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Manage Human Capital Like Financial Capital

Wednesday, May 24, 2017

In the business world, a lot of time is dedicated to managing revenue, even though financial capital isn’t a company’s scarcest resource. According to Bain’s Macro Trends Group, the global supply of capital is nearly 10 times global GDP. As a result of this abundance, the real costs of borrowing are close to zero. However, a company’s scarcest resource, by far, is human capital, measured by the time, talent, and energy of the workforce. This resource is limited, and developing talent is difficult. Finding, developing, and retaining top performers is increasingly difficult, yet it seems in most companies money is managed far more carefully than people. To win the war for talent, companies need to take human capital management as, if not more, seriously than financial management. To do this, first of all, human capital needs to be measured. Companies can do this by utilizing a variety of metrics that index individual team members’ worth and overall production power. Additionally, investment in human capital should be viewed just like an investment in financial capital: It’s just as important to the overall success of the business.

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