“NOT MARKETING” PRESENTATION  ABOUT
MEASURING HUMAN CAPITAL IN AN ORGANIZATION
Group 1: Mohammad Zafar Durani
               Gombojav Otgonbayar
               Srdjan Višnjevac
               Elis Agolli

What is Human Capital?
•Company A
•Company B
http://b-i.forbesimg.com/jacobmorgan/files/2013/10/cubicles.jpeg
http://b-i.forbesimg.com/jacobmorgan/files/2013/10/cubicles.jpeg
-Same office, same finance… does it mean they perform the same?

Why do we need to measure Human Capital?
Because if we do so, we would know the real value of our employees, and how to turn it in the most
efficient way for the good of the company!
We need to keep in mind that HC is arguably the most important asset in every organization. And
it’s the asset that makes thing work!

•
http://www.accountingcoach.com/wp-content/uploads/2013/10/05X-table-01.png
People should be regarded as assets rather than variable cost, in other words, treated as human
capital (Beer 1984)

Human Capital Measurement models
•Input model
•Output model
•Comparison value model
•KPI model
•
•Also
•Conventional
•New
•(Cost based model)
•(Income based model)
•(Integration model)
•
•(Indicator model)

                 Input Model
•Measures accumulated values of all expenditures
•Historical costs
•Costs are tangible and intangible
•
•Limitations:
•
•No necessary relationship between investment and quality of the output •Not easy to divide costs
of consumption and cost of investment
•

                 Output Model
•Measures all discounted values of future earnings through lifetime
•It values HC at market prices
•Dynamic economy is more interested
•
•Weak points
•Model assumes that differences in wages can perfectly reflect differences in productivity •What
kind of expenditure should be classified as maintenance
•In developing countries is not easy to find data

                  Comparison
•It s the combination of above two models (Input and output), as investment in human capital
determine the stock of human capital (input model), which in turn determine the individual earnings
(output model). (Tao & Stinson)
•
•Limitation
•The categorization of rearing costs
•The ability of graduates with SAT scores
•

Indicator Model
•The estimation of human capital from the point of view of the investments in education, without
allocating any monetary values to the human capital. The most frequently use indicators are
literacy rates, school enrollment rates and average years of education.
•In this model the Skandia navigator can be named.
•

Conventional & New measurement
•Conventional measurement OECD
•1. Investment in human capital
•2. Quality adjustment in human capital investments
•3. Results of education
•
•New measurement
•HDI Measures a country’s human development and well-being •The structure of HDI is constituted
with health, Knowledge and standard living
•
•
•

Is it so complicated?



http://media.caranddriver.com/images/media/331369/prius-next-up-for-recall-hysteria-could-corolla-b
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                 Input Model : Cost
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1
2
3
4

Output model: Price
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2
1
3
4

Comparison: Margin %
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4
3
1
2

Indicator: Off-road performance
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1
3
2
4

Indicator: Energy efficiency
http://media.caranddriver.com/images/media/331369/prius-next-up-for-recall-hysteria-could-corolla-b
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4
3
2
1

Why is it so complicated?
•Because every model gives different results. For example…….





•
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•Literature:
•
•The 3rd OECD World Forum on “Statistics, Knowledge and Policy” Charting Progress, Building
Visions, Improving Life Busan, Korea - 27-30 October 200
•Approaches for Human Capital Measurement with an Empirical Application for Growth Policy Rewat
Thamma-Apiroam1 1 Department of Economics, Faculty of Economics, Kasetsart University, Bangkok,
Thailand
•https://www.unece.org/fileadmin/DAM/stats/documents/ece/ces/bur/2016/February/15-Add1-Human_Capita
l_Guide_after.pdf
•http://www.employment-studies.co.uk/system/files/resources/files/454.pdf
•https://frcatel.fri.uniza.sk/hrme/files/2011/2011_2_05.pdf
•The scientific journal of human studies - http://eds.a.ebscohost.com/
•International journal of economics, commerce and management - http://ijecm.co.uk/
•Human capital and its measurement - The 3rd OECD World Forum on “Statistics, Knowledge and Policy”
•

                            SO !!