Human Capital as an Asset

The document argues that traditional accounting treats the workforce as an expense, creating perverse incentives for short-term job cuts. It proposes a shift toward 'stakeholder capitalism' where human capital is capitalized on the balance sheet. The authors introduce three specific metrics—Employee Experience (EX), Total Cost of Work (TCoW) and Return on Work (RoW), and Total Workforce Value—to provide a holistic view of talent and technology. The report highlights 'human-capital-positive' corporate responses to COVID-19, such as cross-industry talent sharing between McDonald's and Aldi, and calls for policy-makers and boards to incentivize long-term workforce investment over quarterly profit maximization.

• Current accounting standards create incentives to treat talent as disposable because workforce development costs must be expensed immediately, while workforce reductions can be treated as one-time costs excluded from core earnings.
• The report proposes treating human capital as a capitalized asset on the balance sheet, similar to how oil and gas reserves are valued using the PV-10 method.
• To account for the 'plurality of means' of getting work done (including gig workers and AI), the report introduces the Total Cost of Work (TCoW) and Return on Work (RoW) metrics to measure productivity and cost on a like-for-like basis.
• Employee experience (EX) is identified as a predictive metric for business performance, with high-performance EX correlating to better top-line growth and bottom-line profitability.
• The COVID-19 pandemic demonstrated that companies with a principled approach to human capital—such as those using furloughs or cross-industry partnerships—were better able to preserve talent and reputation.
• Intangible assets, which include human capital and corporate culture, are estimated to represent an average of 52% of a company's market value.

APA

World Economic Forum (2020). Human Capital as an Asset. http://www3.weforum.org/docs/WEF_NES_HR4.0_Accounting_2020.pdf

Chicago

World Economic Forum. Human Capital as an Asset. 2020. http://www3.weforum.org/docs/WEF_NES_HR4.0_Accounting_2020.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=Human Capital as an Asset |date=August 2020 |url=http://www3.weforum.org/docs/WEF_NES_HR4.0_Accounting_2020.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldeconomicforum2020human, author = {{World Economic Forum}}, title = {{Human Capital as an Asset}}, institution = {World Economic Forum}, year = {2020}, month = aug, url = {http://www3.weforum.org/docs/WEF_NES_HR4.0_Accounting_2020.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }