Abstract
The purpose of this study is to investigate empirically the relationship between human capital efficiency and financial performance of Malaysian public companies. Using accounting data, this study reviewed the annual reports of Malaysian companies for a period of thirteen years from 2000 to 2012. The study applied Value Added Intellectual Coefficient (VAICTM) methodology developed by Ante Pulic to determine the human capital efficiency of a company. The regression models was construct to examine the relationship between human capital efficiency and financial performance measures including return on assets (ROA) and return on equity (ROE).The results revealed that human capital efficiency has significant and positive relationships with financial performance. The human capital efficiency is seen as a value driver for a company’s competitiveness. Hence, the findings of this study should help companies’ managers to make better decision pertaining to investment of their strategic asset that is human capital.
Highlights
Organizations tend to compete on the basis of their human resources, ; currently, human resource is considered as the most effective and important resource of the organization that enables them to gain a competitive advantage (Alsakarneh et al, 2018)
; it is highly effective for the employees to get appreciated and rewards are being distributed on the basis of their performance
Tangible rewards are being used at a certain level for the employees to increase their motivation and loyalty as well, ; it is difficult to say that tangible rewards are directly linked with organizational effectiveness
Summary
Organizations tend to compete on the basis of their human resources, ; currently, human resource is considered as the most effective and important resource of the organization that enables them to gain a competitive advantage (Alsakarneh et al, 2018). ; there are different methods and measures used in order to analyse the performance of the employees which able to offer rewards whether they are tangible or intangible (Yousaf et al, 2015) It is being done in the private or public sector as well because the main purpose of these features is to motivate the employees that enable them to contribute towards organizational effectiveness and efficiency as well. For that purpose; it is required to develop the effective reward system that illustrates organizational mindset and enable their employees to facilitate learning and productivity In this way; performance appraisal or evaluation system should be effective key success factor along with the performance indicators should be fine adequately so the employees are able to meet the expectations and they should be aware of the organization strategy regarding the rewards. This will help the corporate sector of Iraq to use the findings of the study and bring the effective reward system in the organization to increase its effectiveness
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