VALUE OF HUMAN CAPITAL Essay Example | Topics and Well Written Essays - 750 words

VALUE OF HUMAN CAPITAL - strive ExampleThe accountants continue to ignore the value of human capital and stick to the age-old theory of ratio analysis and interpretation of financial statements. Ironically, these too are fraught with errors and can be easily manipulated to mislead the stakeholders.The happenings at Enron are well known when all they were concerned was with maximizing coverholder value and thereof they hid debts and overemphasized profits (Gardner, 2006). Dubious accounts were passed and the account that was presented to the public was fraught with discrepancies. At WorldCom the companys profits were artificially boosted and costs were considered as capital investment, on which they even claimed depreciation (Bhattacharya, 2004). All these helped the company to sustain its manifestly smooth and rapid earning growth. The stock prices were artificially escalated and the company loan was used to buy personal properties. some(prenominal) such instances can be foun d round the world and such manipulation is possible unless with the connivance of the auditors or the accountants. valet de chambre capital has become important as it is the source of innovation and strategy. Human capital is the combination of genetic inheritance, education, experience and attitude towards life and business (Bontis and Fitz-enz, 2002). Tacit knowledge is acquired by interacting with others and is connected to lifes experiences. This tacit knowledge has to be converted and retained within the physical composition so that they can compete in the knowledge-based economy (Marwick, 2001). Human capital adds value, is not substitutable and leads to free burning competitive advantage.At Microsoft, human capital is the greatest asset, is demonstrated by the fact that they form teams to facilitate design and test new software modules. They invest in people and technology and they have learnt how to share knowledge rapidly through out the organization (Edmondson, 2003). T hey