Perspectives on Human Capital and Safety

[Guest guest]

This is from Compliance magazine email - perhaps it

could be used to demonstrate the problem mold in

indoor air causes for employees and the loss in

dollars to employers-

Perspectives on Human Capital and Safety

By Tom Slavin

Editor's note: Compliance Magazine welcomes responses

to this column. Send your comments to

bhintch@....

" Human capital " is a common business buzzword, but

not many agree on what it means. It seems related to

an old business bromide: " People are our most

important asset. " Both expressions could use some

definition and meaningful measurement. Safety and

health professionals help protect human " assets " but

seldom calculate or give real meaning to the term in

the way that other corporate assets are measured and

managed.

The Human Capital Investment

I would like to explore the idea of human capital here

using an example to define human assets in a

measurable way. Over a 30 year career, the cost of a

typical employee who earns $50,000 per year in salary

would total $1.5 million. Another $20,000 per year in

benefits, such as insurance and paid vacation time,

would add $600,000. Discounting for present value at 6

percent would result in a value of $960,000. A company

of 1,000 employees would thus have $960 million in

human assets with a $70 million annual cost.

Strictly speaking, of course, people are not owned by

a company, so it may be more accurate to consider

people as leased rather than owned assets. Benefit

costs might be considered operating expenses rather

than asset values, but for now let us treat them as

assets.

Treating people as human assets may seem insensitive,

but the exercise has a purpose. Think of how a company

would approach the care of a $960,000 machine tool.

Anyone who consistently abused, misapplied, or

carelessly overused the machine tool shortening its

useful life or causing it to break down would be

considered negatively. The same should be true for

human assets that get misused, misapplied, or overused

to the point of breakdown. A dull drill bit in an

automated machine tool is quickly replaced so the

operation can work at optimal efficiency. We should be

just as quick to replace a dull bit in a hand drill to

maintain efficiency and reduce stress to the human

asset.

Investing in a Smoothly Running Workforce

Creating a financial model for human capital may put

into better perspective investments in ergonomic

improvements that can extend the life or improve the

function of human assets. Installation, ramp-up,

maintenance and retooling costs of physical assets are

often built into accounting models. For human assets

perhaps we could do a better job of planning and

scheduling for training and development activities and

other functions that are essential to maintaining a

smoothly running employee population.