Financial capital is abundant, cheap, and rigorously managed. Human capital is scarce and not found on the balance sheet — and therefore not managed as rigorously. In this era of nearly free financial capital, what separates the best from the rest is leaders’ ability to manage human capital: the more talented people a company attracts, the more effectively it focuses their time on value-adding missions, and the more energy they bring to the workplace, the higher the quality of their ideas and the quantity of output they produce. To get better at managing human capital, executives have to manage it like financial capital – they need to measure it, invest it, monitor it, and reward it.

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