What is the one asset that organizations all over the world, no matter where they are located and what business they do, need to nurture? What is that one indispensable element for organizations to grow and stay ahead of the competition? Is it technology? Yes, but there is something that is more important than technology, and is in fact, the factor that gives rise to innovations in technology and other areas of business.
Isn’t it the organization’s employees who do all these? If employees don’t make the organization, who or what else does? Many people like to think of technology as the moving force and the key differentiator for organizations. This is true, but only superficially. If there is one source that technology, best practices, leadership and everything else evolve from and converge into, it is the organization’s employees, right? Does technology fall from the skies? Do best practices get implanted into the organization out of thin air? Does management consist of robots?
Isn’t the human factor at the core of all these? In other words, isn’t it humans that constitutes the soul of organizations? What are all these factors if they did not originate from humans? What are all these if they didn’t have humans shaping and channeling them, helping the organization optimize them? This is that all-important element that makes or breaks an organization, and that is the human capital.
From the business perspective, human capital can be understood as being the collection of all the knowledge and skills an organization’s varied resources that go on to shape its very being. The OECD describes human capital this way:
The knowledge, skills, competencies and other attributes embodied in individuals or groups of individuals acquired during their life and used to produce goods, services or ideas in market circumstances.
This definition makes human capital a very broad topic. When one extends human capital to the overall economy, it becomes an even wider canvas. For the purpose of this article, we will examine human capital from an organization’s perspective.
For an organization, human capital could consist of the employee’s strength in almost all areas that matter to the organization. Anyone who brings any skill of any degree is part of the human capital. Let us understand human capital from the standpoint of what capital itself means: a means for generating assets. Just like how investment is used as a means to generate wealth, in an organization, anyone that contributes to its growth is a human capital resource. The skills and talents, along with the experience and qualification each of its employees brings, are all part of the human capital.
So, in a broad sense, one can think of human capital as consisting of the tangible and nontangible assets that contribute to the organizations. Typically, one can think of the these among other elements as being part of human capital:
What kind of human capital is required for the global workplace? Simple: human capital has to be in relation to the dynamics of the modern, 21st century workplace. The current workplace is undergoing major changes brought about by the following:
The role of human capital in the global workplace has become all the more acute with these trends. If anything, the role of human capital has only grown in importance on account of globalization. Organizations cannot hope to grow and make a niche for themselves in the global scenario unless they make use of their human capital efficiently.
The challenge for organizations lies in how they manage and optimize the productivity from the workplace in the light of these emerging trends. Most organizations typically have to learn to deal with these changing trends. They need to devise strategies for how to spot talent in a diverse workplace.
Exploring the abilities of diverse populations that work at organizations calls for a different kind of thinking. Organizations that understand how to make use of their human capital in relation to these situations do better. As an example, organizations that permit mothers to work from home are sure to get better results and higher loyalty from such employees. If an organization makes a fuss about arrangements like this, the employee will go to the organization that offers what she wants. Isn’t it a basic human need to excel and feel better at what we are doing?
Flexibility and adaptation are the skills organizations have to inculcate if they have to get the best out of human capital in the global workplace. While using human capital in the global workplace has its challenges, it also presents an unimaginably good opportunity. Organizations have a far greater access to global talent and the tools to procure that than before. What was once difficult to get is now available at one’s fingertips. Organizations that are stuck in rigid thinking and refuse to make use of tools and technologies will fail to attract the best human capital. And it goes without saying that the organization that doesn’t utilize its human capital does so at its own peril.