Human Capital

Human Capital: Basic Beliefs about the World's Oldest New Paradigm

by Brook Manville and Marcia Conner

Human capital—the newest buzz and the most relevant new paradigm shift is hardly actually new. People have always been at the heart of the equation. And many would argue the human factor is the only equation with any meaning at all.

Haven’t people been at the center of all productive output ever since our genus graduated from primal slime? “Duh,” as they now say on Madison Avenue or your local junior high. But that’s not really the point. We think that the new focus on human capital is really in reaction to more recent history, the technocratic industrial age that briefly (well maybe for a couple of hundred years) fostered the ideology that machines, computers, or mechanical things could replace people in the workplace or at least relegate them to being little more than the firewood for the furnaces of real productivity.

Well a lot of people, much smarter than us, have been sending that ghost back to the grave for the last twenty years or so. And the rising tide of collective thinking about human knowledge, skills, and experience as the ultimate source of value has finally hit the major corporate radar screens (aided and abetted by a war for talent and a shrinking demographic pool). “Okay, I get it,” they say. “I have to do more than just praise people in my annual report. I actually have to start managing and developing them like the truly valuable capital they are. How do I do that? How do I go beyond just more and better HR?”

There’s no simple answer, of course. But, we start with some basic beliefs—the assumptions, perspectives, and habits of thought that represent a context for any program to pursue a more human-centric strategy. We draw these beliefs from interviews, dialogs, and readings—but also from a lot of personal experience. Each of us has had the privilege to work in some of great institutions that appreciate human values and spirit and that know better than others how to nurture “the capital.”

As is our style, we give you a short and beginning list—to stimulate your thinking, and initiate the conversation.

1. Hey, Bean-counters! Human Capital is a set of terms put together to remind financial types that people are the critical part of an organization’s makeup and that those people need to be developed, managed, and also treated with the respect of at least all the other capital. New and better terms than “human capital” will continue to evolve.

2. Measurement Angst Given the complexity, get used to imperfect metrics; be willing to accept the null set at least some of the time. Balanced scorecards, talent numbers, and intellectual capital measurement can be attempted and can even be helpful. But Heisenberg’s uncertainties must be obeyed, and sometimes it’s just not worth trying to quantify all that you have. There are only so many minutes in each day. Use your time wisely.

3. Managing Means Coaching, Not Just Buying. Everybody wants to source talent—bring on board people of great accomplishment, knowledge, and performance capability. But what really matters is what happens next. The value of human capital begins the moment that talent joins the team. How they are engaged, treated, and developed will ultimately determine whether they are productive or not. Every new job is a new race, and every race is won by the team with not only the best athletes, but also the best coaches.

4. Human Capital Investment Is Investment in Zig-Zag Capability. In the New Economy, with change accelerating all the time, people may not stay on your neatly defined path, but they can adapt to all kids of situations. Consider the other capital sitting around you—the chairs, lights, and even the computer. These work only with the help of people. Treat your people like chairs and the only move they’ll make is on to your competitors. Investing in people is an investment in fluidity, problem-solving, and continuous reinvention (alongside learning from our mistakes and our guffaws).

5. Virtual, Cross-Boundary, More Than You Realize. The arena of managing human capital gets bigger and more slippery all the time. The game goes beyond your door—you need to consider the human talent of your suppliers, partners, contractors, allies, and customers as well as your employees; everybody’s contributing to the final product now. Cross-boundary also means more virtual; you can’t plan on seeing or meeting with all the talent you need to develop. Get used to multi, multi-media approaches.

6. The Technology Challenge Is Post-Automation. The easy stuff—conceptually—is automating away brain-numbing work and managing data. The real value is mostly still to come—when we discover how to really extend and fulfill human capability with our machines. Technology as an augmentation and enhancer of, not substitute for, human capital has begun. But we’re only at the beginning.

7. I Am Because I Can Vote. The only way to truly manage human capital is to let it manage itself—or at least have a big say in how, where, and why it participates in the organization. Expect and encourage democratic processes and decision-making throughout the workplace. The days of “I’m the brain, you’re the legs” are over.

8. You Win, We Win. In the New Economy, every job has to be aligned for the benefit of the knowledge worker, as well as the organization. As obvious as it sounds, lots of managers still don’t get that. Managing and developing Human Capital is always a dual mission.

9. Simply Complex. This human capital thing is clearly multi-faceted. In addition to “Knowledge capital” (codified knowledge storable in repositories), and “Intellectual capital” (proprietary technologies, processes, or ideas that can be patented or copyright), other kinds of soft capital are in the mix: “Social Capital” (value potentially produced when people work together and trust one another);“Relationship capital” (value potentially created on the basis of collaborative and distinctive exchanges); and even “Emotional Capital” (value potentially produced by personal engagement, meaning, commitment, or aspiration). There will be more to come, and more to understand.

10. Honoring Performance, but Also Thinking, Spirit, and Noble Aspirations. Everyone needs to be productive and accountable; but the game has grown beyond products, results, and deadlines. Innovation demands reflection and time for “walking and thinking”; commitment and engagement demand aligning not only objectives, but meaning in the workplace; and stretching goals cannot ignore fundamental human feelings of most everyone—wanting not only to do well, but also to do good, make oneself better while also making the world a better place. Not for profits become more like businesses and businesses become more like not for profits. Embrace the blur.

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At the time this article was published, Brook Manville was publisher of LiNE Zine and the Chief Learning Officer of Saba. Marcia Conner was editor in chief of LiNE Zine. Find more of her work at www.marciaconner.com.