6.4 Human Capital defined
Why is it that the value of Microsoft was considered superior to GM + Ford + Boeing + Lockheed-Martin + Deere + Caterpillar + USX + Weyerhauser + Union Pacific + Kodak + Sears + Marriot + Safeway + Kellogg? (Lermussiaux, 2002:14, as reported in Business Week, 1999). It simply comes down to the value of their employees. This was reinforced by Bill Gates, Microsoft’s co-founder and executive chairman, when he noted that while their company was dependant on innovation and technology advancement to compete in the New Economy they were still tied to their employees such that if 300 people left Microsoft at any one time the company could fail (Gates, 2004).
In the New Economy where many companies compete on what they know, not what they own, capital resources of the organisation have shifted to emphasise the value of employees.