Have you ever heard this term?
For a little historical context, it’s a theory primarily developed by Gary Becker and Theodore Schultz in the 1950s and early 1960s. It was based on the fact that employees and capital equipment are both factors of production. Becker clarified that investment in employees was no different from investment in production equipment.
The Oxford Learner's Dictionary currently defines human capital as the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country.
Human resource teams at companies likely use this term more commonly to describe employees. It’s often used as a development term to encourage a more positive work environment, reduce turnover, and primarily increase employee loyalty.
In my world, I loathe this term. I hate it.
Combining the word ‘capital’ with ‘human’ removes the humanity from the physical person who has been hired for a role within a company. It feels robotic and technical.
Don’t get me wrong. You are hired to do a specific job, but it really plays with the mental headspace of the humans involved.
A few months ago, I posted an essay on the stages of getting let go. I hope you read it. And a side note: I heard from quite a few of you regarding how much it resonated with you or someone close to you.
The essay discussed the human and emotional aspects of being let go. It’s rough, mentally exhausting, and, for some people, life-changing. For every role, there is a human involved. That means thoughts and emotions beyond skills, knowledge, and experience—humans, not robots.
So, in my humble opinion, to use the term Human Capital to describe employees is harsh and demeaning to the individual.
Now that you understand my perspective on the term let’s flip the script and discuss why companies and organizations choose to use it.
In a simplified overview, when you start a business, you consider what investments you will need to make to run it. Your budget likely consists of market research, marketing, equipment, technology, permits, and legal fees. The list goes on and on, depending on the type of business. Employees and their salaries are likely also accounted for.
It’s not just how much you can afford to pay someone; it’s what kind of return on investment you will get with the potential employee. Yes, their salary should be within the budget and profit/loss statement’s parameters, but what is your investment in them?
If it is a talented and well-placed employee, their worth, through effort and expertise, will exceed what you pay them. You invest in them by paying them a salary and benefits while also building a positive rapport and encouraging loyalty to your company; in return, they should ultimately help your business grow in the long term, aka retention. The employee’s monetary worth, plus loyalty and retention, should exceed what you pay them. Human Capital.
The challenge with this is that the actual human gets lost in the shuffle many times.
Employees can be likened to chess pieces strategically shuffled around on the board. It’s expected that they always play their best game, stay ahead, and protect the king. Yet the king always has the ultimate power to move and shift however it helps them win.
Employees often forget this. Noble and dedicated team members frequently show up no matter what. If they are sick, have personal challenges, or are burnt out, they show up anyway. They often believe the company they work for is their most critical factor.
But remember the chess game? The king and his leaders have the ultimate power. They will cut their losses if Human Capital is the sacrifice they need to make to continue winning.
There’s no humanity in Human Capital. That’s why I hate the term.
So, what do we do?
We need jobs. We love building our careers. We want to be successful, dedicated, and valuable team players.
All of these things can be true. We just have to be strategic and set our own rules, aka boundaries.
So, here is some advice to remember:
This is a job. Your job is not your family. Understand this, and your life will become much easier to manage. When the going gets tough in the workplace, remember that this is your place of employment. Don’t take on more than necessary. It doesn’t mean that you aren’t a great employee, but remember that you are an asset that can be eliminated, so only invest what you are willing to lose.
Protect your peace. If the meeting didn’t go as you anticipated, your recommendations were rejected, or your frustration is higher than it should be specifically regarding a work situation, take a break. Vacation days and PTO are given for a reason. Then, find a way to separate your emotions about the work-related issue from the facts. If you are putting forward your best effort and are confident that you are fulfilling your responsibilities, and you disagree with the decision that was made, let it go. It’s hard, especially when you are dedicated, but always find a way to protect your peace first. This is why the first recommendation is so important - this is a job.
Admit that you are Human Capital. This one is harsh and very hard to accept. Unless you are the owner or a principal investor, you are disposable. You are not invincible, you are not protected, and you are definitely not the king on the chessboard. There is always the risk of getting cut. Accepting this will make any adverse changes that come your way easier to take and allow you to move forward.
Prepare for the worst. Give your best. As a college senior, I recall one of my favorite professors constantly repeating, “Always keep your resume up to date.” It wasn’t until several years later, when I was abruptly laid off from my “forever” company, that I chose to take this reminder as part of my personal gospel. The cool thing about frequently updating your resume/CV is seeing first-hand how much you contribute to the company in your role. Pat yourself on the back. Reviewing and updating your resume when you don’t necessarily need to allows you to reflect on your successes and remind you that, yes, you are doing your best.
Find your own path. The workplace is competitive. That alone can be draining. The water cooler gossip and chatter about superfluous speculation regarding promotions, qualifications, and staff shuffles creates unnecessary tension amongst co-workers. Just as frequently as you update your resume, reflect on your own career path, not your co-worker’s career path. Be honest with yourself about where you are going and if it fits your goals. It is not about what suits the company. It’s about your career plan. If it does not suit you, make the necessary changes to pave your own path.
You may not be king, but you are in charge of your own kingdom. If strategically and intelligently played, the chess pieces make it to the other side of the board and become king. Don’t wait to be crowned. Own your own kingdom now and start leading with your intentions. The company you work for is intentional in hiring you. Make sure that you are intentionally leading your career and not being led.
Navigating our career paths can be challenging, but that’s not a bad thing. Just like knowing what we like to eat, what hobbies we enjoy, and what traits we look for in our personal relationships, we also need to understand what our fulfilling career journey looks like for us.
Human Capital is a term that is currently making its way into commonplace work lingo. I hope it fades away when people realize how inhuman it is to describe employees. In the meantime, remember to pave your own path, cross your own bridges, and that you are always more than your career.
Thanks for crossing this very human bridge with me.
Till next time!
Xo,
B.
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