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The human capital edge: developing a scorecard
Most people think of banks and money when they hear the term capital. In the business world this could also include stocks, equipment, property and numerous other items that can easily be valued and/or sold. However, in many cases the true value of an organisation is only partly represented by these tangible assets.
Following the increased nervousness created by the dot com bubble bursting there is a growing imperative to gain a fuller understanding about the intangible assets and the value that these promote.
This has been fuelled in no small way by anxiety created in attempting to value companies with very little tangible asset capital. As such there has been a great deal of effort put into accounting processes that will assign value to intangibles. One group of intangibles that is proving difficult to properly evaluate is the area of human assets; often known as "Human Capital".
Thus, as the requirement to evaluate Human Capital climbs the management reform agenda, the pressure for human resource professionals to be able to prove the returns generated from their investments in people processes is increasing.
And many business people would argue that this is not before time. In almost no other area of the business would it be possible to plough precious resources into a project or activity without a strong argument about the return to the business that is likely to accrue.
