MANAGING HUMAN CAPITAL

Mini-MBA CourseCh.3

Prepared by:

Amr Abdel-Aziz

Computer science, Helwan University

. .Amr abdulaziz@outlook com

DEFINITION When one hears the term, Human Capital, it is

often confused with Human Resources.  Human Capital is viewing people, your employees, as assets for what knowledge and skills they bring to your company.  While the term, Human Resources [HR], seems like a synonymous definition with Human Capital, over the past few decades, HR has developed into a term used to describe the management of people.  Human Capital, on the other hand, recognizes a business leader’s need to surround themselves with other knowledgeable people who possess experiences in specific areas of specialization to help their company succeed.

HUMAN RESOURCES In large corporations, the Human Resources department

usually administers all the management issues related to a company’s employees. This can range from interviewing and hiring a new employee, to employee training, to administering company policy and paperwork, to implementing performance reviews, and finally to firing those people who are not productive.   While all of these tasks must be done for a company to function, this is a very authoritative and potentially destructive approach, since this kind of people management does not encourage inspiration, nor does it recognize the value of an individual’s worth.  What is even more alarming is some companies will hire an outside HR specialist to do this type of management for them, further separating the new employee from the culture of the firm.

STRONG LEADERSHIP

Strong leadership recognizes employees and their talents as Human Capital, especially when it comes to the amount of innovation one can create.  What is different in the business leader’s approach is how they include their team and value individual input in the management process. Unfortunately, many managers get caught up in achieving the necessary tasks and forget the human needs.

ORGANIZATIONAL ENVIRONMENT

Organizational environment is about how a company is organized and how a business leader establishes tone through people leadership.  It describes the attitudes, beliefs and values of a company which influences employees, Human Capital, and their behavior.  In other words, it is the personality of the company.

TONE OF OE

The tone of an organizational environment will have its roots based in the mission statement of the company.  It is from the stated mission employees establish their shared goals and beliefs.  From the mission statement, a business leader takes their basic cues, then establishes the focus from which all decisions and attitudes are developed.  

ESTABLISHING TONE As a business leader, you can establish a positive and

proactive attitude by being the empowering center of your team.  Ask for and expect creativity from your employees.  Listen more than you talk.  As a general rule, consider how you might be actively listen for about 80% of the time in a conversation and only speak about 20% of the time. This means that asking strategic questions becomes a primary way of communication. The act of explaining becomes rare, as belief in the potential of people drives your thought process. Welcome views that conflict with yours because you just might learn something new.  Be encouraging, and support your employees as they work through a project.  Be patient.  Recognize and reward success, as well as recognize and learn from failure.  And dare we say it?  Have fun.  Remember, to be a business leader, instead of a business administrator, you are the inspirational center of your organization.

EXAMPLE [B] Mrs. Linda Sparks was a respected school principal who had been

in her leadership position for over twenty years.  What made her guidance so effective was Mrs. Sparks loved what she did.  She truly had a passion for the teaching profession and a love of learning.  One aspect that made her the inspirational leader of her faculty and of her students was her positive and upbeat attitude.  Every morning she invited her students to join her in broadcasting the school-wide announcements, and at the end of each broadcast, Mrs. Sparks and the students would encourage their peers to do their “Tigerrrrrrrrrrr  best!”  Why their tiger best?  Well, the school mascot was a tiger.  However, what she meant by this and what the faculty and children understood by this is Mrs. Sparks expected excellence and effort from each person every day.  She believed in the Human Capital with which she surrounded herself every day.  Mrs. Sparks understood that people respond to an inspirational, positive tone, and that is what everyone in her school did.  Through Mrs. Spark’s proactive guidance, her people were inspired to be excellent and to be progressive.

INDIVIDUAL PERCEPTION OF ENVIRONMENTAL CULTURE

Not only is the organizational environment driven by an inspirational leader, it is also driven by the perception of individuals based on what they see, hear and experience.  The leader’s goal is to have these perceptions described similarly throughout the organization.  Furthermore, environmental culture mostly appears in the simplest tasks.  Mrs. Sparks understood this.

CONT. EXAMPLE[B] As the inspirational leader of her faculty and school, Mrs.

