The Establishment and Application

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JCHRM The Establishment and Application of Talent Evaluation ， 12 1 System: A Quantitative Model of Individual Human Suning Zhang（MBA，FRSA） Deputy Director of Human Resource Management Professional Committee of China 18 Management Science Society Chief Management Scientist of Shanghai Junhuang Enterprise Management Consulting Center

Abstract Based on the analysis of the current research status of quantification, this paper innovatively puts forward the concept of individual human capital quantification -- the Talent Valuation Model. It summarizes the twelve key assessment factors that affect talent valuation, named“Junhuang Elements”and established the relationship between“Junhuang Elements”and the talent value of the individual. The establishment of the talent valuation model provides the possibility and tools for the quantitative research and application of individual human capital. On this basis, the author also constructed an individual human capital assessment system including three modules of Talent Inherent Price module, Talent Market Price module and Human Capital Stock Exchange Price module. And designed application scenarios for the system in both macro and micro dimensions, including Precise Salary for Company, Performance Quantitative Assessment, Human Capital Tracking and Tracing System, Human Capital Assessment Certification System, Human Capital Value-Added System, Human Capital Finance and Human Capital Bank, Human Capital Stock Exchange, etc. The study of talent valuation model and Talent Evaluation System will lead to the birth of two brand-new“trillion-level”industries: human capital finance & human capital bank, talent exchange, which will help macroeconomic development and social employment. Keywords Individual Human Capital；Individual Human Capital Measurement；Talent Assessment；Talent value；Human Capital Stock Exchange；Human Capital Finance；Human Capital Bank；Precise Salary；Precise Performance Assessment

1. INTRODUCTION This is a big problem that has always plagued entrepreneurs and human resource professions，which how to accurately and reasonably assessed individual talents’value. It is a topic of individual human capital measurement. Traditionally, the research on human capital in academia is mainly based on countries, regions, organizations, etc., and few scholars are involved in the field of quantitative research on individual human capital. In addition, the subject requires high theoretical and practical experience for researchers, so it is extremely rare to see the research results of individual human capital measurement. This paper focuses on the individual human capital measurement, using quantitative methods to establish a model for estimating the value and price of individual human capital. And based on the module to build a Talent Evaluation System and to make it be used widely in real scenes. According to the author’s forty years of practical experience and research in human resource management, the concept, structure, and application scenarios of the“ Talent Valuation Model ”are proposed for the first time.

2. Literature Review

2.1 Human Capital In the field of human resource management, human capital can be defined as the stock of habits, knowledge, social and personality attributes (including creativity) embodied in the ability to perform labor so as to produce economic value.”(Goldin 2016) [1]“Human Capital”, the words, was created in the 1960s by Prof. Theodore Schultz, the winner of the 1979 Nobel Memorial Prize in Economic Sciences (Schultz 1961) [2] In general, human capital is a collection of a series of activities, that is, all the knowledge, talent， Journal of Chinese Human Resource Management skills, experience, intelligence, training, abilities judgment, and wisdom possessed by individuals and Vol. 12 No. 1, 2021 pp. 18‑33 groups in a population. This represents a form of wealth that can be used to achieve national or regional © World Scientific Publishing House 2040‑8005 goals. Human capital is divided into three types: knowledge capital, , and emotional capital. DOI: 10.47297/wspchrm WSP2040‑800502.20211201 The characteristics of Human capital are the innovative, creative, and effective allocation of resources, adjustment of corporate development strategies, and other market response capabilities, etc. The The generally accepted view in the industry is that the original idea of“human capital”comes from Establishment , the“father of modern ”in the 18th century. He defines“human capital”as one and Application of four types of :“the acquired and useful abilities of all the inhabitants or members of the society.”He believes that the talents acquired by members of society and residents through education, apprenticeships, and internships can become wealth for him and the society or organization to which he 19 belongs.“The acquired and useful abilities of all the inhabitants or members of the society. The acquisition of such talents, by the maintenance of the acquirer during his education, study, or apprenticeship, always costs a real expense, which is a capital fixed and realized, as it were, in his person. Those talents, as they make a part of his fortune, so do they likewise that of the society to which he belongs.”[3] The modern“human capital”theory was founded by Gary Becker, an economist and winner of the 1992 Nobel Memorial Prize in Economic Sciences, Jacob Mincer, a father of modern labor economics, and Theodore Schultz, an American economist and winner of the 1979 Nobel Memorial Prize in Economic Sciences. Becker (1993) believes that human capital is a means of production that can be repaid through investment. Investing in human capital will improve the employee’s productivity and earnings. A person can invest in human capital through education and training, etc., and obtain a certain degree of return [4]. In the 1990s, the concept of human capital was extended to include natural abilities, physical fitness, and healthiness, which are crucial for an individual’s success in acquiring knowledge and skills (Caves 2004) [5]. Nowotny (1981) is commonly cited for coining the term be Emotional capital (Gillies 2006; Relay 2004) [6] [7]. Gendron argued that emotional capital is the set of resources (the personal and social emotional competencies) that is inherent to the person, useful for personal, professional, and organizational development, and participates in social cohesion and has personal, economic, and social returns (Gendron, 2004) [8]. Cottingham used emotional capital to refer to one’s trans-situational, emotion-based knowledge, emotion management skills, and feeling capacities, which are both socially emergent and critical to the maintenance of power (Cottingham, 2016) [9]. Gendron B. also stated that emotional capital is a catalyzer, potentionalizing –boostering capital more than a simple additional capital as it is essential for utilizing effectively social and human capital. (Gendron B. 2006) [10]. For ideological reason, social capital has no set and commonly agreed upon definition. So social capital does not have a clear, undisputed meaning.“A resource that actors derive from specific social structures and then use to pursue their interests; it is created by changes in the relationship among actors”(Baker 1990) [11].“Made up of social obligations (’connections’), which is convertible, in certain conditions, into economic capital and may be institutionalized in the form of a title of nobility”(Bourdieu 1986) [12]. “The existence of a certain set of informal values or norms shared among members of a group that permit cooperation among them”(Fukuyama 1997) [13]. The commonalities of most definitions of social capital are that they focus on social relations that have productive benefits.

