As people grow and develop, there are certain values they inculcate, especially with their exposure to education and exposure. These aspects are intangible and can hardly be measured by monetary metrics.
Some of these values improve us, and some others improve society and prove us to be valuable members of society. This aspect of the economy
and personal finance is called human capital. When people are born, the education they're exposed to often influences how economically valuable they become over time.
Growth & Improvement
Whether it's a technical, formal, or human development education, exposure to the right kind of education often improves people.
When a sophisticated and intentional approach is applied to improve people for them to become productive, human capital is the deliberate measurement of the intangible value they tend to add over a specific time.
Human Capital is also known as measuring the value of a person's economic abilities and the productivity that it yields in benefit to them, their job, or the society at large. It's the general value we add from life experience and exposure we have.
Individual Transfer Of Value: A Societal Appreciation
It's the successful transfer of value through the knowledge we possess and how impactful it is to solving real-time problems. For example, a trader neighbor who can also do plumbing work .
It could be that the main placement of this neighbor is expertise in all things trading. But having them solve an emergency plumbing job when such skills are needed as an emergency improves their value as people and make them a valuable member of society.
This is the same for a passerby who can offer first aid treatment to a dying person. It could be that these people are originally doctors by profession.
The Choice To Intentionally Add Value
Such a profession provides life-saving skills that potentially earns them an income while making them valuable member of the society.
So people can intentionally improve themselves to live better lives, earn more money, better their living conditions, and their quality of life, and even establish better wantability when it comes to the jobs they can do or accept.
Also, organizations and establishments can decide to do this for people.
Human Prospect & Value Addition
For example, there are companies or jobs that take their time to spot human prospects and decide if these people will become tangible assets when they undergo personal development training.
In a football club, for example, there are departments whose skills are to spot human potential. Young prodigies that can become valuable assets with the right exposure to the right footballing knowledge.
This shows that when people show prospects and they're exposed to the right training, they'll go ahead to become the best capital.
People As Assets
The reason why human beings can be referred to as "capital" is because of the value that's been vested in them and the potential profit they could yield from these investments.
This is a business model that's often applied by some of the most successful football clubs in the world. This model is to have scouts with psychological scouting abilities.
All they do is envision the right people that are likely to blend into the right training, be it technical, talent development, or even personal development to improve their already inborn natural talents, to become effective money-making skill sets.
Inevitable Return On Investment
At the end of the day, some of these footballers, go on to become global brands/business wanted by a wide range of clubs who are willing to pay anything.
Some smart football clubs, go ahead to include some clauses in the contract of their most prized assets so that even if they sell them to wealthy clubs they'll keep on getting some massive ROI because of the continuous efficiency and performance of their start assets which they've now sold.
Having an adequate human resources department is one of the best ways to grow human capital.
Does Diminishing Returns Set In?
This department is tasked with turning people into profitable organizational assets and when the investment is in monetary format, they begin to refer to these people as assets because of the money that was spent in bringing out the best in them.
However, diminishing returns is always possible as well, because it's a potential downside. Human capital experience depreciation, when people are de-jobbed, or can no longer replicate the value they once added.
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