Treat People Like Assets And They Create Wealth Business Essay

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The aim and objective of human resource management (HRM) is recruiting, training and developing the high quality staff and to promote and encourage diversity at all levels within the business organization. Human resource management has include a large and variety of activities, the most important from all is to fulfil the staff needs, recruiting and sending them for training to get the best results, high performance, dealing with the performance issue, and managing the employees the compensation , pension , benefits and wages , employees record and health and safety insurance. Quality, productivity, service are the main objectives of every management, but without making an investment in human assets it's impossible to achieve these targets.


The term "resource" simply refers to the available supply that can be used in need. And the term "capital" refers to something that gained or loss, value depending on how much you are investing. We can derive the following ideas from the term "human capital".

Peoples are asset and they should be measured and valued.

Investment in human assets leads to appreciation in their value with the passage of time and other fixed asset leads to deprecation

The process of recruiting , training development , reward cost more the company as compare to investment in any other asset like machinery tools etc

Mismanagement of human capital devalues the company in the eyes of investors', and competitors.

Human capital is most precious asset within the organization and this fact is known by every manager of organization. But still , in large number of companies management is not paying enough attention to their human asset and employees remain undervalued , under trained , under employed , and all these factors leads to low level of productivity.

The problem is not that they don't care their employees but most of the organizations don't know how to value their human asset and what their needs are. In accountancy world, Human Asset Valuation (HAV) is a burning issue from last three decades. In the era of 1970s, it becomes a very famous topic of research but later it has lost its attention in the people's eyes because of its practical use. Human Asset Valuation (HAV) provides use full information to the investors and it is useful for the management to make polices to achieve their targets. So the accountants made different models to measure the human asset valuations, the main two approaches are Cost based measurement and value based measurement.


About 50 year ago, Peter Durker was the first who comes with a theory that "workers or labour force should be considered as an asset of an organization not expense .He also explain that labours should be treated with respect by management and they should not consider them just like production or profit making machine."Some organizations take investment in human capital as their asset and on the other hand some takes them as overhead expenses. The investment on human capital pays the same as they make the investment on other assets. But investment in human in assets need long term strategy and planning.


Management of every business know about good investment for their business i.e. acquiring the new assets, tools, equipments, business mergers etc. and they know how much they will get return or profit on their investment. But how someone can measure the return on human assets or capital investment? It's very difficult to measure the return on this kind of investment. This is reason in most of the organizations training and development of employees is neglected when they made their annual budget, or get some cuts in investment if the budget went deficit.


Industries other then health care has find the importance of investing in human's capital. According to the statically data of American Society for Training and Development, the transport industry of America has spent more than $450 dollars on per employees. On the other side healthcare organizations has spent $298 per employees, and ranked 2nd last in 1997 ranking of investment in human capital.

Louis Morris, Assistant Inspector General for Legal Affairs with the OIG, has stated during HFMA's September Compliance Conference in Washington, D.C., that "health care organizations should focus on the training and development of their employees and it's their job to check that employees are fully trained and competent to the work what they are doing."

HFMA showed a positive attitude towards training and respond to this challenge and launched a new training and development company. The purpose of company was to provide training and to the staff and to deal with the issues related to the training of the employees. This company has the goals and objectives which are set by the Office of the Inspector General (OIG).This launching of this company is an important investment for HMPA (Healthcare Financial management Association) because investing in human's capital or asset is a critical investment in health care organization.


In Human Resource Management, training and development is concerned with organizational activity aimed at bettering the performance of individuals and groups in organizational settings. It has been known by several names, including employee development, Human resource development, and learning and development (Rosemary Harrison, 2005).


The reason of investing in human assets in the form of training and development is different from company to company. The following diagram helps us to understand the importance of training and development is important.


To give the complete job description to the employees.

To improve the working performance of existing labour force by teaching them new skills and method of production.

When productivity report shows that lack of training is affecting the production of the firm.


Objective of training may be to provide the employees the

Communication skill which is help full for customer service and front line employees.

Computer training to improve performance and saving of time

Diversity training is necessary because peoples come from different social background and culture.

Health and safety training is most important training from all specially in manufacturing concerns.

Now a day's Sexual harassment training is also need of the organizations where people of different sex and age works.


After completing the training following skills are developed in employees. Improvement in production capacity of workers, better understanding of their job, employee's motivation to the work, knowledge about new skills and technology etc.



Starbucks Coffee Company was the 2nd best company in 2005, in the fortunes "best company to work for" survey. It was all because of the company's human capital investment policies.

Starbucks recruitment motive is to "hire the right person for right job" .And then 2nd stage is sending them for training. All the candidates who went through selection procedure they have to get minimum 24 hour of training at their regional training centre before they can start their work as employee. Nature of training is different from employee to employee according to their job needs. Front line workers have different training programme as compare to the management and non-frontline staff of starbucks. The managerial training in starbucks takes 8 to 12 weeks it includes all the information about the staff, stores and about diversity management etc.

Starbucks management knows that it's vital to invest in their human assets if they want to compete in market with other coffee shops and fast-food chains. According to Howard Schultz, "we cannot complete our strategic objectives without a work force of people who are immersed in the same commitment as management".


"McDonalds, is ranked 27 times in 29 year in worlds top ten fast food brands".According to case study of MacDonald on training and development, the fast food company has world`s best standard of customer service, cleanliness and quality. All the staff working in organization from management to front line all is fully trained and they know exactly about their job. The fast food chain has clear policy on the training and development of the employees. The employees training programs are comprehensive and provide equal opportunities of growth to all employees. The fast food company often conduct different seminars in their regional training centres to develop skills.

The fast food company is making investment in human capital only because they feel that success in fast food business is only possible through the well trained employees. That is the reason they are recruiting best peoples and sending them for quality training so that they can get the best out of them.


Tesco is the world's third largest grocery store and has more than 700,000 employees all over the world. The management of Tesco knows the fact that it is vital to invest in human capital and to provide quality training with the modern skills including IT, if they want to compete in global market. Training is important for staff because new store opening need well trained staff, and even in one store different post need different kind of training.

Tesco has quite flexible approach toward training of employees. The company is providing on-job and off-job training to their staff. The training process in Tesco starts from job description. Second stage is the practically handling of the problems under the guidance of coaches and senior staff. And third and last is providing full time responsibility to employees on short term basis. Tesco also use different programs, seminars and survey to get the knowledge of employee's needs and growth level. The company's positive approach towards investment in human assets (training and development) is helping to achieve their strategic goals and long term objectives.


Mark and Spencer is very famous retail business unit of U.K and also operate on international level with more than 65000 employees. Because of the growing number of competitor in retail market the company has developed new strategy to achieve their future targets and the new strategy is focusing on better and quality service to their customers. For this purpose they have organized a comprehensive training and development programme for their staff. This includes on job and off job training. At the management level objective of training is providing them leadership, teamwork and diversity management skills, and for front line use of IT and customer service training programs are introduced.

Growth rate of Mark and Spencer has proved that providing training to staff is not only a need of time but it's also vital for growth development of company. Although training and development has cost some money but company is taking all these expense as a future investment to their human assets. Because well trained and motivated staff is a competitive edge of company over its market rivals.


According to above case studies we can conclude that, Investment in human asset is important from companies prospective if they want to achieve their required strategic goals and growth rate level. Because well trained employees are the asset of any company and sustainable competitive advantage against their market rivals.