2.2 Firm Specific Human Capital Vs. General Human Capital Regarding the situation of employees being employed by an enterprise, the concept of Firm-Specific Human Capital (FSHC) has been introduced. In general, firm-specific human capital refers to skills or knowledge that is useful only to a single employer or industry, whereas general human capital is useful to all employers (Becker 1993) [4]. Following Becker, the human capital literature often distinguishes between“specific”and“general”human capital (Becker 1993) [4]. Many scholars pointed those resources and capabilities may take the form of FSHC (Coff, 1997; Hatch&Dyer, 2004; Kor&Leblebici, 2005) [14] [15] [16] —knowledge, skills, and abilities that have limited value outside of a given firm. As a whole would appear to increase the importance of specific training and the incentive for firms to invest in human capital (Becker 1993) [4]. Economists view firm- specific human capital as risky because it cannot be transferred. Barney JB (1991) suggested one type of Human Capital by firm-specific invested, which needs to be realized through the willingness and ability of employees and it is usually regarded as general human JCHRM capital that employees can freely control. Such as: teamwork training, learning how to coordinate 12，1 resources, learning to meet the needs of different customers, learning to use company resources to innovate, etc. It is not hard to see these capabilities are valuable to almost all companies (Barney, 1991) [17]. As long as labor markets are reasonably competitive, that employees will be able to appropriate much of the value created by this human capital (Molloy and Barney, 2015) [18]. Morris and Alvarez also 20 found: To the extent that past firm-specific human capital investments by employees act as a signal an employee’s willingness and ability to make firm-specific investments, employees will appropriate more of the value they create (Morris, Alvarez, Barney, & Molloy, 2016) [19]. c) Human Capital Measurement Human capital Measurement studies how to“measure”non-quantitative intangible assets-human capital, which includes: human capital measuring, ROI of human capital, assessment of human capital, the relation of human capital and economic growth, etc. Ernst Engel (1883) was the first scholar to use the retrospective method. Engel applied a simple formula to estimate the cost C0,i (i = 1, 2, 3) birth of three (lower, middle and upper) German social classes (Folloni 2010) [20]. Friedrik Kapp (1870) utilized the cost-of-production procedure (neglecting depreciation and maintenance) to estimate the value of an immigrant arriving in the USA (Kiker, 1966, p. 493) [21]. Farr (1853) was a pioneer of estimating an individual’s human capital. He presumed that‘the present value of the person’s probable future earnings, minus the necessary outgo in realizing these earnings is the present value of that person’s services’(Hofflander, 1966) [22]. Farr applied actuarial mathematics to estimate an individual’s human capital as the present actuarial value of the expected annual earnings net of maintenance costs (personal living expenses) (Folloni 2010) [20]. Human capital quantitative research began in the 1930s. Louis Israel Dublin, a Jewish American statistician, and Alfred Lotka, a US mathematician, physical chemist, and statistician, (1930) developed Engel’s approach. In 1930, Dublin and Lotka co-published“The Value of a Man”; In 1935, an American economist J.R. Walsh published“Capital Concept Applied to Man”and made the first A cost estimate of the value of human capital. Kendrick (1976) and Eisner (1985) have defined the value of the stock of human capital using a cost-based approach [23]. UNECE splits human capital measurement approaches into direct and indirect approaches. Direct approaches include the cost-based approach, the lifetime income-based approach, and the indicators- based approach (also named as output-based approach) (UNECE, 2016) [24]. The cost-based approach is based on measuring the stock of human capital through summing costs invested, including investments from individuals, households, employers, and the government for one’s human capital. The depreciation rate is used in the approach. Kendric (1976) divides spending on human capital between tangible and intangible investments. The tangible investment, as in Engel, refers to the cost of‘producing’and rearing an individual until the age of 14; The intangible investment refers to the cost of enhancing the quality (or productivity) of labour and are inclusive of expenditures on health, safety, mobility, education and training, plus the opportunity cost of attending school [23]. Becker (1962) discussed the different forms that investment in human capital may take: on-the-job learning (apprenticeship, internship, on-the-job training, etc.) and schooling are by far the two main methods used to upgrade human capital [25]. and Jorgenson & Fraumeni (1989) presented discounted income in the future [26]. The approach relies on information about all costs incurred in the production of human capital. The lifetime income-based approach is to measure human capital by summarizing the discounted value of all future income streams that an individual expects to obtain during his lifetime. Mulligan & Sala-i-Martin (1995) defines that aggregate human capital is the sum of quality adjustment of each individual’s labor force and presents the stock of human capital utilizing an individual’s income [27]. But human-unrelated factors can more influence on an individual’s income, so the lifetime income-based approach is rarely able to accurately measure human capital. The indicators-based approach (output-based approach) - Some economists attempted to measure the stock of human capital based on educational output indicators, such as school enrollment rates, adult literacy, and average years of schooling. However, the approach includes a drawback that relies on several indicators lack a common metric. But also, the effectiveness only can be recognized after participating in production activities. The The World Bank has pioneered indirect approaches estimate human capital residually in 2006. This Establishment approach is based on the assumption that the discounted value of the benefits that the capital stock will and Application deliver over its life will be equal to the current monetary value of the . Organization for Economic Co-operation and Development (OECD) measure on human capital is closely linked to international comparable statistics considering investment in human capital, quality 21 adjustments, and result of education. The factors including: 1. Investment in human capital (High-level qualification, Graduation and enrollment rates, Time invested in education) -- which focused on the current level of human capital investment within a national boundary; 2. Quality adjustment in human capital investments (PISA assessments, PIAAC) – which focuses on how the quality of that investment is managed and adjusted through the international comparison of academic achievement.; 3. Results of education (Matching of education to occupation, Labor market outcomes by age, gender, and educational attainment, Rates of return to education) -- presents how the result of educational investment is preformed after postsecondary education (Hanson, B. 2008) [28]. ------PISA: OECD’s Programme for International Student Assessment. PISA measures 15-year-olds’ ability to use their reading, mathematics and science knowledge and skills to meet real-life challenges. PIAAC: OECD’s Programme for the International Assessment of Adult Competencies (PIAAC) is a programme of assessment and analysis of adult skills. The major survey conducted as part of PIAAC is the Survey of Adult Skills. The Survey measures adults’proficiency in key information-processing skills - literacy, numeracy and problem solving - and gathers information and data on how adults use their skills at home, at work and in the wider community. ------Well-known human capital indexes include World Economic Forum Global Human Capital Index (GHCI) and World Bank Human Capital Index (HCI). Since 2012 the World Economic Forum has annually published its Global Human Capital Report, which includes the Global Human Capital Index (GHCI) [29]. In October 2018, the World Bank published the Human Capital Index (HCI) as a measurement of economic success. The Index ranks countries according to how much is invested in education and health care for young people. One of the central of the World Bank Human Capital Index was the inclusion and harmonization of learning data across 164 countries [30].

