Human Capital

No longer mere company "assets," today's in-demand workers have become free agents who can and do invest their ability, behavior, and energy-their human capital-in the companies of their choice. And the companies they choose, the companies that will win in the marketplace, will be the ones that know how to create and deliver the best return on that investment. In this book, author Thomas O. Davenport explores the dynamics of this emerging workplace phenomenon and describes specific strategies that companies and workers can use to build mutually beneficial relationships in the new knowledge economy.

Preface

The Author

1 Worker as Investor: A New Metaphor 3

2 Human Capital Investments and Returns 17

3 Human Capital and Competitive Strategy 44

4 Hiring Human Capital Investors 65

5 Setting the Stage Through Workplace Environment 94

6 Paving the Way for High Investment 121

7 Building Human Capital 143

8 Holding On to Human Capital Investors 169

9 Optimizing and Measuring Human Capital Investment 202

Notes 227

Index 243

THOMAS O. DAVENPORT is a principal with Towers-Perrin, an international strategy, organization, and human resources consulting firm. Formerly, he was responsible for operations management at JAMS/Endispute, one of the nation's largest mediation and arbitration companies. He lives in San Francisco. Many companies say that their employees are their most important assets. Few do justice to the idea; fewer still understand that the worker-as-asset metaphor is outdated and misguided. Shifting labor markets have taught managers this lesson: as workers gain power in negotiating the terms of employment, they behave less like assets, and more like free-agent owners of investable capital. Their capital is the ability, behavior, effort, and time they contribute to a company. Like players in any market, they expect a healthy return on their investment.

In Human Capital, author Thomas O. Davenport explores this worker-as-investor notion, describing what it means to both employer and employee. He explains how companies who treat workers as investors can attract, develop, and retain people who get so much value from the organization—and give so much back in return—that they create a competitive advantage. Davenport describes the practices of companies that recognize the importance of human capital and know how to build it and direct it to areas critical for marketplace success. Drawing from research and personal experience, he provides guidance for managers who must implement successful human capital programs. And individual employees who read the book will come away with ideas for getting the most out of work by cultivating their human capital and maximizing the return on its investment.

The race for human capital has already begun. Companies who want to win must craft and deliver a return-on-investment array that attracts the most talented, creative, motivated workers in the market. Human Capital can help executives and managers build organizations worthy of investment by people whose human capital means the difference between success and failure in a competitive world.