50-80% of a

company’s expenditures is

related to people

Why do Companies need to have the highest salary and the best

benefit possible?

Attract Retain

Support developmentTalents

Adam SmithHe treated the

acquired and useful abilities of the

members of society as one category of

Fixed Capital

Karl MarxLabor-Power the

aggregate of those mental and physical capabilities existing in a human being, which he exercises whenever he produces a use-value of

any description.

Theodore William Schultz

Theodore William SchultzApril 30, 1902

Arlington, South DakotaAgricultural EconomicsIowa State College

University of ChicagoAmerican Economic

Association

Development Economics in Agriculture

Inspired the IMF and World Bank

Human Capital Theory

T.W. Schultz: Contribution

"This knowledge and skill are in great part the product of investment and, combined with other human investment, predominantly account for the productive superiority of the technically advanced countries. To omit them in studying growth is like trying to explain Soviet ideology without Marx." 

is the collective sum of the attributes, life experience, knowledge, inventiveness, energy, and enthusiasm that its people choose to invest

in their work.

Human Capital

EducationOn-the-job training

Health

Investments that affect Human Capital

Division of Human Capital

General TypeTask/Firm specific

Importance of Human Capital

Wage

Job Level

Competitive Advantage

National EconomicGrowth

“An investment in knowledge pays the best

interest.”Benjamin Franklin

Gary S. Becker

Gary S. BeckerDecember 02, 1930

Pottsville, PennsylvaniaPrinceton UniversityUniversity of ChicagoColumbia UniversityThe Greatest Good

Gary Becker: ContributionRotten Kid Theorem

Rate of return in Human Capital investment

 is a profit on an investment

over a period of time

Rate of Return

Costs of HC InvestmentsOut-of-pocket/

DirectForgone Earnings

ROR in Education

Forgone EarningsOut-of-Pocket

A

B

0

Earnings

Costs

ROR in Training

 Total Benefits- Cost of InvestmentCost of Investment X 100

Costs BenefitsDesign and Development

40,930 Labor Savings

241,071

Promotion 4744 Productivity increase

675,000

Administration

12,713 Other benefits

161,250

Resource Person

86,250

Materials 15000Facilities 40500Participants

553,156

Evaluation 872Total Costs

Php. 754,165

Total Benefits

Php. 1,077,321

 Total Benefits- Cost of InvestmentCost of Investment X 100

 Php. 1,077,321- Php. 754,165Php. 754,165 X 100

42.85% Rate of Return

Thank You…