3. Problem Statements and Research Questions In the past ten years,“human capital”has become an increasingly important part of corporate human resource management. In the new century, the organizational form of enterprises has undergone innovative changes, and flexible employment has appeared in large numbers. With this change, the demand for accurate assessment of employee performance, establishment of an accurate and fair B&C system, and assessment of individual talents’value are becoming more and more urgent. Although there are huge amount academic research results on“quantification of human capital”, they still cannot meet the needs of the development of the times and the actual human resource management. The gaps in the research regarding human capital quantitative are described below： a) Human capital quantitative research mostly takes country, region, or organization (enterprise) as an object. There are just a few research focuses on individual human capital measurement. b) Most human capital research is theoretical research from the perspective of economics, sociology, and statistics. It is hard to find a research result on the application and productization of human capital. c) Most criticisms have been made of the cost-based approach are about the relation between the investment and the quality of output. In addition, it is impossible to identify and measure all the skills and abilities that can produce output (Kendrick 1976) [23]. Also, the social costs generating the human capital is not included in the approach (Dagum & Vittadini, 1996) [31]. d) The income-based approach has some drawbacks. For example, it crucially relies on the hypothesis that differences in salaries truly reflect differences in productivity, very sensitive to retirement age, and the wage rate is often not observable, etc.(Folloni 2010) [20]. JCHRM e) The human capital measurement approaches also have other shortcomings. e.g., the cost-based 12，1 approach considers only investment in education is insufficient. When a person works, he invests his personal time, he gets experience and leading to an increase in his human capital. At the same time, he receives wages. In this situation, the work process is a state of coexistence of input and output. The cost-based approach did not take such a case into the account. 22 To the best of our knowledge, there is a small amount of research to undertakes a detailed empirical analysis of the value and return to an individual’s human capital. Felin and Foss (2005) argued that “Organizations are made up of individuals, and there is no organization without individuals”[32]. Similarly, Ployhart and Moliterno (2011) state that organizational human capital is the aggregated value of individual human capital. Based on human capital theory, people who have more human capital (e.g., formal education, on-the-job training) have more productivity [33]. It can be seen that it is far from enough to study the human capital measurement of organization alone. Attention should be paid to the quantitative research on individual human capital. Because this not only helps to improve the accuracy of human capital measurement of the organization, but also it helps to apply the theory of human capital to the reality of enterprise human resource management. The rapid development of technology, such as Artificial Intelligence, Big-Data, and Blockchain, provides the possibility for individual human capital measuring and human capital productization. Wikipedia explains that sociological analysts refer to individual-level elements of social capital or call it “individual social capital”while economic analysts often use the phrase firm-specific human capital. In either case, the clearly includes but also some“activity-”,“community-”or“firm- specific”social capital (community trust) and (shareable knowledge or skills). This is easy to measure: its yield is your salary in your current job [34]. To gain a fuller understanding of how individual human capital influences the economy, in-depth quantitative study is required. Focusing on individual human capital quantitative research can help developing more human capital theories, as well as potentially commercializing future talent capital products objectives. Our goal is to build a practical model based on a commercial purpose rather than a theoretical model. We try to create a talent valuation model and a Talent Evaluation System based on the theory and concept of human capital measurement. Making individual human capital value be accurately priced. A talent exchange market will be built up in the future.

