HPA resurrects the 2003-05 UK Government-led Accounting for People initiative, but in a radically new way.

The last few months have been a whirlwind of behind-the-scenes IT development on our knowledge portal, HubCap Digital (HCD). You'll notice an immediate difference in design and navigation when visiting the homepage, which now features a dashboard to discover new thinking in Human Resources and Human Capital Management. Updated hourly, new documents, forum discussions, blog posts and tweets are published in the Latest sections to give you something fresh every time you come back.

Admiral Lord Horatio Nelson was a hero, no question. He is one of many to whom all of us in the UK owe the luxury of still having choices few other nations have. Like those hundreds of small boatman who evacuated 300,000 soldiers from Dunkirk and effectively kept Britain in the war. I’d love to list and pay homage to these people. We’ve been saved more than once in our history by nameless heroism.

A recent military study spanning 300 years about what has made nations successful concluded that what had made the difference in any one campaign had been the extent to which the “heroes” outnumbered the “the others”. Literally outnumbered – meaning more of one than the other.

The world of business has known about the benefits of engagement for some time now: “the empirical evidence shows that engagement is predictive of the bottom line: organizational performance”.

But while engagement is already high on the agenda for most organisations (see here for example), unfortunately academia and research have been slow to catch up.  So it was a pleasant surprise to see that engagement was the focus of a dedicated conference session, moderated by Professor Arnold Bakker, at the Institute of Work Psychology 2010 conference.

Ilke Inceoglu and Peter Warr, of SHL Ltd, noted that while the term ‘engagement’ had previously been used interchangeably with ‘job satisfaction’, it is now considered as a construct in its own right. The conference explored definitions of the term; relevant research methods; causes and consequences of engagement; and means of sustaining it.

It was pointed out that recent research has already indicated that work engagement is positively associated with

• social support from colleagues and supervisors
• performance feedback
• skill variety
• autonomy
• learning opportunities

However, from an extensive study using a number of practical research techniques, Genevieve O’Reilly & Richard Hicks found eight main drivers of engagement:

• senior leadership
• team leadership
• continuation
• work demands
• work resources
• employee empowerment
• customer focus
• financial rewards

The fact that various predictors of engagement have been found across different studies is a common feature of academic research, especially in the early days of a field of study. Further development and analysis is needed; while investment into engagement has been shown to be worthwhile, it is important to understand where and how that investment should be made. With this buzz word ‘engagement’ now humming though the academic world hopefully we won’t be waiting too long.

The 2-day conference covered a range of other topics including work-life balance, well-being, diversity, work relationships and leadership; potentially the most promising point highlighted during the conference as whole was the need for both academic and practitioner based research. Blending these approaches together will bring about applicable findings and recommendations.

In some well-documented cases, a company has outsourced some of its human capital needs to the anonymous world-wide population – see ‘Crowdsourcing: The IBM Case’.

Not just IBM though.

Companies have outsourced tasks like identifying people from photos, getting toothpaste into a tube, translating websites, locating gold seams in the ground, designing mobile phones, and trawling documents for juicy titbits. Why use your limited company resources to do these things, when there is an enormous supply of brainpower in the world, united by web technology and the excitement of a challenge (and possibly a prize)?

Crowdsourcing can be beneficial to the company in terms of cost, productivity, and innovation. But what are the hidden costs – both to former employees who might be redundant, and to the company itself, which might fail to obtain exactly what it wants?

If crowdsourcing can be so effective, why should companies have employees at all, beyond a few core personnel to ‘run’ the unknown crowd?

Read the article and join in the debate on HubCap Digital.

In his latest post, Stuart talks about the human capital density of an area, a concept I find fascinating. Aside from the parallels with our Audit tools, it had me thinking about what effect Derrick Bird’s mass shootings might have had - temporarily and in the long term - on the communities he devastated earlier this month. Specifically how businesses occupied by townsfolk thrown into emotional turmoil must surely see their KPIs dented as a result of the attack.

And that’s at the individual - for want of a better word - engagement level, what about the psychological environment within companies there of all shapes and sizes that will be churning with the effects for a long time to come? I imagine many locals wouldn’t have even felt like eating for a good while after, let alone facing a day in the office/behind the counter (or perhaps it’s the opposite as the workplace can be a place for people to find mutual support. Either way it doesn’t bode well for productivity, does it?). It would be very interesting to see some employee absence statistics for the two weeks following the incident.

There’s the added dimension of how outside perceptions of the places affected will impact on pride, morale, motivation and other performance-related factors at work. I myself have just bought a house in Haringey, north London, a borough that we immediately associate with Baby P. It didn’t stop me wanting to live there, but my mind can’t help flickering to that story whenever I say or hear the word. How does this unfortunate cloud over a place affect what was a well-functioning centre of industry and commerce? Would staff turnover be affected if people want to move away from the area or re-evaluate what they want from life?

