Human capital is an important factor that allows businesses to run more effectively by leveraging a skilled workforce. It is defined as the knowledge, experience, and skills of employees that is used to produce goods and services. It represents the people in an organization who are responsible for producing the goods and services that the business offers. It is an intangible asset, similar to capital improvements, that is not represented on the company's balance sheet and cannot be bought or sold like tangible assets.

When a company invests in the development of its human capital, the workforce could be considered its most valuable asset. Investments that can lead to the growth of human capital can include employee training, education, and benefits. Through such investments, employees acquire the skill sets that are essential to the company’s growth. Examples of such training can be communication techniques, management training, or sales techniques. Education, on the other hand, may include programs that allow employees to obtain advanced or specialized degrees so they can better manage or lead their departments.

The relationship between human capital and economic growth, productivity, and profitability has been extensively researched. Studies show that companies that are willing to invest in their human capital tend to be more successful. They can attain a competitive advantage, attract better talent, and deliver more efficient and effective services, leading to more satisfied customers. For example, a company may invest in its human capital to increase the productivity of its sales team, so that customers can get more value from their purchase.

If a company does not invest in its human capital, it could suffer from inefficiency, under-skilled workers, and attrition. Productivity and efficiency could decrease, and profits would go down. To ensure that its human capital remains strong, an organization must continually assess their employees and develop their skills.

Overall, human capital is an important intangible asset that may determine a company’s future growth and success. To maximize the potential of an organization, companies must invest in their employees through training, education, and benefits, and continually assess their performance. By investing in their human capital, companies can ensure that their assets are being used to their fullest potential and that their workers are capable of producing the best output.