Training professionals must talk in terms of human capital not human resources Professor Andrew Mayo told delegates at the Learning Technologies Conference.
Prof Mayo said: “HR departments use terms like human resources and headcount, it is up to us as professionals to fight this idea that people are costs walking around.”
He said that terms such as human capital more accurately reflected the importance of people as assets of an organisation.
Prof Mayo is Programme Director at the Centre for Management Development at London Business School and Associate Professor of HRM at Middlesex Business School.
He made the comment during a presentation on developing the value of human capital.
Prof Mayo argued that organisations should shift focus from talking about headcount costs to seeing their people as human assets to be invested in and developed.
5 Responses
Human capital vs resource
One of the problems for anyone managing a business is that certain key business functions can indeed be regarded as having capital value. These include sales and marketing for instance. On the other hand there are many functions which appear to be mainly cost driven, such as training and HR.Surely the key to this argument is for cost functions such as training to make the case that training has a demonstrable capital value which translates across entire businesses.
Workforce Competencies
We should be more precise about what we mean when we speak of ‘human capital’. One model that helps is the People CMM:
http://www.sei.cmu.edu/cmm-p/version2/
This shows how the workforce skills and competencies that are developed, shared and passed on inside an organisation are in a very real sense part of the organisation’s capital assets.
Capital Costs and Assets
Could I request that ‘Bluebeard’ tries to balance the costs of training and HR with the benefits? I’ll bet there are very few organisations (even those who are IiP accredited) which make any real attempt to assess the benefits of their people processes; why? because it’s so easy to add up the costs – that’s why. It requires no effort, no creativity and neither does it require any skill. That way you only get one dimension and sadly, that is all some people require. If you treat those processes as costs and costs only, you’ll never have to justify why you need to reduce themor spend less on them – it’s an iron law of economics; reduce your costs at all costs!.
That’s why I object to the term ‘Human Capital’. Capital in the form of buildings, machinery and even some processes such as ‘marketing’ can be moved (or closed down, or sold on) at will and sometimes, as we have seen with the Call Centre ‘Human Capital’, it can very easily land up on the scrap heap.
The term also does a grave injustice to the very diverse skills, knowledge-sets and aptitudes that in another part of our corporate lives we are exhorted (quite rightly) to celebrate.
There’s always a new business idea to punt and professors will never be the recipients of what they profess; so how about renaming professors as ‘punters’. Capital idea!
Human capital term implies ownership
The term “human resources” as well as “human capital” both imply an ownership of the means of production.
The better reference is to employees as “investors in the workplace with the employer” – which is what employment is all about.
Neither Human Resource or Capital
I agreee, Roy, that both ‘resource’ and ‘capital’ imply an inherent ownership.
It is true to say that an employee is a resource for a company; it is, however, quite a onesided approach.
How about just stating Human Asset? Or Human Investment? Human Contributor? These have the business resource idea but with the positive intention stated, e.g., that the person has value and needs to be enhanced, invested in, to promote further value on both sides.
When it comes down to it, trainers should be emphasising that employees are crucial stakeholders, not merely a drain on money. So what if labour amounts to 80% of a company’s costs? Want to try running the business without any of them? If a company can’t, then they better be looking at ways to keep their people happy and engaged in their job.
One basic way to do this is to invest in each person’s skill set to build confidence, increase professional standing, and to improve productivity. Makes the most of stakeholders: your employees.