-- The Human Workforce is Valued at $1.2 Quadrillion, Compared
to $521 Trillion Value of Physical Assets
-- For Every $1 Invested in Human Capital, $11.39 is Added to GDP
LOS ANGELES--(BUSINESS WIRE)--Dec. 15, 2016--
An economic analysis commissioned by Korn
Ferry (NYSE:KFY) reveals the tremendous financial value people bring
to the global economy. The analysis, conducted for Korn Ferry by the
Centre for Economics and Business Research, finds that human capital
represents to the global economy a potential value of $ 1.2 quadrillion.
This is 2.33 times that of physical capital, which is valued at $521
trillion and includes tangible assets like technology, real estate, and
“Although organizations often put technology in the spotlight in the
future of work, it is human capital that holds the greatest value for
organizations now and in the future,” said Jean-Marc Laouchez, Global
Managing Director, Solutions, Korn Ferry Hay Group. “When an innovation
strikes gold, the connection between the value that’s created and the
team behind the technology is often lost. Leaders must recognize and
capture the value of all their resources to succeed.”
According to the analysis, human capital is also the greatest value
creator available to organizations. For every $1 invested in human
capital, $11.39 is added to the GDP.
“The return on human capital—value versus cost—should give a clear
signal to CEOs: Investing in people can generate value for the
organization over time that significantly exceeds the initial financial
outlay,” said Laouchez. “People, as assets, appreciate. This
distinguishes them from physical assets, which operate at a limited
maximum output and which typically depreciate over time.”
Human Capital Value Globally
Although the structure
and size of a country’s economy frames the relative value of human to
physical capital, the critical importance of people is clear to see.
In each of the eight nations analyzed, the human capital value exceeds
the value of physical capital.
Agriculture and Industry-Based Nations
Even in nations
weighted toward agriculture and industry, the value of human capital
exceeds physical assets. In China, with human capital assets valued at
$110 trillion and physical assets valued at $49 trillion, the human
capital to physical asset ratio is 2.23. In India, the value of human
capital is $80 trillion and the physical capital is valued at $48
trillion, making the human capital ratio 1.67.
Markets with service-based economies
experience higher ratios, meaning the value of human capital further
outstrips that of physical capital. The ratio is greatest in the UK,
where, human capital (valued at $27 trillion) is 4.23 times higher than
physical capital (valued at $6 trillion). The United States holds the
human capital of greatest value, at $244 trillion. With physical capital
valued at $62 trillion, the United States has the second-highest human
capital ratio of the analyzed nations, at 3.92.
“The economic reality of human capital value magnifies the importance of
attracting and retaining the right people now and in the future.
Technology alone cannot deliver the uplift in productivity and value
every organization needs,” said Jeanne MacDonald, Global Operating
Executive and President, Talent Acquisition Solutions, Korn Ferry
Futurestep. “The digital world is fundamentally changing the connections
between companies, their employees and their customers. In many ways,
technology is strengthening these connections—breaking down structural,
geographic and cultural barriers to bring customers closer and link up
global colleagues. But CEOs must keep their eyes wide open to the
potential pitfalls of the digital revolution, including asking
technology to do all the work to the exclusion of people.”
About the Economic Analysis
To quantify the relative value of human and physical capital, Korn Ferry
commissioned the Centre for Economics and Business Research to develop a
robust economic model. The Centre’s economists determined human capital
value by developing a lifetime income calculation, encompassing the
ability of people to perform labor and add productive value over time.
Physical capital captures the value of tangible means of production. It
was calculated using the same principles that were applied to human
capital’s value—potential earnings from the asset in use.
Editor’s Note: A link to the full report can be found here
About Korn Ferry
Korn Ferry is the preeminent global people and organizational advisory
firm. We help leaders, organizations, and societies succeed by releasing
the full power and potential of people. Our nearly 7,000 colleagues
deliver services through our Executive Search, Hay Group and Futurestep
divisions. Visit kornferry.com
for more information.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161215005017/en/
Source: Korn Ferry
Tracy Kurschner, 612.309.3957