Strategic human capital

Strategic human capital is the “disproportionately productive and valuable individuals employed by a firm who are capable of contributing disproportionately to that firm’s competitive advantage” (my definition). Consistent with the human capital literature, the productivity and value of these individuals arise from the knowledge, skills, and abilities they possess and apply toward the goals of the firm (Pfeffer, 1994). To be a source of competitive advantage, their knowledge, skills, and abilities must be valuable, rare, costly to imitate, and nonsubstitutable (Barney, 1991) and they must also be imperfectly mobile (Peteraf, 1993).

Strategic human capital in new, developing ventures

How to you motivate your “star” employees in the early stage of development without giving away the company. Some companies give their employees enough money to take financial incentives off the table and give them autonomy and non-financial incentives to motivate them. They don’t give stock options because they want their stars to think about the customer instead of the stock.

Venture capitalists traditionally have been reluctant to give funding to start-ups that will essentially be used for salaries unless they understand the value proposition of doing so (motivated talent, keeping stock options off the employee table) because there’s no tangible residual for the VCs and because of causal ambiguity, social complexity, and firm-specificity. Strategic human capital aligns these three attributes of talent with the strategic goals of the firm and the investment interests of the founders and venture capitalists. The question is: “How do you pull this off?”

Human Capital Institute - The Global Association for Strategic Talent Management

Human Capital Institute - The Global Association for Strategic Talent Management. HCI is the global association for talent management and new economy leadership, and a clearinghouse for best practices and new ideas.

Jon Ingham's Strategic HCM Blog - Dan Pink on Drive at the HCI Summit ~ HR to HR 2.0 and Human Capital (HCM)

"Autonomy is the pathway to accountability.  Management may give compliance but more and more we need engagement.  Pink talked about:

Netflix which pays its people well to take the issue off the table but (rare in Silicon Valley) doesn’t give its people stock options as it wants people to think about customers not stock.  And also allows people to take as much vacation as they want.

Facebook where new hires attend a 5 or 6 week boot camp before individuals decide in which team they want to work

Atlassian’s ‘FedEx Days’ where every Thursday, people are told to go and work on anything they want, with whoever they want, in what ever way they want, but need to come back to show people their ideas on Friday afternoons in a free wheeling session.  This one day has led to a whole variety of ideas for fixes, new products and internal processes.  The principle is that employees want to do things for the organisation and these days get the organisation out of their day.

Intuit which announced a new strategy to focus on mobile technology.  None of the departments were able to change direction on a dot, but individual employees created 7 mobile apps in their 10% time before any formal projects even got started."

Read more from Jon Ingham's Strategic HCM blog