Is human capital really material to a company’s financial performance? Dr. Larry Beeferman and Aaron Bernstein say yes. Beeferman and Bernstein are with the Pensions and Capital Stewardship Project at Harvard Law School’s Labor and Work Life Program, and co-authors of the paper “The Materiality of Human Capital to Corporate Financial Performance.” Their research offers compelling evidence that effective management of human capital has a direct correlation to a company’s financial performance. Still, investors face challenges in attempting to incorporate these metrics into investment analyses for various reasons: there are no standard metrics or definitions, and there is no definitive consensus about which human resources policies have the most impact on financial outcomes.
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