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4 Reasons of Investing in Human capital

Updated: Jan 15, 2022

Investment in Human capital adds sustainable economic value to the organisation. It helps the business through skill, ability & knowledge. The most crucial part of Human Capital is that it determines the operating efficiency of any business. But most companies ignore this factor as they feel Human Capital is just a support system & not a part of real business. The factors mentioned below will justify, that, Human Capital is an integral part of business in reality & is quantifiable as well.

1. Reduced Employee Turnover ratio - Most employees give more importance to career development opportunities than compared to increased salary. If employees are supported for professional education, they might not switch to other organisations. Most employees desire to work for organisations that invest in their professional development & not look for alternatives, if they feel that this need is met in their current jobs.

2. Increase in ROP I.e. Return on Productivity - Investment on Employee is directly proportional to return on productivity (ROP). The more company invests in developing employee skills, ability & knowledge, the more it will enhance their efficiency. This enhanced efficiency will reflect in employees’ performance. As the performance metrics improves with increased efficiency, it can be directly be associated with customer satisfaction & revenue. The metrics are quantifiable and can be measured in real-time.

3. Build tomorrow’s leaders - With investment in Human Capital, the ratio of employees leaving the organisation reduces, employees growth curve starts moving upward with the company. It also shows that contribution of employees’ are valued by the company. This appreciation & trust from the company encourages employees for long-term association with the organisation & grow as leaders of tomorrow. The investment in Human Capital done today builds the foundation of a more successful brand, profitable business & high customer satisfaction index for tomorrow.

4. High-Level Employee satisfaction - Investing in Human Capital Development leads to greater employee satisfaction & thus directly impacts the commitment of employees towards their job responsibilities. Investing in employees' overall development also shows that the organisation values his/her contribution. Increased employee satisfaction is reflected through an improved workplace culture. Happy employees form a coherent & improved work system where they work on achieving organisation goals effectively.

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