What’s your human capital?
Have you ever considered what your human capital is?
We talk about net worth (well people mainly richer than me talk about net worth) but have you looked at your personal net worth? Have your considered the current value of you, or your people? What are the assets of you? I’m not talking about pound signs in the bank or in your pension or the money that is cascading out of your bank account into heating costs.
I’m talking about what you bring to the table. You as a human. Your human capital. When did you last check your human capital balance?
Human capital may not help you get that next mortgage or pay for your retirement on that yacht but that doesn’t mean it’s not an intrinsic component to your net worth. In fact, science shows that your human capital is a critical component of your success today and in the future. And a crucial success factor in the business growth (no great shock there).
The five main components of human capital include:
Skillset
Experience
Social Skills
Habits and Behaviours
Personal Impact and Brand Image
Human capital was a term developed in the 1950s and 1960s by two economists, Jacob Mincer and Gary Becker, who are considered members of a “Chicago School” of economics but it goes back way further than that. The theory behind it being that capital does not just consist of machines and real estate, but also of “the acquired and useful abilities of all the inhabitants or members of the society.” This notion of human abilities and education as constituting a store of capital which can be invested to produce value was originally applied to analysis of nations as a whole but gradually became a key part of the understanding of how businesses succeed in an age where innovation and intellectual property are as important as factories and land for creating value in business.*
And it’s mainly driven, controlled and grown by the individual but, of course, can be nurtured, encouraged and facilitated by the individual’s environment, network, workplace, wider ecology system.
The good news is your human capital can only grow – well if you continue to invest in you. You can develop and build your human capital and the only cost of living crisis you face in human capital is what you are prepared to invest in yourself.
So have you done a human capital audit on yourself? Go and remind yourself of your current value, look at your GAP analysis of where you can develop, build and grow your human capital and ultimately your success strategy.
Maybe we should be placing more emphasis on our human capital and how we can develop our own net worth and that of the people in our care.
A higher human capital means the people in your business will be more productive, more efficient, more capable.
Looking across the components of human capital, a workforce with a varied level of experience and expertise is going to build the human capital of the business. Employees trained, encouraged and developing their own human capital will increase employee engagement and retention. And building the human capital of the people in your care will ultimately build an agile workforce able to manage the pressures of living and working in today’s environment.
Retaining your human capital in business (in my humble opinion) needs to be on the agenda of every business growth plan and should encompass continual training & development in hard skills, wellbeing, diversity and inclusivity, coaching & mentoring of staff and developing those all-important human skills to build beneficial behaviours and a positive culture cascade.
How often do you consider your human capital?
* https://www.organizationalpsychologydegrees.com/lists/5-characteristics-human-capital/
