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Why is human capital in organizations important
Knowledge accumulation, as well as human capital, translates into organizations’ efficiency. More trained employees in developed countries tend to have an extended working life marked by a rising Gross Domestic Product. Among the social benefits attached to advanced human capital include; crime reduction, social correlation, and good health within the working environment (Pasban, 2016). All these benefits always tend to translate into long-term economic advancement.
Human capital guarantees the welfare of the society as well as efficient goods and services. For instance, if a society has a high level of trusteeship, it will reduce commercial transaction costs. If an organization prioritizes human capital, then it means that its market value is attached to human capital, which is an intangible asset than tangible assets like goods. To achieve this market value, therefore, an organization has to increase employment and keep and motivate the top-notch employees. Among the ways, this is possible are; increased organizational learning level and creation of knowledge; finally, encouraging the habit of learning through sharing and applying knowledge.
As far as artificial intelligence is still limited, human capital creates other forms of capital. Even the machines to reduce the significance of the workforce must be created by human capital. Furthermore, educated employees tend to be innovative and creative, which will translate into high productivity of labor and the growth of the economy. Employees with sophisticated skills will value-adding factors on raw materials in organizations that prioritize manufacturing processes. Coupled with this, human capital guarantees the sustainability of the organization’s practices; that is, the organization will serve the current generation and still give room for the benefit of the future generation, for instance, through resource mobilization.
Reference
Pasban, M., & Nojedeh, S. H. (2016). A Review of the Role of Human Capital in the Organization. Procedia-social and behavioral sciences, 230, 249-253. Available at: https://www.sciencedirect.com/science/article/pii/S1877042816311338