Although the battle for talent continues, the real war is
over the ownership of human capital, argues Gardiner Hempel
Over recent years, the perspective on human resources has
been rapidly evolving from the old view of employees as resources to people as
human capital. Moreover, today’s economy has caused a further realisation that
there is a chronic shortage of the right talent in the right place at the right
time, and there doesn’t appear to be any relief from this condition in sight. This
is a global phenomenon, and no industrialised or emerging economy is immune
from the fierce competition in the HR arena.
Although the war for talent has traditionally been viewed as
the battle between employers for the scarce number of qualified people available
to them, the real war that has been raging is one of ownership. That is, who
owns that human capital: the employer or the employees themselves? We have now
entered an era where the employer can no longer make the claim that people are
their most important asset – employees have taken ownership of their own human
capital.
What does this mean, and what does this portend for
companies that need these people for their global operations? The historic view
of employers was that people were a resource. Like oil, water and air, there
was always a presumption of supply, despite occasional shortages. Although they
were certainly valuable and integral to the company’s operations, people were
measured as a cost on the profit and loss statements, and, like other natural
resources, tended to deplete over time through attrition and a bias towards
younger workers. Employees, on the other hand, measured success in terms of job
security and longevity, and an attractive working environment.
Recently, more enlightened employers have taken the view
that people are an asset. Indeed, it is often said that they are the most
important asset. As such, there has been more concern expressed about the
shortage of qualified people and more attention given to the types and magnitude
of investment that employers make in their people. The view was that, as an
asset, people’s value to an organisation can appreciate. Ironically, human
assets are never recorded on the company’s financial balance sheet because
people are the one factor that companies can never own.
Today’s economic reality is that employees now realise that
companies need them more than they need the companies. Employees are asserting
their ownership rights on their individual and personal human capital.
Nowadays, individuals manage their intangible value as measured by their
diversified portfolio of education, experience, training, relationships,
international experience and entrepreneurial forays. These individuals look for
an environment that provides the highest return on their investment of time and
talent, and in a way that is meaningful to them. Employees now lease their
human capital to companies, and compensation and benefits are the rent
employers pay. Unless the rent remains attractive, employees may go home in the
evening and not return the next day.
This is a completely new environment in which to attract and
retain human capital. Employees are now both customer and investor. As a
customer, they have needs and expectations which must be satisfied or they take
their business elsewhere. They also continually evaluate other opportunities
and offers. As investors, they are savvy as well as temperamental.
Human capital markets are becoming as efficient as money
capital markets where arbitrage opportunities for personal betterment are
sought and acted upon with lightning speed. In response, employers must
leverage human capital in the same manner as venture capitalists endeavour to
maximise returns on their investors’ money.
The challenge to the HR professional operating across the
global landscape is to first understand this fundamental shift in
employer/employee dynamics. Second, they must understand that people in
different national, religious and cultural contexts value their human capital
uniquely and will seek to maximise the return on their investment in different
ways. Moreover, some people seek short-term gains while others aspire to
longer-term plays.
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The key is to understand what people from different points
of the compass seek, and structure the deliverables accordingly, whether it be
competitive pay, attractive environment, abundant learning opportunities,
work/life balance or a meaningful experience. This is the only way to capture
the globally astute, technologically literate and operationally agile talent
that companies need to succeed in today’s global economy.
