The Advantages of Investing In Human Capital

February 23, 2012 by  Filed under: Management 

With all of the focus in recent years on the need for companies to make themselves more competitive, there has been a remarkable lack of attention on the benefits of investing in human capital. While politicians and others certainly offer their ideas about the need for additional spending on education and other forms of training, few of these people ever bother to explain exactly how such investments can benefit individuals, companies, and society.

Alone among all of the different types of resources available to businesses, this resource has the greatest potential for improving any organization’s ability to compete. While material costs, labor expenses, and other factors may be relatively comparable between different business entities, this human capital offers organizations a real opportunity to differentiate themselves from the competition.

Tragically, many people view this investment only through the lens of monetary expenditures. While education and training are critical for ensuring that any worker’s skill set is sufficient for meeting his and the organization’s goals, the fact is that there are other types of investments that can be equally beneficial. To really understand the benefits of these investments, it is important to understand how they must be implemented in an effective manner.

Education and training are obviously important. Educational investments provide employees with all of the basic and advanced skills they need to manage modern technology, complex business systems, and interpersonal relations within the workplace. Ongoing training can help to ensure that each employee continually updates those skills so that he can be as productive as possible in the job to which he is assigned.

In addition, there are other investments that can be made. These additional investments are usually made with little or no cost, since they are interpersonal in nature. Many manager and others in leadership positions often forget about just how important it is to invest in an employee’s attitude by working to motivate them properly. Often times, many employees are provided little guidance in this critical area.

Managers who devote their time to motivating employees fulfill a critical role in the investment process. History has shown that employees who are properly motivated enjoy a greater level of overall satisfaction with their position within any organization. This satisfaction almost always leads to higher productivity and improved performance in every area of employment, which leads to greater competitiveness and increased profitability.

Investing in human capital can thus involve a variety of different methodologies, with each investment building upon the rest. As important as technological investments and procedural techniques always are, they seldom lead to actual improvements in a company’s bottom line unless they are matched by an equivalent commitment to enhancing every aspect of an employee’s skill set.

One thing is for certain, and that is that the increasingly high level of competition in the global marketplace is causing more and more companies to take a second look at their personnel resources. This positive development bodes well for the future, as more of these businesses commit both their time and money to investing in human capital that holds the key to their future success.

About the Author

Dr. Doreen McGunagle is fiercely committed to guiding corporate and non-profit leaders who are serious about making corporate culture shifts to boost profits, performance, and growth as world-class service organizations. For more great information visit

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