Human element is the core
asset in any organization.
The success or failure of a company very much depends on
the person who man the organization. Even for an organization having
vast physical resources with latest technological developments, the
importance of human resources has in no way diminished. It is also
supported by the fact that investors are lured for subscribing capital issues of
even new companies at premium, if their Board of Directors and top
management are comprised of competent persons and renowned managers.
Adam Smith, in his classic work, The Wealth of
Nations classified the factors of production into land,
labor and capital. The modern management stalwarts reclassified
them as four Ms (Men, Material, Machinery, and Money). The terms
`labor' and `men' have now been christened `Human Resource',
popularly known as human resources, which are thought of as the total
knowledge, skills, creative ability, talent and aptitudes of an
organization's workforce. It is the sum total of
the inherent abilities, acquired knowledge and skills of the
employees.
In the corporate world too, the valuation of the company is
done on the basis of Net Assets Value for stock market operations and
for mergers and acquisitions, etc. Though in practice, human
resources are not yet being shown as assets in the corporate
balance sheets, yet analysts give due weightage to it while valuing
the company. |
