High-Impact Human Capital Strategy

Addressing the 12 Major Challenges Today's Organizations Face

 High-Impact Human Capital Strategy

Authors: Jack J. Phillips, Ph.D., Patricia Pulliam Phillips
Pub Date: August 2015
Print Edition: $34.95
Print ISBN: 9780814436066
Page Count: 304
Format: Hardback
e-Book ISBN: 9780814436073

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Chapter 1

Importance of Human Capital: The Journey to Show the Value

This introductory chapter examines the importance of human capital and introduces several arguments for why human capital is king or queen. It begins by examining the role of people in organizations, and then explores issues such as how human capital is (or is not) valued. The role of human capital in highly successful organizations is highlighted in lists such as the Best Places to Work and the Most Admired Companies. In almost all cases, logical arguments point toward the importance of the human part of the organization that contributes most, if not all, of the organization’s successes. The discussion emphasizes the value organizations place on their people and their reasons for doing so.

Are People Necessary?

The beginning point in the discussion about the importance of human capital is to think about the value people bring to an organization. This always brings up the issue, Are people really necessary? Of course, in practice, we all realize that people are critical, but should the goal be to eliminate them or let someone else work with them? It is possible to automate almost everything as some companies attempt to do? So let’s begin with a discussion about whether people are actually necessary.

People Cause Problems

It’s interesting to observe an automobile assembly line in a modern factory. There are no people to be seen—just expensive and impressive robots. Why would the company take this approach and replace humans with robots? Is it a cheaper way? Maybe. Is it because of the problems employees create? Maybe. Is it because of the difficulty in finding qualified workers? Maybe it’s all these issues.

Some managers view the human aspect of organizations as an irritant, a burden, or perhaps a necessary evil. People cause most of the problems. It is the people who are dissatisfied, file grievances, have complaints, allege sexual harassment, have injuries on the job, file workers compensation claims, go on strike, and create a host of other problems that not only take them out of service, but take precious time and resources to resolve. Some executives have estimated that employee problems account for as much as 20 percent of the total cost of human capital investment. If the people could be removed, the problems would go away; there would be no complaints, charges, gripes, grievances, accidents, or work stoppages. For some executives, this would be Utopia and they strive to achieve this scenario.

Technology Replaces People

The advancement of equipment, machines, and technology has enabled many organizations to automate parts of the job, and in some cases, all of the job. As technology evolves, is it possible to have a completely automated workplace. Is it possible to remove the human factor, at least for the most part? Consider something that would be almost unheard of years ago: automated air travel. With the available technology, airplanes could basically take off, fly to their destination, and land completely automated. Much of the check-in, boarding, and logistics could be automated, as it is now to a certain extent. It may be possible for the entire process (from checking in to arriving at the desired destination) to be accomplished without any human interaction. To some, this seems like science fiction, but it could be a reality. Is this desired? Perhaps not. What happens if technology fails or there is a glitch in the automation? The dream becomes a nightmare. It may be impossible to remove the factor in the short-term, but this is a goal for many.

Automation is Healthy

Regardless of your position on job automation, there are some jobs that should be eliminated; automation should be an essential and significant part of the strategy of deciding how much to invest in employees. Four types of jobs are ideal candidates for automation. First, the jobs that are considered very monotonous and boring should be eliminated. These jobs are routine and require little thought and concentration. Many assembly line jobs fit into this category. If possible, these jobs should be automated; otherwise, the monotony leads to dissatisfaction, which leads to absenteeism, turnover, injuries, withdrawal, and sometimes even sickness. Employees have become sick based solely because of the rote work they do.

Second, jobs that are highly dangerous should be automated. This is a critical issue in heavy industry, manufacturing, and mining – using technology to remove the employee factor so that injuries and deaths can be prevented. This is not only the cost-effective thing to do, but humane thing as well.

Third, transaction-based jobs should be automated. These jobs involve simple-step transactions that can be handled much more efficiently with technology. Consider the issue of booking an airline reservation – a very transaction-based process. A few years ago it was all handled on the phone or face-to-face; now the majority of reservations are made on the internet, thus eliminating many people who, previously, had to be involved in the process. Some airlines charge an additional fee when reservations are made via the phone, thus providing incentive to reserve a seat via the Internet. The newer technology produces fewer errors, is quicker, and less costly for the organization.

Fourth, jobs where it is difficult to recruit capable employees should be automated, if possible. Many organizations are automating processes, steps, and even entire functions. Consider the local service station and the job of fueling your automobile. Gone are the days when three attendants ran out to your car, filled the tank, checked the oil, washed the windshield, put air in the tires, and took your money. Today, the individual consumer is familiar with the gas pump. By following a few simple directions, the consumer fills the tank, pays with a credit card, and goes through an automatic car wash. These “modern” conveniences have enabled companies to provide more efficient delivery of their gasoline. If an attendant had to pump the gas and take the money, the associated cost would have to be passed onto the consumer – some estimate as much as 5-10 cents per gallon. This automation has eliminated jobs that are hard to fill and usually have high turnover. At the same time, there is increased efficiency and convenience. The hours of store operation are no longer a consideration; you can fuel your car at any time, any day of the week. Some service stations are open 24/7 with people involved in the process.

People Are Necessary

With the previous discussion as a backdrop, several conclusions can be reached about the role of people in the workplace. First, minimizing the numbers is not necessarily a bad strategy. In the name of efficiency, employee welfare, and the desire to have motivating and challenging jobs, certain jobs need to be eliminated or minimized, as outlined above.

Second, human capital investment at some level is necessary. Even in a completely automated transaction, people are involved in making key decisions, solving problems, and ensuring that the processes work correctly. The investment still exists; it is just that it may be a smaller percentage of the operating expenses.

Third, in a highly automated workplace, people are still critical. Sometimes their skills are upgraded because of problems that arise when transactions fail, or when technology or equipment fails. They are also needed to coordinate and implement the new technology in the first place. In an ideal situation, as jobs are eliminated, skills are upgraded so that the workforce is maintained or, in some cases, even grows. A firm that has both job creation (adding jobs) and significant automation (eliminating jobs) is adding tremendous value to the economy, which is the challenge of many organizations.

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