Abstract
Human capital efficiency (HCE) refers to an employee's ability to create value-added for his employer. The purpose of this study is to investigate the movement in HCE of the workers of South African listed companies over time. The metric for HCE, value-added human capital (VAHU), is calculated as the value-added per Rand spent on employee costs. The median of the compound annual growth rate of VAHU was calculated for all JSE Main Board and ALT-X listed companies, per industry, over the financial years ended 31 December 2001 to 30 June 2011. This median growth was used to infer an improvement or deterioration in HCE. HCE was found to have declined in all South African industries, except Consumer Services, from 2001 to 2011. The overall decline is attributable to an over-emphasis on tangible physical resources; excessive compensation levels imposed by the ‘strike’ culture in South Africa; poor education and, possibly, to the overall economic decline after the global financial crisis of 2007. The government's drive for quality education has not translated into improved HCE. Companies may be forced to shoulder the cost of additional education and training themselves to further develop the basic skills of their employees.
Highlights
Background and conceptual frameworkThe concept of human capital efficiencyHuman capital is one category of intellectual capital, along with structural capital and relational capital (Bontis, 1998:66; Edvinsson & Malone, 1997:34; Stewart, 1998:75)
In order to investigate whether Human capital efficiency (HCE) has increased over time in South Africa, the following research hypothesis was formulated: HCE in South African listed companies increased for the financial year-ends falling in the period 31 December 2001 to 30 June 2011
value-added human capital (VAHU) is strong in Basic Materials because of the ability of their 'unskilled' workforce to generate value, despite the industry being crippled by industrial action at times
Summary
Human capital is one category of intellectual capital, along with structural capital and relational capital (Bontis, 1998:66; Edvinsson & Malone, 1997:34; Stewart, 1998:75). Academic and business research on human capital usually goes hand in hand with research on intellectual capital. Intuitive logic dictates that better education and training are requisites for enhanced employee knowledge and skills. Improving these employee characteristics is expected to result in improved HCE. It may be presumed that one of the outcomes expected from the government's efforts relating to education is a better quality workforce – at least a workforce better able to create value for their employers, i.e. with higher HCE. The purpose of this study is to investigate whether there has been an improvement in the HCE of the employees of South African listed companies over time
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