Making Human Capital, Human
The paradigm of managing employees has been shifting. We have seen the shift from personnel administration to human resources to human capital. However, the current paradigm - whether a “resource” or a “capital asset” - is still based on “business as usual” views. We are advocating a paradigm of “Making Human Capital, Human”.
Much has been said and written about the Fourth Industrial Revolution and how the workforce needs to have soft skills quite different (in terms of importance) to the skills required in previous revolutions. The World Economic Forum, based on responses from leading global employers, identified the top three skills in 2022 as analytical thinking and innovation, active learning and learning strategies and creativity, and originality and initiative . The common goal of these skills is problem-solving, and the challenge, however, is that the problems commonly faced by organisations - may not have ready solutions. The workforce is expected not only to identify but also to learn to solve these problems.
Expectations of the workforce as a problem solver for unknown problems rather than a resource or capital for known needs require organisations to provide, among other things, much higher psychological safety and creation of safe spaces. Higher psychological safety and the active creation of safe spaces may also be instrumental in dealing with the “Wicked Problems” identified by Keith Grint , whereby a given problem is so complex that it defies “managing” and means that the best “solution” is likely to be “the best available now” (which has echoes of contentment, or learning to be comfortable, with producing “beta” solutions, as mentioned in our previous article on how businesses co-evolve through the prism of agility).
Regardless of what label the new human capital paradigm carries, our viewpoint is that it needs to capture the spirit of the following:
Psychological needs of employees should be given the highest priority.
Employee psychological needs ought to be constantly monitored given the current context of changing work, workforce and workplace. For example, what happens for older employees who have enjoyed job security and a sense of belonging when suddenly they are faced with the perceived threat from younger employees and robots? What happens when their hierarchy of needs (think Maslow’s hierarchy) drops from Stage 5 (Self-actualisation) to Stage 2 (Safety needs) overnight ? How can organisations deal with this? Putting “human” into sharper focus may help.
“….. productivity of itself as a goal can’t be the only thing. We have so long been driven almost solely by economic output, profit and short-term goals that the human at work has too often been rather lost".
– Peter Cheese, Chief Executive, CIPD
We need to emphasise the “Human” in “Human Capital”.
Though the goal of any business organisation is to make profits, putting the human “in focus” does not conflict with this objective because the “working part” of human capital is not the capital but the human. Part of the working human requires motivation, inspiration, and passion. Organisations cannot simply push someone to learn new things (they can try!), and it is widely recognised that there is a limit to extrinsic rewards.
This is article 12 of 12 in our Human Capital Prisms series.