Human Capital explained: What is it and how is it measured?

‘Human Capital’ is an economic metaphor for the knowledge, skills, and health of individuals through which they seek to better their lives. As economies have become increasingly knowledge-based and globalised, providing both greater demand and flexibility in movement for skilled labour, the economic significance of human capital has increased at every level in society. This includes for an individual’s employability and earning capacity, for a firm’s competitive advantage as an employer, and for a country’s economic success.
 
The Organisation of Economic Co-operation and Development defines human capital as “knowledge, skills and health of individuals that facilitate the creation of personal, social and economic wellbeing”. The role of the firm in creating human capital is an increasing area of interest for business leaders and policy makers, due to the sheer size of employment in and the scale and value of in-house training provided by the private sector.

Download our full Human Capital valuation guide that includes:

 
  1. Overview of GIST’s Human Capital valuation

    GIST’s Human Capital methodology measures and values the impacts of a business or organisation’s Employee Hiring & Training, Employee Health & Safety (EHS), and Gender & Diversity practices on its employees’ human capital. GIST follows a Drivers>Outcomes>Impacts’ framework for its human capital assessments.

  2. Overview of data sourcing and processing

    A step-by-step guide on how Human Capital values are estimated, collated and displayed by GIST for investor and corporate clients.

  3. Human Capital valuation framework

    An income-based approach to measure human capital creation, human capital externalities and employee health and safety impacts being generated by businesses.

  4. Human Capital valuation methodology

    An illustration of our model accounts for the flow of human capital to and from the organisation via hiring and attrition, and measures the economic impact of EHS practices on the wellbeing of its employees.

Click here to download

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About GIST

GIST is a pioneering data and analytics company that brings together world-renowned sustainability expertise with technology and big data to help investors and companies measure, value, and benchmark business impacts across all four capitals: Natural, Human, Social, and Produced. GIST’s data and software solutions provide analytics and insights that make it easy for investors and companies to measure performance across all value dimensions, manage material risks, and make informed decisions.
 
Founded by Pavan Sukhdev (UN Goodwill Ambassador, and winner of the 2020 Tyler Prize for the Environment), GIST is at the cutting edge of measuring impacts using a scientifically sound and economically rigorous methodology that provides unique and unparalleled insight into how companies impact society and the environment. GIST has been measuring and quantifying impact for over 16 years, and the GIST team brings a depth and breadth of experience in sustainability, science and economics that is unmatched in the market.
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