The Value of Human Capital

Michael Bolton has a great quote about the value of human capital, from an interview he gave at whatistesting:

...I frankly don't think businesses are very good at measuring or even considering cost and value if there's not a direct cash figure that can be calculated easily. Outsourcing is a great example: outsourcing is usually less expensive if you look only at the cost of labour. However, many companies today have no assets to speak of, other than intellectual ones--the real assets are in the minds and experience of their staff. Economics suggests that we can't put an accurate value on intellectual capital; there aren't good ways to measure its worth. That's not the same thing as intellectual capital having no value, but without a yardstick, nobody bothers measuring, and the value implicitly gets set to zero. And yet it seems pretty clear to me that software companies that don't place value on knowledge, or that don't treat their people well are vulnerable to losing their most valuable assets. Companies that work hard to retain their employees, to keep their minds engaged, to keep their skills sharp, and to keep knowledge in-house will do correspondingly better.

Attempt to understand value before you make a decision based on cost.