From Human Resources to Human Capital

Beyond the multiple implications that differentiate the concept of Human Resources from that of Human Capital, in the following lines we will try to explain what an evolution in both the function and the way of understanding the world of organizations from the point of view of the people who compose them.

the concept of “resource”

The inherited concept of “Resource” refers to what exploitable, usable. According to the dictionary of the RAE, “means of any kind, which, in case of necessity, serves to achieve what is intended”. It is a mere means. However, the ethical question is unavoidable, are humans a means or an end in themselves? Depending on the answer, policies and understanding of organisations will vary substantially.

In addition, the classic conception of “resource” has an exploitative mentality behind the short term and disposable type: the resource can be used and thrown away.. Hence the classic distinctions of Direct Workforce, Indirect Workforce, Auxiliaries, and so on.

This conception understands the function as an internal support department, with dominance of the personnel management processes and labor relations.

“A resource is exploitable and usable. It can be used and thrown away. It’s a mere means”

Elias Maiztegui
human resources
Photo by Pedro Henrique Santos on Unsplash

The concept of “capital”

The concept of Capital is linked tovalue, in this case to that of humans, and in the last decade to the concept of Talent. Value increases or decreases with a longer-term vision. It can be linked to investment, and entails a strategic vision of the business.

In a world where the robotization of certain tasks is unstoppable and artificial intelligence is part of the digital transformationaccessible knowledge is the main differentiating factor and element of competitiveness. Hence the urgent need for evolution in function as an adaptive mechanism.

Organizations that began to see these differences and were not caught up in their inertia of industrial contexts, began to take into account the human factor as a strategic element to support business growth and business, through the development of cohesive teams, the development of strategic skills in the medium and long term, the alignment of the desired culture and ensuring the capacity for change and collective learning.

In recent times, the creation of market-oriented ecosystems through self-managed teams coordinated through scalable platforms has made the concept of human capital stronger than ever.

“The evolving philosophy that allows the constant analysis and improvement of the Customer Experience, leads irremediably to rediscover the internal customer through the Employee Experience”.

Elias Maiztegui

This philosophy of action allows us to activate the evolutionary levers that today’s organizations need to become attractive places to work.

Thus, concepts such as Trust, Autonomy, Flexibility, Constant Learning, Pride of Belonging and Social Awareness , begin to take on a new meaning, beyond traditional corporate propaganda. In the same way, management quality and psychological capital in healthy organizations strengthen their bonds, being even more determining if they fit, as mechanisms to achieve commitment and competitiveness environments.

Human capital
Photo by ROOM on Unsplash

Organizations oriented to Human Capita

Organizations have to evolve according to the present times. A fundamental first step is to use the appropriate terminology and to internalize the meaning and implications of the different concepts. The evolution of the function related to people continues to progress as everything that surrounds the world of organizations: society, education, technology, values, economy, etc. This progress that has taken place in the last decade comes from three main factors that have generated a new vision in the function that is marking the differences between organizations.

On the one hand, the digital transformation and the multiple implications in which we are immersed: change of relationship and consumption habits, access to knowledge and information (and disinformation), immediacy in work processes, etc.

On the other hand, the demographic imbalances that are occurring in an ageing Europe, and specifically in the Basque Country, means that the balance between employers and employees is beginning to level off in the face of a shortage of qualified professionals in technical areas in a conservative and not very dynamic labour market.

The other factor that is determining the behaviour of professionals and directly influencing how they see the world of work is the post-crisis of 2008.

“The digital transformation, demographic imbalances and the post-crisis of 2008 have created a new vision of the world of work.”

Elias Maiztegui

The psychological contracts of a lifetime employment have mutated, and concepts such as success or failure , anchored in the accumulation of material goods, have become other priorities in the framework of new forms of collaborative economics and payment for the use of different functionalities (Airbnb, Uber, Netflix, etc.).

This new field of play means that some of the most innovative and evolved organisations are given another, more critical and strategic treatment of the human factor as an element of competitiveness, not to mention start up and technology companies, which are intensive in intellectual capital.

The path of facts is imposing and the trends that mark the multinationals, with more vision and resources in a global battle, makes elements such as brand, reputation, psychological capital, etc.. need to consider people as key elements in order to carry out their projects.

Practical solutions for human capital management

Under the circumstances, our clients’ questions at EMCK are usually directed to which are the most feasible solutions to move from managing the people in your company as resources and put them in true value as human capital. The truth is that each organization and company has its own peculiarities, starting point and characteristics that require a prior audit to define the most appropriate strategy, but some general proposals could be:

  • To make an authentic company where people want to go to work , and for it, we will have to work the purpose, the employer’s brand, the development culture, the managerial quality, etc.
  • Immigrant support where there will be a need to improve the languages and vision of the administration (which is lost in its spider’s web) but which brings a great capacity for resilience, as well as diversity and multiculturalism in an increasingly global world
  • (For example: who provide experts with localised knowledge. These freelancers are professionals who work on projects and add a lot of value in specific moments. They allow for a mix of internal and external teams that break down inbreeding and dominant discourses and open the mind to all kinds of solutions.
  • Programs of rotation of professionals between companies but not only internal with internal promotions but also between countries and departments to gain skills, languages, contacts and relational capital. All this is even better if accompanied by cross mentoring programs .
  • Potentiate employee experience. a very good brand is generated and people speak well of you should not only be a question of customers but also of employees. In addition, we must achieve that if they leave (which is very normal at certain ages) leave the door open and want to return (whenever you want, of course).

In short, the organizations that know how to move from the management of Human Resources to a new vision that allows them to properly manage their Human Capital are those that will survive the last changes that we have lived and the futures that we will live in the medium and long term. The key is to put people at the centre and we can help you: Discover our services.

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