4. Theoretical Framework In this section, the hypothesis about the individual Human capital measurement model named: Talent Valuation Model will be discussed. We begin by defining what the“Talent Valuation Model”is. We then try to outline the structure ideas of a Talent Evaluation System by using the“Talent Valuation Model”as a benchmark model.

4.1 Definition of“Talent Valuation Model” The Talent Valuation Model is a tool to evaluate the individuals’market price, who realize value through labor in exchange for his value rent – wages. Using“individual inherent characteristic elements and additional elements”as assessment factors to assess the value of individual human capital. The model takes the advantages of“the cost-based approach, the lifetime income-based approach, and the indicators-based approach” combination. Consider the influence of educational input costs, past income, social capital, emotional capital, and regional and industry factors on the results of talent valuation. The main purpose of the“Talent Valuation Model”is a practical commercial application. The model helps monetization of individual human capital. The output is the talent price which is the“rent” formed by its interaction with the market.

4.2 The Talent Evaluation System Extending the scope of application of the Talent Valuation Model to the Talent Evaluation System we designed. It mainly consists of the following concepts and elements: 1) Study“the value and price of individual human capital”from the perspective of practical applications The 2) Talent Valuation Model is the benchmark model. Establishment 3) the products of Talent Evaluation System to Business (B-side) are accurate salary setting tool, and Application accurate performance assessment system, labor cost assessment tool, core team identification, and assessment system, etc. 4) the products of the Talent Evaluation System to individuals are salaried assessment, job-hopping 23 transfer cost assessment, market price assessment, job search job matching system, performance pricing, etc. 5) Talent valuation ecosystem for the market: human finance, talent bank, Human Capital Stock Exchange list, talent recruitment, talent transfer, talent trading index, talent futures, talent bidding, etc. The Talent Evaluation System would lead to industries integration and the birth of a trillion-level industry.

5. The Elements of“Talent Valuation Model Based on the results of many years of human resource management practice and human capital research, we make this hypothesis that the talent valuation model is mainly composed of the following elements, and named as Junhuang Elements: Knowledge Experience Skill & Competence Achievement Salary Social Reputation and Status Values and Professional Ethics Financial and Commercial Credit Family and Personal Conditions Industry Region Other

Knowledge： In the paper, knowledge is defined specifically as familiarity, awareness, or understanding of something. It is acquired by education, training, or some ways. Among the elements, three core factors are mainly considered: primitive knowledge, cumulative knowledge, and the relevance, breadth, and depth of knowledge: 1. Primitive knowledge refers to the part that may create value obtained through formal school education (including primary and secondary schools, colleges, universities, postgraduates, etc.). Different levels and contents of education have different effects on talent valuation. 2. Cumulative knowledge is the sum of knowledge acquired through previous training. It has a positive influence on talent valuation. The knowledge owner has had more cumulative, could have more value. 3. The relevance, breadth, and depth of knowledge have a strong correlation link to talent valuation positively. A person who has had the knowledge is more relevant, more breadth, more depth of knowledge, the owner has more values in the market. Kno = + ∫aiTi + f biK(r,w,d) + γ Among:

= The influence of primitive knowledge on talent valuation ∫aiTi = The influence of cumulative Knowledge on talent valuation f biK(r,w,d) = The influence of knowledge relevance and breadth/depth on talent valuation ai/bi/y(s) = the coefficient and weighting of knowledge elements related factors γ = coefficient

