Many believe that advertising is the economic engine of the Social Era. Others believe that technological enhancements to productivity is the economic engine of the Social Era. And then there are those that believe innovation is the economic engine that fuels the Social Era. Is it all of these, one of these or none of these that represent the economic engine of the Social Era?
Economics is defined as the social science that analyzes the production, distribution, and consumption of goods and services. Social science refers to the academic disciplines concerned with society and human nature. Human nature refers to the distinguishing characteristics, including ways of thinking, feeling and acting, that humans tend to have naturally, i.e. independently of the influence of culture. So economics are largely influenced by human nature.
Human Capital Is The Economic Engine of The Social Era
Human capital is the stock of competencies, knowledge, social and personality attributes, including creativity, embodied in human nature which produces economic value. Economic value doesn’t always equate to monetary value however little if anything with monetary value will ever get produced without the contribution of human capital.
A Forbes article titled Can HR Managers think like Economists? states : Deloitte just released its Human Capital Trends 2013, a year-long research effort which looks at talent and leadership trends around the world.
The research reinforces a big issue: talent and leadership gaps have become the top business challenge this year.
- The Conference Board survey of CEOs just found that Human Capital is the #1 challenge on the minds of CEOs (more than 10% higher than “operational excellence”)
- In the Deloitte study, more than 2/3 of HR leaders cite leadership and technical talent gaps as their top business challenges.
- Skills from outside the US are in great demand. Demand for H1-B Visas (highly skilled immigrants) outstripped the entire year’s supply in the first week!
- Our education system is not keeping up. McKinsey research shows that 45% of business leaders believe that newly minted college students do not have the entry level skills they need to start work without training.
- At a national level these issues are being discussed every day. There is now a national debate about immigration, the role of women in the workforce, and the need to redesign our education system.
But while all these issues are discussed in Washington, what do we as HR and business managers do? The answer is mentioned in the Deloitte study: we have to think like economists.
The Industrial Era mentality of business leaders viewed Human Capital as an expense rather than an investment. Education was something you had to pay for and learning was something you received from teachers in accredited schools.
In The Social Era people are investing in each other. Education is free and learning is an experience. The value of human capital in the Social Era is growing exponentially because economics is about social science which is about human nature.
The nature of business is to control human nature for monetary gain. Human nature is naturally inclined to create value whether monetary or not.