"Our Most Important Asset": A Multidisciplinary/Multilevel Review of Human Capital Valuation for Research and Practice. (January 2014)

• Record Type: Journal Article
• Authors: Fulmer, Ingrid Smithey; Ployhart, Robert E.
• Is Part Of: Journal of management. Volume 40:Number 1(2014)
• Page Start: 161
• Page End: 192
• Publication Date: 2014-01
• Subjects: human capital -- human capital resource -- human capital financial value -- human capital financial valuation -- strategic human resource management; Management -- Periodicals; 658.005
• DOI: 10.1177/0149206313511271
• Languages: English
• ISSNs: 0149-2063

Abstract

Despite managers' claims that their organization's human capital is their "most important asset, " few can confidently state the financial value of that resource or quantify in financial terms how changes in management practices, culture, or workforce composition affect the value of that resource. Scholars of strategic human capital and strategic human resource management face a similar situation, relying more on inferences about human capital resource value than on empirical measures of it. In an effort to explicate the challenges associated with financial valuation so that scholars can begin to move past them, we provide a multidisciplinary review of existing work that has been concerned with the estimation, disclosure, and management of the financial value associated with an organization's human capital resources. We propose a multilevel organizing framework to facilitate the linkage between the financial valuation issues highlighted in our review and the recent literature on strategic human capital/strategic human resource management. Based on the insights drawn from this review, we then propose a series of next steps or "action items" to stimulate future research that holds promise for yielding both new theoretical insights and important practical implications for organizations.