Experience The study of human capital measurement tells us that income increases with the growth of work experience. Jacob Mincer (1974) classifies it as a“postschool investment.”And found that postschool investment accounted for about 1/3 or more of the total [35]. According to our study, there are four core factors among the experience elements are mainly considered: the individual’s past work experience (including employers, industries, working years), the JCHRM professional field involved, the job level and period, the management range, the roles in previous 12，1 participating or leading projects, etc. 1. Past work experience refers to an individual’s work experience in creating value (such as a job with paid, charity, project, self-employment, full-time or part-time) in the past. The factors affecting talent valuation include industry (industry salary differences affect talent valuation), employers (employer’ 24 s size, nature, organizational culture, etc.), length of the working period, project nature, scale, and project period, etc. 2. Past professional field refers to the professional field (relevant or non-relevant) that the individual has been engaged in the past to create value (for example, a job with paid, charity, project, self- employment, full-time or part-time). Different weighting coefficients are supplemented according to the degree of correlation with the valuation. 3. The previous job level and management range refer to the individual’s responsibilities in the past to create value (for example, job with paid, charity, project, self-employment, full-time or part-time), including positions, management scopes, duties, length of time, etc. Different weighting coefficients are supplemented according to the degree of correlation with the valuation. Exp = ∑ci f E(co,pr,po) + δ Among: f E(co, pr, po) = The influence of previous work experience/professional field/job level and management scope on talent valuation ci = the coefficient and weighting of the experience element related factors δ = the experience adjustment coefficient

Skill & Competence： The Skill & Competence element is mainly concerned with the skill & competence accumulated by the individual in the previous work experience. Most studies have found that the influence of skill & competence deviation on the calculation of the rate of return is positive. The Skill & Competence element is mainly concerned with the skill & competence cumulated by individuals in their previous work experience. Most studies have found that the influence of skill & competence deviation on the calculation of the rate of return is positive. Research shows that human capital is the stock of skills and production knowledge embodied in people. According to Robert Gibbons and Michael Waldman (2004):“human capital is accumulated specific to the nature of the task (or, skills required for the task), and the human capital accumulated for the task is valuable to many firms requiring the transferable skills.”[36] Robert Gibbons and Michael Waldman (2006) also state that the concept can be applied to job-assignment, wage dynamics, tournament, promotion dynamics inside firms, etc.[37] Therefore, Skill & Competence is one of the core elements in talent valuation. Skill elements include two factors: skill and expertise. Skill is the professional ability to deal with work and problems well, which is acquired by learning, training, and practice. Skill is dynamic. It increases and cumulates with experience and learning. It will also decrease due to leaving the professional position. Expertise is the person’s special skill, knowledge, or judgment that is acquired from practice. The expertise is not strongly connected with the number of years in that particular field but practice. Expertise also requires an interest. Expertise is assessed based on background, personality, and level, etc. Its relatively stable inherent ability of the valuated object (individual). Competence is the person’s knowledge and behaviors that lead to being successful in a job. The competence element also contains two meanings: one is to measure the degree of professional competence of the valuated object (individual), and the other is the scope and intensity of the professional competence. The assessment of the Skill & Competence of the valuated object (individual) focuses on the following core factors: past performance, achievements, past employers and subordinate’s assessment, peer assessment, publication in related fields with the weight, influence in the industry, and intellectual property owned, etc. Com = ∑di f Skil + ∑ei f Com + ∑fi f Exp + ∑hi f Imp + σ Among： The f Skil = The influence of Skill on talent valuation Establishment f Com = The influence of Competence on talent valuation and Application f Exp = The influence of Expertise on talent valuation f Imp = The influence of the degree, scope and intensity of professional on talent valuation di/ei /fi/hi = the coefficient and weighting of the Skill & Competence element related factors 25 σ = the Skill & Competence adjustment coefficient

Achievement: The achievement getting before by the evaluated person is a core evaluation element for talent valuation. Achievement elements include both positive achievement and negative achievement. Positive achievement refers to the positive results (including but not limited to project success, profitability, rewards, etc.) created by the evaluated person in the past; Negative achievement refers to the project failures, losses, penalties received, etc. in the past work and life of the evaluated person. Ach = ∑ji f Suc(co,pr,w) - ∑ki f Fall(co,pr,pun) + τ Among： f Suc(co,pr,w) = the positive influence of previous achievements on the value of human capital f Fall(co,pr,pun) = the negative influence of previous failures on the value of human capital ji/ki = the coefficient and weighting of the achievements element related factors τ = the achievements adjustment coefficient

Salary： Salary is an amount of money or compensation paid to an employee by an employer in return for work performed. Salary is also the person’s market valuation. Salary elements mainly include previous salaries, bonuses, stocks/options, and dividends, etc. According to our observation, there are big gaps in salaries in different regions and different industries. We state that the salary element should exclude the influencing factors caused by the difference in regional/industry salary and remove it from the salary as an interference element. Jacob Mincer (1974) stated that the slope of the income-experience curve is increasing, and the intercept of this curve decreases with the amount of investment (that is, if the investment is large, start from the low point and then Rise to a higher position) [35]. This indicates that the influence of previous salaries on talent valuations has changed over time. It means the person’s salary and income years ago has less influence on the current salary level than the last year. The biggest influence on the current salary level is the salary and income of the previous year. Wag = ∑li f n (Wi) + φ Among： f n (Wi) = The influence of previous salary on talent valuation li = the coefficient and weighting of the salary element related factors φ = the salary adjustment coefficient According to our empirical study, the time division of the previous salary is set as 1 year, 2-3 years, 4-6 years, 7-10 years, 11-15 years, 16 years, or more. The weighting coefficient will also be obtained through AI technology and mathematical-statistical analysis based on the data of the industry and region. Social Reputation and Status: The element of social reputation and status is looking for evaluating the person’s social capital, which includes the person’s social status (current posts and previous posts), the nonprofit organizations and public activities involved, the academic and professional status, social honors, paper published and cited, academic awards, media interviews, and social visibility, etc. Rep = ∑oi f n (Aci, Awi,Ini,Rwi) + ξ Among： f n (Aci, Awi,Ini,Rwi) = the influence of social reputation and status on talent valuation JCHRM oi = the coefficient and weighting of the social reputation and status element related factors 12，1 ξ = the social reputation and status adjustment coefficient Originality/value－and Professional Ethics Originality/value－and professional ethics have an extreme influence on the value of individual human capital. The element includes the criminal records, warnings got, disciplinary punished records, and the assessment by previous employer/peer, etc. 26 I prefer to slip it into emotional capital. Eth = pi f n (Et,La,Em) +ω Among： f n (Et,La,Em) = the influence of the values and professional ethics on talent valuation pi = the coefficient and weighting of the values and professional ethics element related factors ω = the values and professional ethics adjustment coefficient Notes：The data can obtained by 360-degree interviews, and questionnaire surveys, etc.

