Being Human Capital

Throughout modern time management philosophies about employees have gone from equating them to cogs in a wheel to zen-seeking members of the family. Those philosophies and all the ones toward the middle of the spectrum have had their moments in the sun and become the center of big institutes and trainings. Soon or not so soon after the training a new philosophy would take over or the managers would fall in to their old, natural patterns of management – good or bad.

Strangely an employee was rarely given the specific information that the manager had traded one philosophy from another. Wasn’t that hard for an employee to go from being a cog to relative overnight? How many employees didn’t make that transition well and were left to flounder under the new regime? How much potential for connection and growth were lost because things were assumed about the needs and wants of the employee and their understanding of the new philosophies.

As we reflect on those questions and the goals of the philosophies themselves, we arrived at a conclusion. The core issues for both managers and employees are the same so the philosophy should apply to both. The first issue is how do I maximize my profit potential (for the employee that comes in the package of a paycheck)? Second, how do I achieve high profits while reflecting my values and daily happiness needs (for an employer that may mean working with people who aren’t trying to run them over with their car on the way out of the parking lot)? For each of us the priority of each issue and how they manifest themselves in our lives at certain periods fluctuates. For example, when I first graduated I cared a lot about the first issue and didn’t give much thought to issue two. Slowly I learned that if I didn’t have passion for my work and a sense of giving to a larger common good, the money never filled me up so the second issue gained importance and evolved.

As a manager, my prioritization of the two issues was constantly in flux depending on how invested I was in my employees and the pressure I was getting from my managers. If an employee drove me nuts and didn’t seem engaged, I relied heavily on how they were helping me to achieve profit goals and if the profits weren’t connected to their contributions, their time with my company was limited.

If these issues are as universal as we assume, then we all become human capital and, potentially, managers of human capital. The concept of human capital is an old economic term. Human capital is a term identifying people as a source of profits and other useful results in the context of industry. The term is generally used in the context of how a company looked at its people, but it is also helpful as a term we can use for ourselves. In fact, it may be critical to make this philosophical change.

First, by seeing our careers as an application of our human capital potential, we take some emotion out of decisions. For example, it is less of a stretch for me to ask for a raise when I see the issue as one of human capital potential rather than popularity or a reflection of self worth. Negotiating compensation also becomes easier. Second, developing career goals and a plan for long-term growth or investing in training becomes more of a structured management of our potential. In fact, it would be considered squandering our potential to not make those investments in our future.

Under the theory of human capital the second concern of reflecting our values and daily happiness needs does not fade away. That is also part of the equation. As human capital, my value in the market consists of more than just money. Am I more valuable human capital if I fill a need for my community? Yes! Do I extend my usefulness and increase my potential value if I stay healthy and happy because I am doing things that make me feel good? Yes! As human capital, when I take on more training and development opportunities that enrich me immediately, do I also deepen my human capital value for the long-term? Yes!

So, how does the concept of human capital apply to your daily life? As a manager, consider if your employees are fulfilling their human capital potential in their current role. If they aren’t, work with them to figure out how to make them more of a profit factor. Are they in the wrong position? Do they need more training? Do they feel they have the autonomy to suggest or implement changes that save or make the company more money? Is the employee thriving in the environment so they are free to do their best work? Is the employee ignoring their individual development and personal needs because of too much work and they are at risk of burning out? Working to answer those questions and invest time with the employee to maximize their potential is a good use of your time and skill. Remembering that your goal is to maximize the value of human capital to ensure company profits will help you, your company, and your employees see greater success.

As an individual, seeing yourself, your goals and your actions in light of your role as human capital can help you make smarter decisions. It can also help you to invest more time in planning. Finally, it can take the emotional component out of some decisions and allow you more courage to ask for what you, as valued human capital, deserve.

Forward Consulting is committed to helping employers and employees maximize their human capital potential.