Facing Up to the Human Capital Equation

by Ken Orr

People -- especially skilled, knowledgeable people -- are in great demand today. Organizations are recognizing that fact and trying to react. As a result, concepts like human capital are increasingly popular. Recently, the Cutter Business Technology Council issued an Opinion authored by Tom DeMarco and Peter O'Farrell ( Vol. 2, No. 2) about the importance of quantifying human capital -- i.e., placing human capital on par with financial capital (from a reporting standpoint). In recent years, a number of books have appeared on the subject of intellectual capital. One of the most influential authors in this area, Karl Erik Sveiby, has defined intellectual capital as follows:

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Facing Up to the Human Capital Equation July 2001