Comment by runako
11 days ago
Even the creepy business terminology "human capital" implies something that a business actively wants to grow. That is in stark contrast to how most businesses manage their people today.
11 days ago
Even the creepy business terminology "human capital" implies something that a business actively wants to grow. That is in stark contrast to how most businesses manage their people today.
I find "human capital" better than "human resources", as it has connotations of something valuable to be invested carefully as opposed to something simply to be consumed and discarded.
Of course, in the end it doesn't really matter, it is all Orwellian anyway.
Not entirely. Businesses don't try to grow things like buildings and inventory, they try to manage them at levels that make sense for their present and projected sales.
(So the same sort of mercenary treatment that employees get)
Inventory is part of working capital. Companies generally understand that they want to expand working capital.
Buildings are often leased and are therefore not capital at all.
Companies who pay attention to free cash flow will typically try to manage inventory and non-cash/equivalent working capital down, not up.
How do you improve your "return on capital"?
That's right - by keeping output constant (e.g. through automation) while reducing capital!