Valuing human capital

“The 21st century belongs to those who learn how to leverage human capital.” 
Dr Jac Fitz-enz.

What is your value to your organisation?  What value do you bring to your place of work?  If you were to leave your organisation tomorrow, how would it suffer as a result of your departure? Would it suffer?  Or would you be easily replaced? These are some of the questions a workshop on “Human Capital Value Management,” held at the Hilton Hotel and Conference Centre on July 16, sought to answer.  The workshop was hosted by the Human Resources Management Association of Trinidad & Tobago (HRMATT), in association with Quality Consultants Limited and RBTT ROYTEC, and was conducted by international author and speaker, Dr. Jac Fitz-enz.  The workshop was part of the Association’s sixth Biennial Conference, which had as its theme: “The Art of HRM — Linking People, Strategies and Profits.” The central question of the workshop was “how can the human resource function in an organisation help the organisation to compete on the basis of increased human capability and commitment?”

Dr Fitz-enz described an organisation’s people as its “primary profit lever”; that is, it is people who create value for an organisation.  Not the organisation’s finances; not its material resources; not its technology; but its human and intellectual capital — the skills, knowledge, competencies, creativity, innovativeness, attitudes, motivations of its people.  This is what makes people the new “competitive advantage” for organisations.  The “new” responsibility of the human resource function in organisations, therefore, is to help the organisation leverage its human capital for competitive advantage. In my introductory remarks to Dr Fitz-enz’s workshop, I made the point that our people are the only true value-adding resource  that we as a nation possess.  Our human resources are our greatest natural resource more important than all the oil and gas off the east coast of Trinidad, or wherever else they may be found, and more important than all the financial capital that comes from the oil and gas.

Without human intervention, the oil and gas cannot be transformed into the financial “windfall” that we are all expecting.  Our organisations and the nation as a whole, therefore, have to find ways to lead and manage our people so that they add, rather than subtract, value from our organisations, our nation and our lives. In his keynote address on the first day of the conference, Dr. Fitz-enz painted a picture of an evolving world with converging economies, increasing competition, emerging technologies and a declining talent pool.  Organisations are being transformed by scandals, restructuring, downsizing, mergers and acquisitions, budget cuts and outsourcing, among other things. On the world market, the only certainty is uncertainty and the strategies that got us to where we are today won’t get us to where we need to be in the future. New challenges call for new strategies.  The new foci of attention have to be on the external customer, on attracting and retaining talent, on information and knowledge management, on fast change and on globalisation.  Driving profitability and increasing customer loyalty have replaced cost reduction as the primary concerns of CEOs, indicating that maximising lifetime customer value will be a key market trend and business strategy to sustain long-term growth.

The challenge, then, is: “How can organisations manage their human capital in a way that adds value?” How do we attract, maintain, develop and retain the talent necessary to take our organisations forward?  How do we maximise the potential of our people so that they create value for the organisation?  How can we turn our people into our competitive advantage?  

The answer is simple, but, perhaps, not as easy to achieve:
*Hire the best talent the fastest;
*Pay competitively and equitably;
*Training continuously, including supervisory, management and leadership development;
* Maintain positive management/employee relations.

Dr Fitz-enz also identified some general measures to support these activities:
* communicate performance expectations
* measure work outcomes — both quantity and quality
* benchmark
* implement best practices wisely
* allocate resources appropriately
* measure again, and
* recognise and reward performance.

Human capital management must be linked to the corporate goals of the enterprise.  There must be alignment between what the human resource department is doing and what the organisation wants to achieve.  When we have that alignment, we are more likely to achieve organisational success through faster time to market, product and service innovation, increased market share, improved customer service, product quality, increased productivity, sustained growth, industry leadership, company reputation and, of course, competitive advantage.

Dr Charles is a Director of Quality Consultants Ltd.

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