Human Capital Investment Essay Example

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1.     Description of the Topic and Key Terms

This report explores the case of Google as an IT company and discusses human capital investment in it to engage or retain key talent. The first section of the report aims at defining key terms and establishing a connection between rewards and human capital planning.

Human capital

Human capital is defined as skilled employees an organization has.

Human capital investment

Human capital investment is the cost that is invested for future returns. Human capital investment increases a firm’s productivity (Subramony et al., 2020). Rewards offered by the organization to its employees are of different types, such as non-financial rewards, financial rewards, employee assistance programs, and employee recognition programs. These rewards are to engage employees and retain key talent. They are considered significant in motivating employees to perform better (Victor & Hoole, 2021).

Human capital planning

Human capital is defined as skilled employees of the organization (Subramony et al., 2020). It is the most important asset of an organization or a firm as it creates an image of the business in the market and help it attain its goals.

Rewards and human capital planning

Rewards given to the workforce and human capital planning are related because effective planning can assist the management in the decision-making process related to the human capital investment. The right investment can lead to the attainment of goals and improve the business’s reputation.

2.     Best Practice Involved in Reward Management

Companies most commonly use several sorts of reward management to increase workforce productivity and employee job satisfaction. However, the method or approach to reward employees is not one. Four common approaches that are used for this purpose are non-financial rewards, financial rewards, employee assistance programs, and employee recognition programs (Bremen et al., 2019). The case company for this report is Google which operates in the IT industry.

Company’s Best Practices

Google is a renowned name in the IT sector and has the finest of people working for it. According to research conducted by Payscale (as cited in Lindstorm, 2017), 86 percent of Google employees are satisfied with their work roles. Google is a well-reputed company with a robust financial rewards system for its employees, which assists the employees in meeting their financial needs. The monetary rewards and perks practices have assisted the firm in attracting and hiring the finest human resources from around the globe and hence is considered one of the major reasons for employees’ job satisfaction. Besides providing monetary benefits to the employees, the management understands that non-monetary awards are crucial for employee motivation since one of the major reasons for employees leaving or switching jobs is a lack of recognition, which demotivates them and is also considered a cause of dissatisfaction, especially among the millennials (Lindstorm, 2017).

While analyzing Google’s reward management practices, it is identified that Google is an ideal workplace because the firm considers employees’ every need, whether intrinsic or extrinsic. This is the only firm that provides laundry, gyming, dining, hair cutting facility, massage parlor, sleeping areas, buses, shuttles, play area, etc. – all these facilities highlight that it not only says but actually considers its employees an asset (Francoisaba, n.d.). The company believes in providing experiences. It also offers individual rewards and bonuses by integrating “spot bonus recognition” and “google peer bonus” reward system, which is designed for individual employees putting extra effort into any teamwork or project. The rewards in this bonus program could be monetary or non-monetary.

Similarly, the firm also has an appreciation program for teams, which assists the management in enhancing teamwork and bonding among employees since teams are necessary for creating innovation in a firm. The recognition program is driven to encourage teams that show better performance; the program name is “no-name program.” Another practice that I can consider the best practice of Google is the “gThanks.” This is a peer-to-peer recognition approach; here, the employees can send appreciation and thank you notes to each other through a broadcast system without any approval. This system creates a sense of bonding, gratitude, and recognition among coworkers (Lindstorm, 2017).

2a. IT Industry Trends

The IT industry has been growing at a high pace. According to Statista, industry growth is expected to increase up to 5.3 trillion US dollars in 2022 (Sava, 2022). Not only this, the industry is rapidly evolving with the big 5 IT firms, including Google, Apple, Samsung, Amazon, and Microsoft. Looking at the reward management strategy of each, one can understand that these firms are looking to motivate their employees and keep them happy for retaining their position in the companies. Taking the example of Google, as discussed above, the company uses the “gThanks” strategy for the employees, which includes appreciation for each other and providing recognition for their achievements in the company (Lindstorm, 2017; Boxer, n.d.). The response to this strategy has been effective. Yet, there are diverse practices in the IT trends that show that the big 5 IT companies take it seriously and have their own incentive plans for reward management and employee appreciation.

Competitor Analysis

Looking at the IT industry, different reward programs are being approached by different companies as they are adamant about appreciating and retaining their employees. For example, Apple uses a paid-time off strategy for the employee during the holiday season based on their area and localities. This made the company one of the best places to work and increased appreciation for the employees (BasuMallick, 2021). In comparison to Google, Apple has achieved much appreciation for their program as it focuses on diversity and provides an ease to employees for getting paid vacations when on holiday in their own locality, which can be considered by Google as well for improving their employee motivation or appreciation.

