Is your ‘Human Capital’ stock going up or down?

 Nov 11, 2015

A Customer Service Manager from a medium sized business attending one of my seminars on Managing Multigenerational Teams recently stated: “My manager doesn’t want to spend money on the younger staff members because he thinks they’ll leave anyway. How do you get your decision makers to shift that attitude?”

It’s a tough catch 22 situation, but in the end; do you want trained up staff that stay a while and do good while they’re there and maybe even feel more loyal to want to stay around longer or would you prefer staff with no capacity that stay a long while?

'Human Capital’ is the stock of productive skills and technical knowledge embodied in your labour force. An organisation can yield additional output if there is additional investment in its Human Capital, according to economist Joseph Mincer who developed the term.

Just like an investment in the stock market, an investment in human capital has many vagueries and financial risk is involved. The beauty of human capital stock, as opposed to equities, is that you can do things to increase the value of your stock rather than waiting for it to increase through the decisions of a board you have no control over.

Similarly to a stock market investment, any investment in human capital should be wisely considered and a return on investment expected. Many business decision makers do thorough research when contemplating training provision: some only go with the best price. In either situation, there is still a ‘close your eyes and hope’ period in the procurement process.

The outcomes of Office Applications and Technical Training are reasonably predictable. The participant will usually know more and be able to do more than when they began the course, provided that they are on a course relevant to their skill level. Given that this will usually mean efficiencies to the individual (as well as the organisation) there is a high probability that the participant will apply the learned skills.

The outcomes in Professional Development (PD) or Business Skills are not as assured. The reason for this is that most PD courses are aimed at behaviour change and whilst there may be a ‘payoff’ for doing a new behaviour, the pain of the change (habitualising the new behaviour) may severely outweigh the anticipated ‘payoff’. Hence, a candidate may not implement the new skills/behaviour.

This issue may have many CEOs and CFOs considering that PD training is a waste of time and money. The growth in Human Capital may then halt.

Looking at a macro analogy, there is currently a global debate regarding the fair distribution of human capital. Educated individuals will typically migrate from poorer places to richer places seeking opportunity, making 'the rich richer and the poor poorer'.

This is true in business too. Not only may a lack of investment in human capital lead to the seeking of external opportunities but it can erode companies internally. Skills and knowledge transfer may only occur through the amount of knowledge existent in the human capital of the company and the ability of the leaders to transfer that. It could also cause detriment to the company and the Human Capital stock, through such things as poor service, poor leadership, feelings of lack of appreciation and cultural issues.

The New Horizons’ Professional Development Portfolio addresses the above issues in a variety of ways.

  • Programs are designed to concentrate on behavioural flexibility, rather than just knowledge of “what to do”. To this end we incorporate a great deal of exercises and activities into the training and focus on participants understanding themselves in relation to the theory.
  • We see ourselves as more than a training organisation. We are a business solutions provider. This means that we have your end result in mind all the time and work with your people to fulfill that outcome.
  • Our programs offer great flexibility. We do dedicated training at your organisation and ours but we also offer a public curriculum to cater for small numbers, timing issues, absentees, logistical issues and cost efficiencies.
  • We employ trainers with a wealth of experience as well as academic qualifications. This is the first step to bridging theory to actual behavioural change.
  • We follow Donald Kirkpatrick’s 4 learning evaluation levels: reaction, learning, behaviour, results and can do a complete R.O.I. calculation if needed.

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About the Author:

Tim Higgs  

Tim has been involved in the corporate training industry for over 15 years; seven of these have been as the Portfolio Manager and Senior Facilitator at New Horizons. Tim holds a Graduate Diploma (Psych/Couns), a masters' degree in Cultural Psychology and a bachelor's degree in Business, giving him a unique theoretical backdrop for understanding human performance in the workplace. This complements his actual experience of working within the corporate sector in sales and management positions and owning and running a small business. Having worked with individuals and groups in both clinical and business settings, Tim has a fantastic insight into human behaviour, motivation and the issue of human change.

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