What Are the Different Approaches to Human Capital Policy?

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  • Written By: Jan Fletcher
  • Edited By: Jessica Seminara
  • Last Modified Date: 17 October 2019
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Various approaches in choosing human capital policies lean either toward an employee or an enterprise paying for job training or career development. Some companies have a policy of investing heavily in workforce development, while others prefer to hire individuals already prepared for a particular position. On-the-job training may include an internship or apprenticeship, or company sponsored attendance at special training events, such as seminars. Companies also diverge in human capital policy over the issue of whether to reimburse a worker for off-the-job training he or she undertakes for career development. One of the major factors influencing a company's decision to invest in human capital is expected return on investment, since a company may not want to train a worker who will subsequently leave, and take his or her skills to a competitor.


With the exception of publicly sponsored education, usually the worker, the employer, or a combination of the two invests resources in developing human capital. When a worker pays for the training, in most cases he or she has the freedom to pursue individual career goals at will. There is usually no expectation by the employer that the worker is indebted to the company in any way. If a company or organization is paying for the training, then the employer will likely expect the worker to reciprocate by agreeing to continue to work for the company for a defined period. Employers increase investment in human capital through on-the-job training, or through encouraging a worker to seek further educational opportunities on his or her own.

On-the-job training may involve worksite instruction by supervisors. Internships are often unpaid or low-paid contractual arrangements in which an employer offers a person the opportunity to receive training, while gaining on-the-job experience. A company's human capital policy may also be geared toward launching an apprenticeship program in order to create a pool of trained workers within a particular geographical area. An example would be a group of boat manufacturing companies in a coastal area that choose to invest in a human capital policy to train boatbuilders locally.

Sometimes, developing a human capital policy of apprenticeships is a political process, in which a local government pays for some of the costs in order to promote workforce development. Seminars conducted either at the workplace, or off site, are another human capital policy that invests in workforce development through short training sessions. Many companies adopt a human capital policy in which onboarding new hires is considered to be a wise workforce investment.

Taking the time to orient a newly hired worker to a workplace usually increases the chances that the person will achieve success in the position. Depending upon the firm, recruiting and then quickly losing a new hire may be costly. In other cases, such as in industries that use relatively unskilled labor, a company's human capital policy may be to not expend resources on training a workforce that may have a high rate of turnover.


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