Tuesday, March 26, 2013

Human Capital as an investment


[This post is a continuation of my previous posts "Social accountability in Human Capital Management" and "Global cost of a human being", posted on March 18th and 21st. You may want to read them in sequence]

Looking at the facts in this light, the Human Capital as an investment done by private citizens, but the true ROI is for society at large.

Hold that thought! As HR professionals, doesn’t that mean that we are ipso facto accountable for the sustainability and for the development of such a valuable resource?

When an investment is deemed valuable, it has to be protected, grown and developed. It is true for industries, for commerce, and it still holds true in regard to Human Capital.


A city, a country, a nation supports its people, educate its children, looks after their health. Some of the smartest and most skilled HR people are actually working in public office, and I don’t believe a public officer could or should be ignorant of HR practices.

Leveraging to the full the human capital, and managing it correctly in a civic, ethical sense, means giving to all the employees the opportunities they deserve. Not because we are being NICE, but because we want to capture the human and monetary value of the skills, experience and knowledge of diverse people, developed at high cost by our education system, families and life styles. In these terms, we have to look at employees as an asset to maximize, not as a mere cost that has to be minimized to increase revenues.[1]

As an example, I’ve always wondered why women who have been head of a households with multiple children and handled the challenges of managing a complex family life and budget, are suddenly handicapped by that role once they return (or start) on the work place. Worse, in most countries their earnings are dramatically lower than women without families and without children! [2] Of course, there are practical reasons while statistics show such a difference – part time, less investment in a career… but isn’t it time we find ways to value and leverage the skills they have gained? Would it really be different if women had gained those skills while being employed as an executive assistant or as a manager, rather than by supporting their own families?

Diversity programs are not a nice to have. I am making the case of women here, but diversity has multiple facets, each bringing in clear wins. The challenge of diversity isn’t any more to allow everybody to have a voice, but to leverage and recognize the value it brings. In fact, the relevancy and value of the human capital is closely tied to the multiplicity of voices, of ideas, of experiences it offers. Squandering it spoils the most valuable asset a nation has, and at the same time the nation’s ultimate reason for existence: its own citizens.

And it must all be a win,win,win. If society wins, if the company wins, the employee must win as well. The answer to the “what’s in it for me” question must stay at the forefront of our mind in order to put in place a successful program. If any of the three protagonists doesn’t get a cookie, their interest will wane.

Perhaps an example can help.

Let’s take a real example, rather than an abstract. Johnson Precision (NH) is a manufacturer of precision plastic injection components, where a special-needs workers program has been put in place to integrate them in the workplace, supporting non-traditional employees to work side-by-side with their co-workers in every department, with the same expectations as everybody else. The wins are on all sides. On the employees side, special-needs workers received training and a good pay, while “traditional” employees gain confidence and proficiency by training the new comers. The company gained not only tax benefits (yay), but also credibility with customers for its social responsibility, as well as long term, productive employees. And society? Ensuring integration of special needs citizens is a pain point, and such a program helps to make them productive and self-supported.  

In return, the win, win, win results gained the program a top-down endorsement that is ensuring its continuation and potentially its expansion. [3]

That is the value that HR can bring. Know your employees, know your data and forecast the changes

Where else has this blog been published, or The little Blog that Could