Angie Henson - July 12, 2024

Harnessing the Power of Human Capital for Business Growth


The most difficult business assets to quantify are also the most valuable.

When we hear the word capital, we usually think of easily quantifiable financial, physical, or natural resources. Human capital is a bit harder to assign a numeric value to, even though many businesses consider it to be their most valuable asset—and rightfully so.     

In this blog post, we examine human capital and the many ways it can be developed and enhanced to support business growth and sustainability. We also explain why prioritizing human capital has become a powerful differentiating strategy for many companies.

The concept of human capital

Human capital consists of the collective knowledge, skills, attributes, health, and experience of a given company’s workforce. The concept originated over half a century ago, when economists and industrial psychologists began to connect the dots between human traits and business outcomes like productivity and innovation.

Human capital is a critical factor in driving business growth, since the unique contributions of employees can influence a company’s performance, adaptability, and competitive advantage in the marketplace. For example, well trained, experienced, and knowledgeable employees are likely to invest more time and energy into new ideas, or go the extra mile for customers. Key elements of human capital include:

● Education and training – Formal and informal learning that enhances abilities and skills, including certifications, degrees, and on-the-job training.
● Knowledge and experience – Insights and practical understanding gained from life and work experience rather than formal training.
● Skills and competencies – Innate talents, skills, and abilities that individuals bring to their roles and continue to develop over time.
● Behaviors and attitudes – Personal ethics and values that are transferable to leadership, teamwork, and motivation in the workplace.

Human capital strategies

While identifying examples of human capital in your organization is relatively straightforward, nurturing and retaining it can be more challenging. 33% of employers expect turnover to increase in 2024, with a healthy job market elevating the competition for talent. Quantifying the human capital within your organization goes beyond evaluating salaries and resumes. Human capital converts into economic value when you cultivate the knowledge, contributions, and potential of each individual.

The importance of human capital is leading more employers to focus on employee retention strategies. While salary remains an important motivator for workers in all industries, wellness benefits, flexible schedules, growth opportunities, and effective communication practices are among the factors that keep employees in jobs longer, while allowing their company’s human capital to expand.

The importance of investing in professional development

Like any form of investment, human capital should be nurtured and expanded over time. This can be accomplished through employee training and other forms of professional development. A workplace that lacks professional development opportunities is likely to be one where top talent moves elsewhere to further their careers. Additional benefits of professional development that help to build a solid base of human capital include:

● Development of new skills that allow employees to make greater contributions.
● Improved employee confidence and willingness to take on more challenging projects.
● Cultivation of leadership skills and traits for successful internal succession plans.
● Establishing employee mentor relationships and networks through workshops, conferences, and classes.

Effective leadership practices to maximize human capital

Recognizing and cultivating the impact of human capital is only possible when managers and other business leaders make it a high priority. The inherent connections between leadership and optimized human capital can be found in reward and recognition programs, team building strategies, training opportunities, and other activities that are most successful with the full support of management.   

Business leaders are also responsible for creating a positive culture where factors like inclusion, collaboration, and trust improve employee satisfaction. This includes creating a clear vision for the business that motivates employees to invest more of their own time and energy as they continue to learn from each new experience

Encouraging innovation and creativity

Creativity has been described as a superior form of human manifestation and an essential spark that leads to innovation and competitive advantage. With these distinctions, creativity may be the ultimate (and most treasured) form of human capital. Companies including Disney, Apple and Amazon that are known for innovation and creativity began their journeys by building environments where creativity was encouraged. Common practices used to promote creativity and innovation in the workplace include:

● Cross-functional teams to foster exchanges of knowledge and ideas.
● Employee flexibility and autonomy that allows them to pursue creative solutions.
● Tools and technology to support creativity and innovation.
● Establishing a safe environment for risk-taking without fear of negative feedback.
Employees who see their creative ideas recognized and encouraged are more likely to become further engaged in their work and contribute to company success, thereby creating an ongoing cycle of human capital development.

Building a culture of continuous learning

As you create an environment that motivates and inspires workers, you should also consider the impact of a continuous learning culture on human capital. Continuous learning enables employees to acquire new skills and refine existing ones, combining online learning resources, training programs that align employee goals with company needs, and informal learning sessions (lunch and learns) led by in-house experts.

A company that is committed to continuous learning can adapt more quickly to new technologies, market trends, and dynamic business environments. This agility gives companies a competitive edge when industry changes force them to re-evaluate their strategies or incorporate new product design features. A culture of learning also improves employee satisfaction and retention as their accumulated knowledge allows employees to find their ideal role and grow organically within the company.

Leveraging technology to enhance human capital    

Emerging technologies like artificial intelligence (AI) and machine learning are impacting every facet of the workplace, and the development of human capital is no exception. AI is being leveraged by HR teams and company leaders to suggest learning opportunities for employees, identify factors that lead to attrition, and develop strategies to attract top talent. Additional tools that support human capital management and productivity include:

● Learning management systems to automate training delivery and tracking
● E-Learning Platforms like Coursera that offer a range of self-paced learning programs
● Virtual and augmented reality tools to enable immersive training in simulated environments
● Performance management software to help employees and their managers set goals and track career development

Big data analytics tools give managers more insight into workplace trends and help them determine what training programs are mutually beneficial for the employee and company. Big data analytics can also play an important role in analyzing employee engagement survey data to determine what steps the company should take to retain and expand their human capital.

Final thoughts

Businesses around the world are beginning to realize that prioritizing their human capital yields long-term benefits by driving their growth, sustainability, and innovation. Cultivating employee knowledge, skills, and creativity as part of a culture of continuous learning provides a win-win by making businesses more adaptable while improving employee satisfaction and retention. Effective leadership and advanced, emerging technologies are among the essential ingredients that come together to enhance human capital by enabling professional development and allowing our most valuable business assets to grow.

Tags: Business Growth Business Leadership

  1. About the Author:

  2. About the Author:

    As a Principal at Valesco, Angie Henson serves in key roles related to new investment origination, portfolio management, and investor relations. She directs the firm’s strategic acquisition planning and program management as acting head of research and business development operations since 2002. Angie holds a Bachelor of Science from Tarleton State University and a certificate in entrepreneurial studies from Southern Methodist University.


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