April 21, 2011

The Asset of the Human Capital

“Human Capital adds directly to the bottom-line of the company and this is very evident from the shift in the line of thinking-people as cost to people as capital.” P. S. Srikumar, Vice President, Talentpro (An HR service provider in India) was quoted saying this in an article in an Indian newspaper I caught hold of in my flight. In my view this is more or less paraphrasing the view of extracting more than the mere acceptable minimum. Atleast I would interpret it that way.

In the very next few lines, the author quotes Ajay Trehan, Founder-CEO Authbridge (A risk0management consultancy in India), saying that "The only way to evaluate human capital and its contribution to bottom-line profitability is by creating a set of KPI’s that are directly cascading from the business’s financial targets.”

I was wondering, is this actually possible, mere mortals calculating a cost/benefit ration of human potential!? He advises that this be considered in the very beginning recruitment stages. And by the way, in order to calculate the benefits from the human capital, what would be the time frame considered? Unlike a machine human would not work the same way forever. It actually takes me back to the discussion in class regarding recruiting a person as a manager just means that they have a potential to be leaders, it does not mean they are leaders. And if you hire people looking at their potential, how can you be certain to evaluate the ‘ return on the investment’? As Dr. Deming says, 'The most important figures are unknown and unknowable.'.. I wonder these people are doubting Deming or are they trying to accept this as a challenge..

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