Human Capital Theory Regards People as Assets and Stresses That Investments by Organisations in People Will Generate Worthwhile Returns. Discuss.

In: Business and Management

Submitted By Mjtinashe
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The human capital theory emphasises the need to educate and maintain the workers that an organisation has as they are assets to the company. The human capital is seen as a source of competitive advantage that it is in the theory and proper management of the human capital will lead to greater productivity and efficiency. ‘The educating of the workers is an investment which is equally worthwhile as that of capital.’(Woodhall, 1997)
Beeker (1993) asserts that ‘education and healthcare are a key to improving human capital and thence increasing the economic outputs of a nation’. These factors are the ones stressed by the human capital theory and this shows that the human capital theory recognises the need to invest in human capital inorder to generate worthwhile returns.
The human capital theory brings out the value that the workers have to an organisation and to increasing shareholder value to the company and thus authorities summaries the human capital theory as ``workers having a set of skills developed by educating and training that generates stock of productive capital``(Armstrong, 2009:238).
The human capital theory helps improve and increase skill to the valued workers or human capital that the company has therefore showing the cognisance that the theory takes on investing in human capital as they generate worthwhile returns. The human capital theory encourages the creation of innovative ideas and products to gain advantage over other players in the market by educating and enhancing the skills base that the workers have or possess as it will yield worthwhile returns.
Armstrong (2009:68) says `` Strategic management is therefore visionary management, concerned with creating and conceptualizing ideas of where the organization should be going.``, the human theory then is concerned with providing guidance for future HR and business strategies and basing on the…...

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