Financial and Commercial Credit Financial and commercial credit elements mainly focus on evaluating personal assets, personal credit records, civil and commercial disputes, civil litigation or non-litigation cases, etc. Cre = qi f n (Fi,Cr,Cla,Cbu) +θ Among： f n (Fi,Cr,Cla,Cbu) = the influence of the financial and commercial credit on talent valuation qi = the coefficient and weighting of the financial and commercial credit element related factors θ = the financial and commercial credit adjustment coefficient

Family and Personal Conditions： Research shows that the influence of family factor on talents evaluation is indirect. The evaluation mainly pays more attention to all family member’s (including spouses, children, parents) property, income, punishment, health, etc. The personal conditions factor mainly focus on age, health status, etc. The studies have found that human capital values are substantially below the naive value. It means human capital returns are above stock returns early in life and tend to decrease with age over the working lifetime. M. Huggett and G. Kaplan (2013) pointed out that the age structure of income presents an abnormally regular pattern. In the first few years of professional life, earnings rose rapidly; in the middle of the career, the growth rate of earnings declined; and earnings tended to turn negative toward retirement. The human capital values and returns are nearly those in the benchmark model by age 30 [38]. Lillard and Wiltis (1978) found that income can be broken down into several components. One is the personal effect, which records the ability, health, and the person’s profitability that compares to his peers [39]. Fam = ∑wi f m (Fi,Pu,H) Per = xi f p (Fi,H) Among： f m (Fi,Pu,H) = the influence of the family factors on talent valuation f p (Fi,H) = the influence of the personal conditions factors on talent valuation wi = the coefficient and weighting of the family factors related xi = the coefficient and weighting of the personal conditions factors related

Industry Element Industry element mainly considers the influence of different industries’salaries and the talent supply- demand relationship on talent valuation. Industry data includes all industries on his arear history. Ind =∑yi f n (Ii) + α Among： f n yi (Ii) = the influence of the industry factors on talent valuation yi = the coefficient and weighting of the industry factors related α = the industry adjustment coefficient The Establishment Region Elements and Application Region element mainly considers the influence of different region’s salaries and the talent supply- demand relationship on talent valuation. Region data includes all regions he works on his area history. Reg= ∑zi f n (Yi) + β 27 Among： f n (Yi) = the influence of the region factors on talent valuation zi = the coefficient and weighting of the region factors related β = the region adjustment coefficient

Other The other element is a comprehensive element, including environmental elements, emotion capital, emotional capabilities, etc. Oth = ∑f n (Si) +∑f n (Ei) +∑f n (Zi) + η Among： f n (Si)/f n (Ei)/f n (Zi) = the influence of the other factors on talent valuation η = the Other adjustment coefficient

6. The Talent Evaluation System The Talent Evaluation System consists of three modules: talent inherent price module, talent market price module, and Human Capital Stock Exchange price module. The Inherent Price of Talent is estimated through the Talent Valuation Model, which includes an almost stable fixed value of talent, the variable value that changes with the cumulation of experience and ability, and the added value of talent value caused by other comprehensive factors. The fixed value of the talent is the most stable part, which does not change with the change of the person’s experience, time, etc. The main elements include Knowledge (education), Social Reputation and Status, Values and Professional Ethics, Financial and Commercial Credit, Family and Personal Conditions; The variable value of talent is the non-fixed part of individual human capital that does change with the change of the person’s experience. It is strongly linked to time and individual work experience. The main elements include Experience, Skill & Competence, Achievement, Salary；The added value of talent is the part that is not determined by the person itself but still affects the evaluation of individual human capital value. The main elements are industry, region, and other elements. The Market Price of Talents is the embodiment of talent value in the job market. The market price of talents is affected by the elements of regions, industries, employers, and the supply-demand of talents in the market. The market price includes market supply price, market demand price, and premium. The market supply price is the talent price on the market, which is determined by the market based on the inherent value, variable value, and added value of the talent; The market demand price of talents is the invitation price issued by the talent demand enterprise based on the company’s salary system, talent supply and demand conditions in the market, and with reference to regions, industries, and other factors; The premium is the difference between the actual price paid by the employer and the market supply price. The premium could be positive or negative. The Human Capital Stock Exchange Price is the price in talent transferring (talent hunting, hiring, exchange, talent leasing, etc.). It is mainly composed of salary (the market price of talent) and transfer fee. The transfer fee is financial compensation paid by the new employer to the former employer for the talent transfer. If talent is bound with a company by a contract, he should obtain the company’s agreement to terminate the contract before leaving for a new company. As compensation, the new company needs to pay a“transfer fee”to the former company. Talent transfer fee is helpful to avoid vicious competition and malicious hunting in Human Capital Stock Exchanges. The composition of the Talent Evaluation System is as follows: JCHRM The Talent Evaluation System： 12，1 ﹩ = （f S, M, E） S = ∑(f edu, f exp(i, j, p), f ski(s, k, ns), f know, f ach, f oth, f wag, f cre, f eth) M= S + C C= （f s, d） （ ） 28 E = φ* f w, f, c Among： S = the inherent price of talent M = the salary agreed D = the market demand price C = premium E = transfer fee （f s, d）= premium model （f w, f, c）= transfer fee model There may be a coefficient to adjust the difference of the model.

