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Why Personnel Management is called Human Capital Management today? Do you agree that "Humans" are more of capital than merely assets?

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Question added by Christian Kenji Manriquez , Compensation and benefit analyst , Schlumberger - United Arab Emirates
Date Posted: 2016/12/20
Duncan Robertson
by Duncan Robertson , Strategy Consultant , Duncan Robertson Consultancy

Humans are neither capital nor assets.  All of this nomenclature, even though it is common, is profoundly offensive.  People are fundamentally different from things.

Something isn't an asset if it can urinate on your desk, call you a few rude words, tell the police about your shady business dealings and walk out of the door towards your competitor with the names and phone numbers of your best clients it its head.  And then sue you successfully for constructive dismissal.  Assets don't do anything like that.

 

Note that capital and assets are completely different.  An asset is, in general, something which produces a return and which in principle can be sold.  Capital is a store of value.

If I own my own house, that is not really an asset because it does not produce a return and if I sell it I'll have nowhere to live.  If I buy a property with a%  mortgage and rent it out then that is certainly an asset - it is producing a return - but it is not capital because there is no store of wealth.  Over time, as the mortgage is repaid and property values increase, it may become both an asset and a store of capital.

In other words a house may be capital, or it may be an asset, or it may be both.

A stash of banknotes under the mattress is capital, but not a true asset. 

 

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