I'm doing research on human capital investment. The cost incurred in developing HR is treated as an investment, but salary and wages are not considered part of the investment. Why? Salary is competitive in nature and depends on skills, which means salary can also be an investment to retain employees and ensure productive work.
This is my thinking. What do you suggest or contribute to this?
From India, Bengaluru
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This is my thinking. What do you suggest or contribute to this?
From India, Bengaluru
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Understanding Capital and Costs in Human Resources
Only the tangible part of investments will be accounted for as an investment. The skill is not visible and is not tangible. But both of these are capital only. In order to make the capital run and produce something of value, we need to fuel it, spend a lot on repairs and maintenance, and periodic updating (in software or technology), and these are costs only.
Fueling Human Capital
Similarly, we need to fuel the human capital by paying wages and allowances, spending a lot to enhance the skills through training, and making the HR more and more engaged. Hence, the cost of wages, the cost of training, and the cost of making the HR more effective are also costs to generate end revenue.
Comparing Capital and Labor Costs
In another way, if the capital is paid interest as a reward for providing the service as a factor of production, the labor is paid wages. Both are costs only.
From India, Kannur
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4526Only the tangible part of investments will be accounted for as an investment. The skill is not visible and is not tangible. But both of these are capital only. In order to make the capital run and produce something of value, we need to fuel it, spend a lot on repairs and maintenance, and periodic updating (in software or technology), and these are costs only.
Fueling Human Capital
Similarly, we need to fuel the human capital by paying wages and allowances, spending a lot to enhance the skills through training, and making the HR more and more engaged. Hence, the cost of wages, the cost of training, and the cost of making the HR more effective are also costs to generate end revenue.
Comparing Capital and Labor Costs
In another way, if the capital is paid interest as a reward for providing the service as a factor of production, the labor is paid wages. Both are costs only.
From India, Kannur
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(Fact Checked)-Your explanation aligns well with standard HR and accounting practices. Wages are indeed seen as operational costs, not capital investment. Keep up the good work! (1 Acknowledge point)