statistics and major findings so far
Relevance to policy analyses
Possible future directions
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What Is Human Capital and Key Definitions
Human capital can be broadly defined as productive capacity embodied in
individuals
Input view of human capital: innate ability, education, training, experience,
health care, etc.
Output view of human capital: enhanced earnings, better health, informed
political participation, better parenting, etc.
Human capital theory focuses on relationship between education and wages
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Capital theory is one of the most difficult and contentious topics in
economic theory
The measurement of capital is one of the most complex dimensions in the
official national accounting system
More challenging for human capital
Many unknown factors that serve as inputs in the production of human capital
Data available does not directly measure the theoretical concept of human
capital
The value of human capital has to be imputed
Key Challenges
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List of Some Companies
Standard Chartered Bank
Unilever
Kingfisher
Co-operative Group ltd
Barclays
Home Retail Group
Vodafone Group
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These organisations were selected randomly
Large enough sample to gain an idea of the standard of the
HCM reporting
The criteria used in the research were using variousexisting reporting criteria and in-house expertise
The criteria were split into three key groups
Strategic intent
Governance and assurance
Policy and performance
Research methodology
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Research methodology
The percentage score in each group of criteria was worked
out by calculating the percentage of the total possible
number of points for that group
This technique was also used to calculate the overall
percentage scores
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Groups of Criteria
Strategic Intent - This group of criteria was concerned with disclosures on
HCM strategy setting; key and material HCM issues for the business;
evidence of engagement with employees on material issues
Governance and assurance- This group of criteria related to evidence inthe organisations report as to whether there was a robust governance
structure in place to manage HCM and sustainability issues and a whistle-
blowing process for grievances to be aired
Policy and performance - This group of criteria related to evidence thatperformance in material HCM areas was both managed and measured in
terms of key performance indicators and narrative disclosures.
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Overview of Groups of Criteria
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Key Findings from Measures of Per Capita Human Capital
Average human capital for men grew at 0.6% annually
Average human capital for women grew at about 2.8% annually
Overall average human capital grows at 1.3 % annually
Narrowing gaps may be mainly due to
Increasing labor force participation rate for women and
decreasing labor force participation rate for men
Narrowing gaps between male and female earnings
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Significantly increased proportions of more-educated workers, in
particular for women
Annual growth rate of human capital stock for men is 2.0% between
1981-2001
Annual growth rate of human capital stock for women is a massive
4.2% between 1981-2001
Overall growth rate is 2.8% between 1981-2001
Key Findings from Measures of Per Capita Human Capital
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Possible Future Directions
Construction of database linking Census data, labour force statistics, data on
labor earnings and hours of work, education and migration statistics
Refining estimates by relaxing some assumptions and incorporating latest
developments in relevant fields
Measuring the contribution of human capital to social well-being
Construction of education and health satellite accounts using human capital
approach
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Questions/Comments