The Telegraph asked the same question in an article featuring our own Dr Michael Reddy, who was asked to shed some light on the mixed value of counselling support after a traumatic event, where his longstanding experience lies. He observes that it’s the community pulling together that makes the largest strides back to normality - the same way the human social context at work plays a central role in the overall success of the company.

He had said in a similar vein after July 7th how remarkably resilient people are when hyper-focused into a situation like this - we just get on and deal with it. Some are naturally more affected than others, and will require clinical attention, but as a whole it’s the links between people that dictate whether an overall goal is achieved, whether it’s standing up against terrorism or creating value for the business.

Which brings me, in light of even more recent headlines, to the disappointing England draw in the World Cup. From an individual and team perspective, after such a high profile and potentially devastating mishap, you have to hand it to Robert Green for dusting himself off so quickly and assuring us that all was forgiven as far as the rest of the players was concerned. In human capital terms, Capello will be continually evaluating his players on their singular performance and critically as part of a group that can afford no weak links. I guess we’ll have to wait until Friday’s match to see whether England really can move on as one unit.

Image courtesy of The Guardian

‘Human Capital’ ... does this term imply a view that people are some kind of machine that can be turned on at the start of the working day, and off at the end? Maybe, to some.

Does it mean that we are an asset and/or liability on the balance sheet? How can this be so, when companies don’t own their employees?

Or does it herald a scary new dystopia in which we are owned by our employers, who manipulate us at will for their own benefit (cf. Brave New World)? I sincerely hope not.

Sometimes the term ‘Human Capital’ seems to have subtly different meanings depending on who you read. Here’s a short selection of some web definitions/articles I've found:

• Google's definitions page – clear and precise
• Wikipedia article – scholarly and thorough, but apparently needs more references (any offers?)
• Michael Reddy: “If you are talking about human capital you are talking about how best to manage it, measure it, and report on it.”
• David Brooks: human capital is more than just skills & knowledge; add cultural, social, emotional, moral, and aspirational components too
• Derek Stockley: “If people are valued, and all management and leadership actions demonstrate that, then the terminology is not so important”
• Mark Schonewille explores the concept, with reference to some classic works
• Oxford Dictionary of Sociology article on Human-capital theory
• Contrasting Chinese and American approaches to Human Capital development
• HC Global: why HCM is more humane than HR
• Macmillan's definition is the shortest I’ve seen – 11 words, of which the first 5 are inaccurate (or are they? it depends on your perspective)

Closely related terms include:

• Intellectual Capital
• Social Capital
• Intangible Assets (these include Human Capital - as well as lots of other non-physical things, such as brand and reputation)
• Human Capital Contracts, whereby someone sells a future interest in their intellectual output, in return for educational funding
• Human Capital Accounting
• Human Potential Accounting (that’s us!) – recognises the possibilities for counterproductive, as well as positive contributions from people; people can be liabilities as well as assets

Should we care?

Yes! Because the new coalition government has announced that it plans to reinstate the Operating and Financial Review (OFR), which will give companies the opportunity to record their Intangible Assets, such as their Human Capital. Charles Tilley, in a letter to The FT, said "without a form of narrative reporting such as the OFR, business reporting remains essentially backward-looking and focused on historical financial statements. The financial statements do not – and cannot – cover strategy, intangible assets, prospects, opportunities and risks." Do you agree?

Human capital is key to economic development. No one would argue with this. So how do you measure it? Population wise?

So we find ourselves in exciting new times with an unexpected coalition upon us. Interestingly the most publicised fallout is the roar of anger that only four women are in the cabinet.  “The real problem is how, in the 21st century, women have become so marginalised from the political bloodstream? Put your thinking hats on folks, because politics without women is quite simply dangerous for democracy.” (Jean Seaton).  Yes, without women, democracy is threatened. However are we missing the bigger picture, diversity? Feminists here, there and everywhere are coming out of the woodwork talking about tokenism. What a joke! Have all of these people failed to notice that there is only one ethnic minority cabinet member among the senior ranks? Considering Lib Dems are firm in their belief for a proportional representative system, it doesn’t really seem as if they practice what they preach. I, like all women, feel that we should each be treated fairly; however I am not naive enough to believe we live in a fair society. Now in our efforts to fight for a fair government we should not be focusing solely on the dearth of women but the lack of diversity in general.  

Long ago in the Late Bronze Age of my career, when I was nurturing an infant EAP in the UK, a man I came to respect greatly said “why should the EAP stop at the factory gates?” I was too young to understand what the great man was saying – by the way let’s not be shy, it was Paul Heck of Dupont, then engaged in setting up factories and workplaces in China, among other places. Later I was in Ghana and was appalled at the sight of school age children walking along the country roads, mile after mile, carrying jugs and pans of water on their heads to fill the family’s cistern for the day. It was the same yesterday and unless the sky fell in, it would be the same again tomorrow. “What a waste of human capital”, I thought.