Human capital and performance: A literature review

firms with higher profits are more likely to implement profit sharing. However, if it can
be demonstrated that employees in firms with profit sharing have different attitudes and
behaviours than those in firms without profit sharing. And that these differences also
translate into different levels of customer satisfaction, productivity, speed to market and
so forth. As such, researchers can begin to have more confidence in the causal model’
(Becker & Gerhart, 1996: 793).
2. A good deal of work has emphasised the alignment of human resources to organisational
strategies (e.g. a cost leadership strategy and a differentiation strategy). But the firmspecific
contexts and contingencies surrounding the organisation will make HR alignment
much more complex and idiosyncratic, and render generalisations about HR and human
capital problematic.
3. If human capital is, in a real sense, ‘best practice,’ why is it that some organisations lack
human capital processes and yet are successful in their businesses Or, in other words,
why doesn't everyone adopt human capital principles These are some empirical
questions to be investigated. A simple answer would be that such firms may be successful
now, but the possibility of sustaining their success is perhaps reduced by the degree of
their failure to implement the human capital concepts. In general, we agree with Becker
& Gerhart (1996) who state that ‘more effort should be devoted to finding out what
managers are thinking when they make the decisions they do. This suggests a need for
deeper qualitative research to complement the large scale, multiple firm studies that are
available’ (1996: 786).
Measuring human capital
From the foregoing discussion, Delaney & Huselid (1996) state that there is compelling
evidence for a linkage between strong people management and performance. But how is
human capital to be measured Measurement is obviously important to gauge the impact of
human capital interventions and address areas for improvement, but in this field, measurement
is a problematic issue.
The process identified by some academics (e.g., Guest et al., 2000; Patterson et al., 1997) as
well as a number of the consulting firms, is to specify the key human capital dimensions and
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