Similar to Google, Amazon also understands the importance of non-monetary benefits to employees. The company provides the program named “FC Games” under this program. The employees compete in gaming tournaments with each other that are counted in their extra hours to the company, for which they can redeem free T-shirts, etc., from the company (Menapace, 2021). Although the company has provided employees opportunities, there is a negative feeling in some employees as they need to provide extra hours for redeeming such prices. This makes Google’s best practices more superior and reward-providing. It does not include employees to provide an extra effort, and just a simple thank you note or kudos can create appreciation (Boxer, n.d.).

2b. Overview of Google Inc.

Google remains one of the most celebrated forums in the IT sector. It offers numerous opportunities to employees in terms of learning and professional development. Likewise, Google offers a variety of rewards and incentives for the outstanding performance of its employees. Thus, the franchise enjoys a prominent position in the IT industry. Google found that financial compensations were not enough as other non-monetary rewards are also needed to improve the workforce’s efficiency. It was found that the workforce’s perception regarding cash and other non-financial returns was different. This notion was that hard money entrenched jealousy and offense among the employees. A remuneration of millions of dollars was made to recognize its best performers. However, this practice failed to achieve the anticipated outcomes. Non-monetary incentives were found more effective and encouraging as the results were more favorable. These incentives included the “gThanks” note and gained much popularity in the company and the IT industry (Kraus et al., 2019).

Google encourages its workers to appreciate and recognize the performance of other colleagues. The company has laid a culture of appreciation, and the managers are empowered to recognize the outstanding performers who have accomplished successful projects. Besides, the company has permitted the executives to reward teams for completing the project or assigned tasks (Paais & Pattiruhu, 2020). The application of the gThanks program was implemented in the company some time ago, but they reintroduced the idea, and this non-monetary practice provided help in appreciating the peers and helped them to consider appreciation for each other. The program gained huge appreciation overall in the industry and provided the company with improved employee appreciation in the company too. The program resulted in developing removing cultural barriers and positive responses from members that were unaware of each other. This also supported recognition of peers and gaining motivation from others’ behavior and achievements (Francoisaba, n.d.).

3.     Conclusion

This report explored the case of Google to study the importance of rewards for effective human capital investment. Google is a well-established IT sector company with clear core values in its organizational culture. It uses different reward management systems to enhance its employees’ job satisfaction. The best practice that Google uses is gThanks. It is a simple thank you note or kudos that helps employees appreciate each other service and provide appreciation. Both monetary and non-monetary rewards play a vital role in improving the organizational culture as it includes appreciation which is one of the forms explained as an example of Google.

It is important to note that rewards given to employees and human capital planning are related to each other. Human capital planning can be defined as the procedure of resource pool identification for organizational goals’ attainment. It is the responsibility of the HR department to identify this resource pool. The resource pool involves skilled or talented employees of the company. To motivate them to engage effectively in organizational activities, the HR department performs another duty, i.e., reward management. It is a process that involves policy-making to reward employees based on their skills and job description.

Reward management usually focuses on monetary rewards. However, the latest trends in the IT industry have shown that employee engagement is not only impacted by monetary but non-monetary policies as well (Yin, 2018). The management or leadership must focus on this reward system while planning about human capital. Employee job satisfaction is a psychological factor that can be improved by motivating and helping each other in the process. Ignoring reward management demotivates employees to switch to alternate employment opportunities available in the market. It is important to note that effective human capital planning needs a lot of research and feedback from employees. Leadership should take feedback from employees to know what their needs and expectations from their job are (Paais & Pattiruhu, 2020).

Different approaches could be used to carry out effective human capital planning. Some of them include using records, auditing, monitoring performance, and using the right employees for the task. The management team needs to know the specialization o area of employees’ expertise before allocating them for certain projects. Also, the management should consider the record of employees and monitor their performance before planning a reward strategy for them. In order to avoid employee turnover in the company, the management needs to study the market before the formulation of final strategies. The rewards should be decided according to the competition in the market so that employees can feel satisfied with the value of their work and devote their efforts to attaining organizational goals. It can be said that effective planning can assist the management in the decision-making process related to human capital investment, and the right investment can lead to the attainment of goals and can improve the business’s reputation. This discussion reveals how both concepts are linked and can benefit a company.


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