HUMAN CAPITAL AND ORGANIZATIONAL PERFORMANCE
HUMAN CAPITAL AND ORGANIZATIONAL PERFORMANCE

Summary/Abstract: The concept of human capital is concerned with the added value people provide for organizations. It has been well said by Chatzkel (2004) that “it is human capital that is the differentiator for organizations and the actual basis for competitive advantage”. Human capital theory, as stated by Ehrenberg and Smith (1997), conceptualizes workers as embodying a set of skills which can be “rented out” to employers. The knowledge and skills a worker has – which come from education and training, including the training that experience brings – generate a certain stock of productive capital. Human capital is an important element of the intangible assets of an organization. The significance of human assets explain why it is important to measure their value as a means of assessing how well they are used and of indicating what needs to be done to manage them even more effectively. Human capital concept is viewed as a bridging concept and defines the link between HR practices and business performance in terms of assets rather than business processes (Scarborough and Elias, 2002). The purpose of this research is to establish a model by which we measure human capital and to what extent it determines an organization's performance.

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