The term human capital refers to the economic value of a worker’s experience and skills. Human capital includes assets like education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality.
Today’s workforce is drastically changing, driven by both technological advancements and individual attitudes. These two points include an array of issues from remote work, demand for higher wages, automation replacing workers, and benefits. As a result, there is a disconnect between employees and employers. Employees are expressing dissatisfaction with pay, benefits, work-life balance, and doing meaningful work. Employers, on the other hand, are having the issue of maintaining an adequate workforce while still being able to maintain their bottom line.
The COVID-19 pandemic is not the root cause of these issues, but it certainly brought these trends to the forefront when they otherwise might not have been recognized until much later. Lockdowns showed that remote work is possible and the event made people reevaluate personal goals. A MetLife survey “The Rise of the Whole Employee” highlights some of these trends:
- In 2022, 70% of employees intend to be with their current organization in 12 months.
- Employees who believe they are doing purposeful work are twice as likely to stay.
- Companies with flexibility and work-life balance are 1.8x more likely to stay.
- Employees with Career development and training are 1.7x more likely to stay.
- Offering wellness programs and benefits makes employees 1.6x more likely to stay.
Beyond statistics, the changing work environment can be seen with such phrases as “quiet quitting.” As described in one Harvard Business Review article, “[quiet quitting] describes someone who does exactly what’s required of them at work and signs off at the end of the day.”
A solution to this issue can be the development of human capital, a common philosophy in human resources. Human capital is seeing employees more as assets rather than just workers. Seeing employees as assets put a greater emphasis on organizational leaders to see the economic value in their workforce. Specifically, investing to create a culture of higher retention, a more skilled workforce, and the ability to create a talent pool that can be promoted within the organization. The common perception of labor relations between employees and employers is often one of competing goals, but the idea of human capital is to create a symbiotic relationship where both parties benefit from each other.
Two examples of investing in human capital can be found at Middle Tennessee State University (MTSU). MTSU. Middle Tennessee State University (MTSU) has programs with both local Chick-Fil-A and McDonald’s restaurants to provide tuition-free classes to qualifying employees. Such programs are not only limited to franchise restaurants, through MTSU’s Community and University Partnerships clearinghouse, other programs/partnerships can also be created for local businesses with similar goals. From the employer’s perspective, such programs have two major benefits: creating a more dedicated workforce and an internal pool of future managers and leaders for the company.
Investing in human capital does not have to be a huge cash infusion on the part of the employers. MTSU also offers to partner with any local business to provide employees discounts on tuition through the Corporate Partnership Rate. Lastly, investing in human capital does not solely mean college education benefits. Simply creating internal opportunities or programs can greatly impact the relationship between employees, employers, and organizations. These can range from formalized training or documentation to facilitate certifications or even performance rewards or bonuses. A level of creativity in this seemingly stagnant world can go a long way. Our Tennessee Small Business Development Centers (TSBDC) can provide a one-stop shop for answering any facet of a business operation including human capital implementation.
Walter Castillo| February 2023
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