Investment in the Human Capital

The concept of human capital investment is mainly investment done by a firm or an individual on education/training and to expect a return of that investment in terms of revenue/capital. Human capital consists of three main components: ability, earlier education, and knowledge gained by training on job premises. From a company or a firm perspective, human capital is related to the revenue and productivity of that company. In short, we can say that human capital investment is directly proportional to the success and profit of the company.

Understanding Human Capital

The reputation and popularity of a company are as good as the number of quality employees it has from the topmost hierarchy to its bottom. The human capital is managed by the human resource department, which decides workforce acquisition, optimization, and management. Employee hiring, on-the-job training, planning, and management are also some of the essential functions of the HR department. Human capital defines that not all labour is equal. A company can improve the quality of its employees by providing proper training and education to its employees and hence increase its overall productivity and revenue.

Benefits of Human Capital Investment based on their types

As investment in human capital indicates the investment in a human, when the investment is not returnable directly, or has no return but it’s too important for humans to invest in. Let’s discuss the topic of different types of human capital investment and their benefits.

Investment on Study

Investing in the study has no direct return, but it will give a return in some other ways. This will help a child to grow with proper education and will start earning. Those earnings will help in the return on the investment. So, this one is an investment in human capital. No one can deny investing in the study of children as it has no direct return. 

This is one of the most important human capital investments, as this investment helps a child to grow properly.

Investment in Healthcare

Healthcare is one of the most important human capital investments. This one has no return at all. But this investment is the one, which helps humans to have a better life ahead and get health issues cleared. So, without knowing, you also need to invest in healthcare. 

Not only at one time, but in the future also this investment keeps on helping a human with a perfect way of investing in the healthcare sector.

Investing in social welfare

It is not the only point to keep yourself perfect and healthy. It is also a basic need, to keep the society and the situations around you healthy and perfect. It will help you to lead a perfect and great life. 

For this also, you need to invest some amount which doesn’t have any return at all. But as it will help you to keep the surroundings better, to get a gift of a better society, and to spend life in that society, you need to invest in this sector as well.

Mental health

The other important investment sector in human capital is mental health. Mental health is also equally important as physical health. So, with the help of investing in mental health grounds, you will be able to get good mental health.

This good mental health will provide perfect growth with a perfect and healthy future. So, knowing that, there will be no return on the investment, you need to invest in mental health for your betterment.

Employee development

If you take any company into account and invest in human capital, employee development will be one of the most important. In this phase, employees don’t do any business, but the company invests capital to educate them, to train them properly as per the company’s requirements. This helps the company in the future. With the help of this investment company can make business in the future with the employee.

Investment on Creativity

Creativity makes the brain more colourful and helps it to think in various ways. Only study or work can make a brain not that functioning, which creativity can do. Also, creative ideas can be utilised in too many ways.

It is also important to invest some capital to help your child or yourself on the ground of creativity. A small creative time can be a perfect quality time that can help you to soothe your mind. This has no direct return on the investment but is very important to invest in for creativity.

Human Capital and Economic Growth

The type of investments we make in human capital has a potentially strong relationship with economic growth. Some governments are currently providing higher education at little or no cost as they have started noticing the relationship between human capital investment and potential revenue generated. As a result, career advancements by investment in human capital are also happening now in government sector jobs. So, in return, it positively affects the country’s economic growth.

Conclusion

Human capital investment is the amount invested in improving an individual’s skills working in a firm to make them more productive. Education has proven to be one of the most important types of human capital investment. This type of investment, as discussed, leads to more economic returns, stability, and job satisfaction. It has proven beneficial for both the employee and the client, leading to good turnovers for the organisation. Hence, apart from giving their employees monetary perks and salary benefits, companies should invest money in their career improvement so that both parties can benefit.