Intangibility and portability[edit]

Human capital is an intangible asset it is not owned by the firm that employs it and is generally not
fungible. Specifically, individuals arrive at 9am and leave at 5pm (in the conventional office model)
taking most of their knowledge and relationships with them.
Human capital when viewed from a time perspective consumes time in one of key activities:
1. Knowledge (activities involving one employee),
2. Collaboration (activities involving more than 1 employee),
3. Processes (activities specifically focused on the knowledge and collaborative activities
generated by organizational structure such as silo impacts, internal politics, etc.) and
4. Absence (annual leave, sick leave, holidays, etc.).
Despite the lack of formal ownership, firms can and do gain from high levels of training, in part
because it creates acorporate culture or vocabulary teams use to create cohesion.
In recent economic writings the concept of firm-specific human capital, which includes those social
relationships, individual instincts, and instructional details that are of value within one firm (but not
in general), appears by way of explaining some labour mobility issues and such phenomena as golden
handcuffs. Workers can be more valuable where they are simply for having acquired this knowledge,
these skills and these instincts. Accordingly the firm gains for their unwillingness to leave and market
talents elsewhere.
Risk[edit]
When human capital is assessed by activity based costing via time allocations it becomes possible to
assess human capital risk. Human capital risk occurs when the organization operates below
attainable operational excellence levels. For example, if a firm could reasonably reduce errors and
rework (the Process component of human capital) from 10,000 hours per annum to 2,000 hours with
attainable technology, the difference of 8,000 hours is human capital risk. When wage costs are
applied to this difference (the 8,000 hours) it becomes possible to financially value human capital risk
within an organizational perspective.
Human capital risk accumulates in four primary categories:
1. Absence activities (activities related to employees not showing up for work such as sick
leave, industrial action, etc.). Unavoidable absence is referred to as Statutory Absence. All
other categories of absence are termed "Controllable Absence";
2. Collaborative activities are related to the expenditure of time between more than one
employee within an organizational context. Examples include: meetings, phone calls,
instructor led training, etc.;
3. Knowledge Activities are related to time expenditures by a single person and include
finding/retrieving information, research, email, messaging, blogging, information analysis,
etc.; and
4. Process activities are knowledge and collaborative activities that result due to organizational
context such as errors/rework, manual data transformation, stress, politics, etc.
Corporate finance[edit]

In Corporate finance, Human Capital is one of the three primary components of Intellectual Capital
(which in addition to tangible assets comprise the entire value of a company). Human Capital is the
value that the employees of a business provide through the application of skills, know-how and
expertise.[31] It is an organizations combined human capability for solving business problems. Human
Capital is inherent in people and cannot be owned by an organization. Therefore, Human Capital
leaves an organization when people leave. Human Capital also encompasses how effectively an
organization uses its people resources as measured by creativity and innovation. A companys
reputation as an employer affects the Human Capital it draws