Human Capital Production Function

Abstract

Abstract In many organizations the labor workforce is the single most important factor for business performance, but also the most difficult to analyze. Traditional analyzing and forecasting methods do not explain the phenomenon how human capital affects business economics, and therefore they are not too widely used in strategic management. This article introduces Human Capital Production Function (HCPF) as an analyzing method that combines the tangible and intangible assets of human capital with financial scorecards in a way that explains the meaning of human resources for business performance. Intangible assets can be measured using tacit signal method which can be connected to organization system intelligence. The article studies HCPF validity in longitudinal business case data and tests the use of HCPF in scenario-analyzing in a statistical average business services company in the Singapore region.