It is very clear that human capital entails a crucial usage to almost all global organizations and Honda Motors is not an exception to the fact that they have to incorporate better human capital models and concepts in order to keep their business structure strong and successful in the global market economy. Thus, the economy has moved from agriculture to industry to a knowledge-based system focused on productivity shifting from land to machines to the human mind, therefore managers, human resources professionals and accountants struggle to place value on human capital (1993) Honda’s accounting function strives to apply its financially oriented principles to the human capital assets and its decision-makers are challenged to determine how much to invest in human capital. Honda – having had a manufacturing presence in the United States for more than 40 years, Honda’s growth and expansion has a significant impact on the U.S. economy in terms of both dollars and numbers of employees and that much of Honda’s success turns on the company’s respect for individual employees (1989)
Human Capital: The Competitive Advantage, Honda motors have access to such key success factors such as: (Mohrman, Galbraith, Lawler and Associates, 1998).
Ø Financial resources are available with a viable business model
Ø Access to technology is equal as the information technology society can readily adapt technology to a given situation or business model
Ø Businesses have access to customers, Honda having entry and access to a customer database is not necessarily a competitive advantage
What makes Honda difference possible, is the human capital in which they are applying to with relatively equal access to resources, it is logical to conclude that the human resources are where a strategic advantage can be developed but having capable human resources is no guarantee of success. what is important is the way those assets are managed to maximize the return on investment in the human capital of the organization (1989; 1979) The wealth of convincing and intuitive evidence of the importance and value of human capital and its contribution to Honda company success continues to grow and that investing in human capital is good.
The importance of building high performance public and private organizations is stressed. Human capital and the development of organizational capabilities and core competencies are fundamental to creating high performance organizations in today’s highly competitive environment. In order to develop high performance organizations many of the traditional bureaucratic approaches to management need to be discarded and replaced by approaches which move information, knowledge, power and rewards to employees (1996). While there are a number of theories as to why wages increase over an individual’s work life, a commonly accepted interpretation is that upward sloping wage profiles reflect investment in human capital, particularly investments in job training. The traditional human capital model predicts that training lowers the starting wage and increases wage growth (Veum, 1995) from estimating starting wage regressions indicate that there is not a negative relationship between starting wages and current company training. Also, the data indicate that off-site company paid training is portable across employers and suggest that the firm rather than workers pay for general training, which is inconsistent with the standard human capital model. (1995)
Henceforth, training that is company financed has a positive impact on wage growth independent of tenure at the current job that takes place outside the work place is particularly effective in enhancing wages. (1991) Honda makes solid, high quality, reliable products. It has a culture of respect for the individual’s contribution to the team, to the overall organization, and, significantly, to society. It aspires to be a company that society wants to exist, to protect the environment as its Research and Development is focused on understanding fundamentals. The firm has done great research on the human/machine interface and why the human being needs to stay in the loop – the mind does simultaneous track management that contributes a sense of alternatives, (1991) acceptable tolerances, and social values and combines respect for values with profit. It’s hard to formulate, but there’s almost a certain pragmatic heroism to its culture, that comes from realizing the need for intelligence and teamwork in an exposed and ever changing world.
The HR aspect is about new innovation-focused understandings with labor, cross-functional work groups and job rotation, managerial accounting applied to the whole product life cycle by managers rather than accountants, and use of return-on-sales rather than return on investment as a strategic goal. The accounting aspect is about things like target costing (2001). Honda incorporates necessary safeguards to ensure that all dealers are treated equally, something of great importance, it also incorporates unique links back into product and production engineering and provides daily feeds of warranty claims information for analysis. (1990; 1987) Indeed, human capital is critical with respect to two issues in the area of strategy as Honda is effective in formulating an effective business model for a complex; challenging and knowledge focus business activity that is committed to high levels of employee involvement, strategy ideas and formulation taking place throughout the firm. Furthermore, Honda Motors need not to look passively at the environment when it comes to human capital but try to shape the environment so that it creates the kind of human capital that organizations need to succeed. In order for employees to work in a tedious environment, they need problem solving skills and they need to understand the basic economics of the business, group process and a host of other skills and needing human capital that has the knowledge, skills and ability to perform, as Honda need individuals who are committed to the ultimate success of its core business process. (1990; 1987)
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