ACCA Strategic Business Leader (SBL) Practice Exam

Which of the following best describes human capital?

1. The financial resources of an organization

2. The intellectual and skill-based resources of individuals

3. The physical assets owned by a company

4. The network of relationships within a firm

The correct answer is: The intellectual and skill-based resources of individuals

Human capital refers to the collective skills, knowledge, and attributes that individuals possess, which can be utilized to create economic value and drive productivity within an organization. This concept encompasses various dimensions, including education, training, experience, and overall capability of the workforce. By focusing on the intellectual and skill-based resources of individuals, this definition emphasizes the importance of people as an asset to the organization. This perspective is particularly relevant in today’s knowledge-driven economy, where the effectiveness of human capital plays a crucial role in innovation, strategic decision-making, and competitive advantage. Organizations increasingly recognize that investing in training and development enhances their human capital, leading to improved organizational performance and success. In contrast, the other options focus on different aspects of an organization. Financial resources pertain to monetary assets rather than the skills and knowledge of employees. Physical assets refer to tangible items like machinery or buildings, which do not capture the essence of human capability. The network of relationships, though important for collaboration and communication within a firm, does not directly encapsulate the skills and knowledge of individuals. Hence, the description of human capital as the intellectual and skill-based resources of individuals is the most accurate among the provided choices.