Sparks communicated with her employees in regularly scheduled meetings, as well as made time to meet with each person personally to check on their progress, to answer any questions they had, and most importantly, to serve as their mentor.  Her faculty knew what her expectations were and also knew that she respected them for the individual knowledge and skills they brought to their work.  Her faculty teams were organized by grade levels and were given the encouragement to discuss their students’ performance and formulate their own approaches for improvement.  At these meetings, Mrs. Sparks also served as a resource for her teams by finding and sharing research and strategies they may want to consider.  This is an example of a leader guiding her people, and it reinforced the positive, creative environmental culture she established.  The business leader plays an important role in the forming of an organizational environment, because they are the person who is leading people and guiding their Human Capital.

CONCLUSION

Nevertheless, it is hard to share the same values throughout a company, but by trying to do so increases productivity.  Realistically, not all cultures impact employees.  Therefore, every leader, no matter if they are managing a small or a big business, needs to make sure that the values, goals, and attitudes of the culture are well communicated for optimum productivity.  

THE MOTIVATION

Motivation is what inspires people for action. When an employee starts work at a new company, in the beginning they are very excited about it and extremely motivated to work at optimum levels. However, as time passes their motivation naturally begins to drop, and they look for new ways to become inspired. They need to keep their motivation level up to perform efficiently. Here is when the business leader is charged with inspiring their team.

When you are managing your own small business it is easy to lose your motivation sometimes, especially if you are running a business alone. Lots of stress and pressure can wear you down, which can lead to a drop in your levels of motivation. Therefore, it is necessary for you to make a personal motivation plan. There are numerous practical tips that you can implement to boost your everyday work-life, which will help you maintain your motivation and keep up the good spirit!

PRACTICAL TIPS

Set measureable goals for yourself to see how you progress: Long term goals help the business to go in the right direction whereas short term goals help to accomplish the long term goals. If you want to keep track of your goals write them down on a timeline and refer to them regularly to see whether you are on the right path or you whether you need to change anything. 

 Remind yourself what the source of your inspiration is: When you are running your small business the everyday stress might make you forget why you wanted to start the business in the first place. Remind yourself what inspired you to do what you do. If you had your first idea after talking to a certain person, then meet this person again. If you were inspired during a seminar, look for your old material from this seminar or attend the seminar again! Remember what your business means to you and you will certainly manage to win your motivation back!

PRACTICAL TIPS Be organized and have a daily routine: If your business

life is unorganized you can lose motivation. It is easy to feel overwhelmed when your desk or your calendar is a mess. Establish a general order around yourself and your workplace and set up simple rules that you should follow. Make a regular schedule and you will see your motivation will come back again.

 Network: Isolation is one of the most difficult challenges of being an entrepreneur.  Make connection with other small business owners; share your ideas and methods for maximizing your motivation. You can renew your interest in your business by sharing your experience with other and hearing about other’s experience. 

 Once a leader has righted his/her organizational plan, it is then time to synergize using Human Capital.  No where is this more evident than in team brainstorming.

TIME OF BRAINSTORMING

Human Capital is at its best when members of a team get together for problem solving.  Sometimes, we think of all possibilities, but we still arrive at the same solution. What if there was a way to think out of the box and find the right solutions in a different way? Most of the time, we see difficulties in a situation/task because we always look at problems from the same angle, which prevents us from finding creative solutions. Using different brainstorming techniques in groups, or alone, can help us in solving problems and creating new ideas. Consider each employee as a book full of ideas not yet written.

GROUP BRAINSTORMING When you brainstorm in a group, you must first make

sure that everyone in the group understands what the focus is and that everyone agrees with it. Keep the objective simple and set up a time limit.  Then when you start the actual brainstorming activity, explain the concept to your team. Everyone should suggest ideas randomly, and your job as the leader/facilitator is to encourage the whole team to take part. Write down all the suggestions on a piece of paper that everyone can see. When the time is up, look at the collection of ideas and categorize them, together with the members of the group. It is very important not to leave out anybody’s idea and no one should feel left out because if they do they might be reluctant to contribute the next time.

When you are done with the actual brainstorming you will come to the most important part: the implementation. Talk about the next steps and agree who is responsible. Make sure that you have a positive outcome after the session; members should feel that their effort was valuable. If they feel that their ideas will be implemented, they will be more motivated to work towards the final result.

