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Human Capital or Productivity?

Today productivity requires working smarter rather than harder. Companies increase output to combine inputs, implementing technology, and new business models. Nevertheless, all these tools require talented people who can bring productivity to life. In the new era, human capital (time, talent, energy, ideas) is the establishment of superior performance. A single great idea can put a company on top for years. Think of Apple (iPhone) or IKEA (re-imagination of home goods).

If companies continue to focus too much attention on managing financial capital, they will commit far too little to ensure their real scarce resources (time, talent, and energy) are placed to their best use. Companies lose their productive power by wasting time on structures, processes, and practices, resulting on an undermined performance from their workers. Human capital has become the primary source of competitive advantage, and companies that manage it carefully as financial capital can perform better than the rest. It is all a matter to apply real discipline in their management if they seek to attract, deploy, and lead the hired talent more effectively. With that discipline, such talent will certainly achieve that inspirational leadership they seek within (even at the lowest hierarchy of the company’s corporate governance).

Most of today’s leaders were taught strategy (at school or on the job) by the old traditions, in a time when capital was scarce and expensive. Not surprisingly, most large-cap companies still treat financial capital as the most valued resource for control and use. Those practices are not in rhythm with what is required to win in the new age. Only those who have learned and understand that ideas and people is what brings to life a company’s asset, are the ones who build impressive leads. Those who do not learn these lessons may find themselves lost behind in the years to come.

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About the Author

Renzo Mazzini, MARCFIELDS -Capital Management
2553 SW 20 ST
Miami, FL 33145

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