Figure. 2 the Talent Evaluation System structure

7. The Data System of the Talent Evaluation System The talent valuation model is based on the effective application of Big-Data, AI, Cloud technology, and Blockchain. Data processing and analysis will be completed through cloud platforms or locally deployed platform systems. The data processing diagram is as follows:

Figure. 3 the Data System of the Talent Valuation

8. The Application of Talent Evaluation System The Talent Evaluation System has broad application prospects. At the micro-level, the Talent Evaluation System can be applied to salary determination, performance quantitative assessment, human capital Tracking, and Tracing, human capital assessment certification, human capital value-added, etc.; at the macro level, the Talent Evaluation System can be applied to human capital finance and human capital bank, Human Capital Stock Exchange and leasing, talent transaction, etc. With the in-depth study of individual human capital measurement, Talent Evaluation Systems will have more extensive application scenarios.. a) Precise Salary for Company In the practice of recruitment, accurately determine the salary is a difficult problem that puzzled recruiting officers. Low salaries cannot attract high-level people. High pay is one of the most effective ways to attract these people, but it causes an increase in labor costs. Accurate salarying is a key issue in recruitment. The customized talent valuation model can estimate the candidate’s salary range. The b) Performance Quantitative Assessment System Establishment The derivative product of the Talent Evaluation System, Performance Quantitative Assessment and Application System, can be applied to the company’s organizational performance management and employee performance assessment. The Performance Quantitative Assessment System conducts performance “ ” management on the basis of full staff, full cycle, full process, full-range , and clearly and accurately. 29 Linking the employee’s performance assessment results with performance rewards, so that employee performance bonuses can be“figure out, counted clearly, and calculated accurately”. The Performance Quantitative Assessment provides ideas, methods, and tools for companies to solve performance management problems that have not been resolved. Performance Quantitative Assessment consists of a performance valuation model, internal quota system, performance quantitative measurement system, and a full performance management system. Performance Quantitative Assessment System structure below:

