Human productivity: The new american frontier

Abstract

Over the past several decades, the sources of competitive advantage have shifted dramatically, with financial and physical capital giving way in importance to intangibles contributed by human beings. However, the measures of human productivity have not kept up with the changes. Despite rhetoric to the contrary, human capital continues to be treated in most companies as a cost rather than a source of value, and managers are forced to make decisions about investments in human capital without reliable information on the returns that can be expected. As a result, many mission-critical actions—such as mass layoffs or outsourcing—are undertaken without a clear picture of the likely consequences. This article introduces the general theory of human capital asset mangement and explains how it can clarify the relationships between investment and value, generate useful measurements, and permit meaningful comparisons with other companies. The end result is a strategy for the intelligent, informed creation and management of human capital assets. © 2000 John Wiley & Sons, Inc.