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Elsevier, Procedia Social and Behavioral Sciences, (148), p. 551-558, 2014

DOI: 10.1016/j.sbspro.2014.07.078

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An Outline of a Compensation System Based on Human Capital Theory

Journal article published in 2014 by Leszek Kozioł, Wojciech Kozioł, Anna Wojtowicz, Radoslaw Pyrek
This paper is made freely available by the publisher.
This paper is made freely available by the publisher.

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Abstract

The paper presents the identification and definitions of compensation functions from the perspective of human capital theory. The methodology for achieving the objectives of work is based on an alternative human capital model. This model facilitates explicit assessment of employees’ individual human capital based on the achievements of accounting in the area of valuations. The model identifies human capital as aggregated capital related to the costs of living, education and professional experience. Recruiting an employee implies the use of human capital in a business process, which makes employers responsible for offering appropriate compensation - the product of human capital value and the adopted rate of return. Fair base compensation requires the adoption of a rate of return at the level of potential growth.