It is often assumed that human capital is related to organizational performance, but the research literature provides mixed support for that assumption. In this article, the authors conducted a meta-analysis (or statistical combination) of 66 studies to clarify the seemingly contradictory research on the relationship between human capital and firm performance.
THE RESEARCH FINDINGS
The authors found that human capital was positively related to firm performance, but that the relationship was moderated by the type of measure used and the type of human capital. The relationship was stronger when performance was measured with operational performance measures (e.g., customer service satisfaction or innovation), as opposed to global performance measures (e.g., returns on assets or returns on sales). The relationship between human capital and performance was also stronger when the human capital was firm-specific as opposed to being general human capital.
THE BOTTOM LINE
This meta-analysis indicates that human capital is positively related to organizational performance, so acquiring and developing human capital is critical. You should also try to obtain and nurture human capital that is specific to your organization so that employees are less likely to use their capital to obtain positions in other markets. Another interesting finding was the importance of having human capital across multiple levels of the organization, so be sure not to focus on one level (like top managers) and ignore the others.
Crook, T. R., Todd, S. Y., Combs, J. G., Woehr, D. J., & Ketchen, D. J. (2011). Does human capital matter? A meta-analysis of the relationship between human capital and firm performance. Journal of Applied Psychology, 96(3), 443-456.
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