Putting the human into human capital : a human capital index based on competences : a thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy at Massey University, Palmerston North, New Zealand
The world of work is increasingly more global and knowledge-based and there is a developing awareness of the importance of human capital. An individual's performance against a comprehensive competence profile will capture, I suggest, the substance of human capital. A review of existing theories and measures directly or indirectly associated with measuring the value of people in the workplace reveals a gap. There has been no simple measure that captures the substance of human capital. A human capital measure was developed in an attempt to address this omission. Various procedures and concepts from the literature were initially tested in a pilot case study in an engineering firm. From this an original human capital index measure was developed and applied in subsequent case studies. The human capital index is derived from the performance ratings of competences which are correlated with productivity measures. Nordhaug's (1993) typology provided a consistent framework for job role coverage, in competence profiles that either already existed or more commonly, were developed during this research. Performance scores for competences were gathered through 360-degree feedback. Productivity measures were specific to each case study. This human capital index was developed with and applied to seven samples in five organisations: customer service representatives and customer service officers in a bank, two groups of lawyers, managers in a supermarket, engineers in the armed forces and technicians in the gaming industry. There were very strong correlations between the human capital indexes and organisational productivity results for several of the samples. Against these same productivity measures the OECD measure of human capital (equivalent years of tertiary education) correlated weakly. This study contributes to the constructs of competences and productivity and their relationship in a human capital measure. It also describes a case study process for human capital measure development and raises issues of human capital measurement acceptability. Results suggest that under certain conditions an human capital index based on competences is feasible as a human capital measure; although it involves a number of subjective processes and is organisation specific. Further development and areas of research are suggested.