Figure. 4 the Performance Quantitative Assessment

c) Human Capital Tracking and Tracing System The Human Capital Tracking and Tracing System tracks and traces the elements and factors of the talent valuation model by using blockchain technology and to ensure the dynamic accuracy of the talent valuation results. The talent value increases or decreases with the changes of valuation elements and factors. Therefore, it is particularly critical and important to track and trace the evaluation elements’ dynamic changes. The Human Capital Tracking and Tracing System is a typical application of the Talent Evaluation System. Using blockchain technology to track and record the professional reputation, business reputation, learning and training experience, academic degree certification, work experience, project experience, salary history, and other data of talents for a long time. The tracking system data is provided to the talent valuation model as verified and reliable data. Reliable data improves the accuracy of the final result of the talent valuation model. The Human Capital Tracking and Tracing System tracks and traces the data, including data collection, data use, and transfer, etc., should be agreed in writing by the data owners. Ensure that there is no legal risk. The Human Capital Tracking and Tracing System can be an independent commercial product. d) Human Capital Assessment Certification System Human Capital Assessment Certification System is another commercial application derived from the Talent Valuation Model. The human capital assessment certification system is applied to certify the human capital value of talents. The certification system adopts a multi-grid evaluation system including functions, for example, expert evaluation, employer evaluation, and actual operation verification. It consists of evaluation rules, evaluation expert network, evaluation result certification, talent value certificate, etc. The Human Capital Evaluation and Certification System is applied as an independent product. e) Human Capital Value-Added System The Human Capital Value-added System is one type of training system that guides and promotes the positive value-added of the human capital of talents at different levels. Including talent valuation, customized training system, evaluation mechanism, and assessment rules, etc. The Human Capital Value Added System is used as an independent system. The evaluation result of the human capital value-added system is recognized and accepted by the Talent Evaluation System. JCHRM f) Human Capital Finance and Human Capital Bank 12，1 Human capital finance and human capital bank are the important expansion of the talent valuation model in the macro application and are a cross-border concept based on the combination of human capital quantification and finance. The fixed value and the variable value are the key parties in the inherent value of talent. It constitutes 30 individual human capital and forms market value. Therefore, we regard the acquired knowledge, skills, experience, and other variable value parts as an individual’s investment in human capital. To take a hypothesis: in order to obtain a return on investment of human capital, individuals lend their inherent value of talent to the job market and receive monetized returns. This creates the possibilities for the operation of human capital finance and human capital bank. Under this hypothesis, individual human capital can be“monetized”: 1) Obtaining cash loans as collateral 2) Talents have a wealth label of“monetization”, allowing“talent flow”to give the function of“asset transfer” 3) Human capital becomes“tangible”and“computable” 4) Monitor talent appreciation and talent devaluation is possible. 5) Revitalizing the“individual human capital stock”is conducive to maximizing the use of talents When individual human capital is monetized, we can apply the financial management method to manage individual human capital. Human capital finance and the human capital bank came into being. It is an important application scenario of the Talent Valuation Model. We make the definition of Human Capital Finance as a term for matters regarding the management, creation, and study of Human Capital monetization and investments. It includes human capital financing loans, human capital financing management, and human capital insurance. in human capital finance, the personal human capital monetized by the Talent Valuation Model can be the non-material collateral to obtain personal finance (maybe corporate finance) loans from banks or financial institutions. Human capital financing management mainly focuses on talent valuation pricing, human capital derivatives, human capital investment management, human capital banking, intellectual property ownership management, human capital risk management, etc. the human capital insurance is a means of protection from human capital financial loss. It is a form of human capital finance risk management, mainly used to hedge against the risk of contingent or uncertain loss in the monetization of human capital. The insured purchases Human Capital insurance in the form of payment to the insurer in exchange for the insurer’s promise to compensate the insured in the event of underwriting losses. When human capital depreciates or human capital financing loans are at risk, the insured gets compensation and compensation. The insured may be a talent party, bank, loan lender, or other related parties.

Figure. 5 the Human Capital Finance and Human Capital Bank

Human Capital Bank is a quasi-financial institution that provides standard pricing of the human capital value and accepts human capital saving and leasing services. The business includes human capital valuation and pricing, human capital saving and leasing, paid transfer and leasing of talents, maintenance and appreciation of human capital, human capital security, and guarantee. Human Capital Bank system The includes six components: human capital valuation and pricing system, human capital deposit and loan Establishment system, human capital security and guarantee system, paid transfer and leasing of talents system, human and Application capital value preservation and appreciation system, human capital ROI & ROCE analysis and management system. g) Human Capital Stock Exchange 31 Human Capital Stock Exchange (also named Talent Exchange) is a platform for talent trading, human capital investment, and talent transferring. The Talent Exchange refers to the collection of markets and exchanges where regular activities of buying, selling, and issuance of human capital stock (shares) take place. The talents who participate in transactions in the Talent Exchange are those who have obtained the “price tag”after being evaluated by the Talent Valuation Model. The operation of the Human Capital Stock Exchange refers to the stock exchange. Such human capital financial activities are conducted through institutionalized formal exchanges or over the counter (OTC) marketplaces that operate under a defined set of regulations. All transactions are completed through the intermediary of talent brokers. The Talent Exchange can be multiple trading venues in a country or a region. The Human Capital Stock Exchange consists of Talent Evaluation System, listing system, trading system, settlement system, information system, monitoring system, and human capital index. The human capital stock exchange has created a permanent market for talent trading, investment and transferring, and has become a place for monetary capital to realize a long-term human capital investment. If talent treats as a resource only, to crazily battle for talent grabbing should be appearance frequently. It leads to either high labor costs or mutual poaching, vicious exchanges of talents. The Human Capital Stock Exchange allows talents can be public bid, auctioned and listed. To make the healthy exchange of talents possible. Applicable objects of talent exchange could be: a) Elite and senior-level (academicians, scientists, corporate executives, etc.) b) Movie and sports stars, well-known public figures c) Reputable record in Human Capital Tracking and Tracing System d) Certified by Human Capital Assessment Certification System e) Passed a training program of Human Capital Value-Added System f) Others approved by special procedures.

9. Conclusion and Prospects Developing the Talent Valuation Model and Talent Evaluation System will lead to two brand-new trillion-level industries: Human Capital Finance & Human Capital Bank and Talent exchange. Human capital finance has broadened the business scope of Finance, banks and the insurance industry, which will contribute to the prosperity and innovative development of these ancient industries. Under the design of Human Capital Finance & Human Capital Bank, dozens of huge International Human Financial Centers will be formed in the world; Talent Exchange, as the global top talent pool, has first-hand and more accurate flexible basic data. It will develop and contribute to global talent distribution and human resource allocation. It also helps improve the efficiency of the market’s use of human resources. In the future, there will be a large number of talents and funds circulating in the human capital bank industry and talent exchange platforms; It will provide thousands of jobs opportunity.

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Notes The principal idea and concept of the talent valuation model and system was created by Mr. Zhang Suning in August 2018. It formed in February 2021. The English version was finally completed in July 2021.

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