When people think of asset classes, things such as stocks, real estate, commodities, and bonds come to mind. If you will be a young or middle-aged investor, then the significance of these assets pales as compared to be the human capital. Of course, human capital is found to be intangible, which you could not be sold or purchased directly. Because of this reason, it doesn’t obtain much financial press. Let us see what human capital could do for you & how you could make use of it to protect or grow your financial capital.
What is human capital all about?
Do you learn about human capital in your business school? It was possibly defined from the outlook of a business owner. However, what about from the Individual investor’s point of view? For individual investors, human capital is nothing but the current value of almost all the future wages. It is actually the most priceless access, which you own while you are young. In fact, human capital is said to be your best defense against inflation. Regardless of the inflation of your local currency, you will able to command a reasonable wage with the help of strong professional skills.
If you want to do anything to boost your ability to earn higher future wages, then you have to consider investing in the human capital. Getting a higher education, learning good social skills and on-the-job training are some of the time-consuming and monetary investments, which you need to make as early as possible in your life to boost your own human capital.
How human capital affects the allocation of your financial capital?
Over the years, your financial and human capital must go contradictorily. When you become aged, you will get the opportunity to make use of your human capital to boost your financial capital. It seems to be the opportunity, which you have never gain from the financial capital as it is earned by means of wages, savings as well as smart investment decisions.
At the time of your working profession, the risk factors associated with your human capital will affect the way by which you assign your financial capital. Characteristics such as job stability, industry sector, and income volatility should all be taken into account while opting for an asset allocation with respect your financial capital. Recruitment in Thailand is usually depends on various HR Consulting firm.
How to protect your human capital
Just like other asset classes, human capital is also equipped with risk factors. The two major risks include professional competency risk and death/disability risk.
- Professional competency risk: Depending on your professional competency, you will able to earn future wages. If you are found to be comfortable with your career, then it will surely pose an unknown risk towards your human capital. As similar to that of other valuable assets, you have to monitor your human capital in a constant manner. To protect yourself from this risk, you have to set goals for ultimate learning and stay up-to-date with the new technologies and industry trends.
- Death/disability Risk: It is extremely important to safeguard your human capital with the help of both disability and life insurance policies if you are one of those young adults. Doing so would surely protect you as well as your family during a possible shortfall of human capital caused due to a career-halting illness or an untimely death. This is particularly true if you are expecting high future financial obligations. When you get older, you need to hedge your human capital through insurance. Decision made on protecting your human capital by means of disability and life insurance must be in conjunction with the total asset allocation decision within your investment portfolio.
Best ways to keep your biggest asset: Human capital
HCM or human capital management is nothing but an approach to managing company’s employee as assets. Your business could not able to earn much profit without your employees. This is because that the employees of an organization are considered to be the lifeblood of any business. There are a number of things, which may go wrong with respect to management. There are also several other things, which could go right. Thus, it is important to prevent issues out of arising in its starting place. Think about and potentially change the way by which you manage, treat as well as view your employees to have a greater impact on your company.
Employees – your biggest asset:
Almost all employees have their individual unique combination of experiences, talents, and skills to bring out to the table. Therefore, it is the duty of an employer to find out the excellent way to uphold the employee’s team spirit. This simply means that employers have to find out the strength of each employee. Thinking regarding their skills not just as the biggest asset to their skill set or personality, yet also as a tool could, in turn, bring overall success for your business on the whole.
Areas of conflict:
According to the recent survey, employees across the globe generally possess a more negative perception towards their management team as compared to their senior level executives or HR agency Thailand. In addition, the study reveals that there are many different key areas, which employees are inclined to rate more negatively in contrast to the senior members or HR management. Some of those areas are:
- Career opportunities
- Work/life balance
- Compensation
- Senior leadership
There are obviously several reasons for why employees rate these areas less favorably than senior or HR management. However, the most important thing is, a common disconnect exists between the management team and their employees all across the world. Given below are the strategies, which management team needs to be followed to rebuild confidence among their employees:
- Be a leader instead of a Boss: Boss will assign tasks and implement them. Even though leaders perform the same, yet need to set a path and vision for their team and organization. Having a craze on what you have done and self-assurance in your capabilities and your team’s capabilities will assist your employees in feeling the same way. Finding the strength of each employee and having self-assurance in them would only help in making them feel a lot more confident regarding themselves and their position in the organization. It seems to be incredibly vital to assist create a culture for your employees to feel that they possess a sense of ownership in their action. Appreciating each and every member of your staff would help you manage your team in an effective manner and it would also help your employees feel valued.
- Appreciate a work/life balance: If you are not responsible for offering your employees a work/life balance, you could certainly help them balance personal time as well as work time. Encouraging healthy eating, exercise and several other healthy habits would usually make your employees feel happier and better all around. Be sure to have room for fun. Games, team building exercises, and trivia are really an excellent way to help them loosen up.
- Encourage career development: Let opportunities for training to encourage them in developing their professional skill set. Offer them with opportunities to learn and expand their knowledge. By actively taking part in the career of your employees and maintaining an open conversation with them, you would get to predict their goals and in turn, you could able to align the career goals of your employees with the company. Try to assist them in exploring the areas that they want to learn about or even areas for which they are passionate. While applied appropriately, leveraging the interest and strengths of your employees within your company would help them in reaching their goals in addition to the company’s goals too. Everyone will value a feeling of progress and if they feel they have room to develop, then it will help them value their time while working.
- Listen to your employees & build trust: You have to value each skill of your employee and think of them as the biggest asset to your business could help them motivate and build their confidence and trust in your business. If your employees didn’t believe in your business, then it won’t go very far. Building their trust will help you a lot in developing your company and business. Simply start by providing them a voice. Have an open talk with your employees regarding the company and allow them to give up their concepts and ideas. Executing their ideas and offering credit to them will surely be the best way to make them happy and feel like an asset to the business.
Conclusion
Inflation protection is offered by human capital to both young & middle-aged investors. So, human capital is an extremely significant asset, which you must not be overlooked. Almost all the investment decisions must consider the characteristics of your financial and human capital. It becomes a necessity to protect your human capital with insurance and consistently open to future investment through a lot of education & on-the-job training.