PERSONAL BRAINSTORMING

Personal brainstorming can be very useful, whether you have to organize your thoughts, take a decision, plan a presentation or start a new project. Studies show that when individuals brainstorm alone they generate more ideas than when they are in a group. However, you might not develop your ideas fully when you are on your own, because you are lacking the experience of the group.

BRAINSTORMING TECHNIQUES

To make your brainstorming job easier, there are few great brainstorming techniques you can use when you want to create new ideas. The most important thing you have to do when you want to solve a problem or come up with a new idea is to THINK OUTSIDE THE BOX!

Most of the time it is very challenging to think as though we are someone else or we are in a different situation. However, if you are caught with a problem you don’t know how to solve, these techniques are proven to be helpful:

BRAINSTORMING TECHNIQUES Face the problem in a different place: Imagine you are in a

different country or geographic location; think how you would solve the problem  if the risks were no longer present! Or you can ask yourself – what would you do if you had no fears?

Think of yourself as a different person:  How would you approach the situation if your gender was different or if you were older or younger? How would you try to solve the situation if you came from a different culture?

Start with the ideal end state in mind: considering the ideal situation gets you out of the band aid approach that most people fall into when trying to fix a problem. Too often, the problem is only a symptom to a greater systemic issue.  Going beyond the problem into the systemic view starts with creating the ideal situation. Working backwards from there allows you to resolve future similar problems before they occur.

Using these techniques can bring new energy and inspiration to a project and will encourage your team to develop creative solutions to help your company be and stay successful.

WEAK AND STRONG CULTURES

even though every business culture is different, an organization's environmental culture can generally be described as being strong or weak.  A strong culture will have focused facilitative leadership; whereas, a weak culture will have ample management, without much leadership.  Within a weak culture, employees are merely numbers following rigid rules. The concept of human capital may only exist in theory. 

Conversely, in strong cultures, employees‘ knowledge and creativity is central to the success of the organization.  Specific processes are in place to ensure that knowledge starts within the minds of the employees. In order to facilitate the knowledge transfer, the key values and visions are shared throughout the organization and all employees believe in them. Everyone knows what they have to do and what is expected from them. Usually, people working in a business with a strong culture are more dedicated to their work and respond wisely and more quickly than they would in a business with a weak culture. Regardless of the current culture, the dynamics of human beings makes culture a living entity. Successful leaders are constantly working to further the thought processes within their organization. For example, a basic action taken by successful leaders is to change their language. Instead of the common greetings like hello or good morning, they would ask, „what have you learned today“? Such language shifts the thought process of those involved and transform a culture into a learning organization where human capital evolves around knowledge creation.

CONTINUOUS CULTURE DEVELOPMENT

The creation of a culture and how it is carried on is quite organic.  The founder and/or the boss of the business is the one to define the culture initially with their personality. The traditional approach tends to have this individual set out values that should be shared, spread and carried on. He/she needs to clearly communicate the organization's goal and what the organization itself should be. Unfortunately, this paradigm of thought tends to create more animosity. Most people don’t like being told what values they have to follow and reject conformity.  Unconventional wisdom opens the discussion about organizational values to all employees and stakeholder groups.  A collaborative process creates partners in knowledge creation. In this case, the new knowledge created is an authentic set of shared values. Just the process of the open dialogue creates a culture that reflects principles of human capital.

PRESERVING THE ENVIRONMENTAL CULTURE A healthy organizational culture starts with selecting the

right employees. You should only hire people that really fit into the dynamics of the company, and the organization must help the newly recruited workers to learn the culture.  Finding the right people, or Human Capital, to work for your team is one of the most important decisions of any business leader.  This recruiting process consists of careful planning and preparation, the interviewing process, and finally, the hiring of the right person for the team.  Recruitment planning is having the individuals who are already on your team identify the talents that already exist among the group and compare those with what talents are needed by the company.  If there is already a suitable person on the team, then you will not need to search for additional people from outside the company.  Should the team agree someone from the outside is needed, then planning for that person begins.  Remember, you are encouraging input from your employees in this process; however, as a leader you may have to make the final decisions once everyone’s ideas have been shared.

CONCLUSION

Lastly, in order to perform well and empower yourself and others, you need to recognize your personal strengths and the strengths of your team.  Unfortunately not many people know what their strengths really are.  The best advice is to follow your passion: Simply do what you love to do.  As for your employees, encourage them to do the same and use their knowledge and skills to move the company forward.

THANKS