Human Capital : What It Is and Why People Invest It

Rating:
Summary: People aren't assets; they're human capital investors.
Review: "Employees are our most important assets." This phrase has become the dominant metaphor of late twentieth- century management. Few companies do justice to the idea, however, and fewer still understand that the worker-as-asset metaphor is outdated and misguided. In my book, I explain why, and what to do about it.

Cows, computers, buses, and forklifts are assets; people, in contrast, are owners and investors of human capital. People possess abilities, behaviors, and personal energy. These elements make up the human capital that they bring to work each day. Like financial investors, human capital investors place their currency where they get the best combination of risk and reward. Rewards (that is, return on human capital investment) include things like an interesting job, recognition for strong performance, opportunities to learn and develop, and financial remuneration.

Drawing from the successes of organizations like Southwest Airlines, Cypress Semiconductor, Motorola, MCI, NASA, and Genentech, I've provided real-life examples of how companies can:

- Determine which forms of human capital are most critical to strategic success

- Give prospective job candidates the information they need on the investment they will be expected to make and the probable return on that investment

- Build human capital by coordinating strategies for formal and informal learning

- Increase a firm's ability to hold on to people who have the most valuable (and marketable) human capital

- Optimize the firm's investment in compensation and other rewards to engender the highest possible levels of workforce commitment and engagement.

Most readers, I think, are like me - they don't like dry academic tomes or glib collections of new-age cliches. I've tried to take a different path, to make the case for a new paradigm, and to do so with heart and humor. I've also tried to make the book as accessible and useful as possible. It contains practical examples, usable models, and wisdom from thinkers as diverse as Adam Smith, Herman Melville, and Mark Twain. I humbly hope that you'll find the book both enlightening and entertaining.

Rating:
Summary: A Solid Analysis
Review: Actually, if you are interested in this subject, there are at least four books to read: this one, Fitz-enz's The ROI of Human Capital, and two different books with the same title, Intellectual Capital, by Annie Brooking and Tom Stewart. So often, we hear someone say that "Our most valuable assets walk out the door at the end of each day." That's true. But what does it really mean when assigning value to human "assets"? Davenport has written a very solid book (I'm NOT damning with faint praise), one which I strongly recommend. Given the importance of this subject, I again suggest reading at least the four books previously identified. Who knows? Davenport may be, in your considered opinion, the most hepful. He has a sharp mind. He writes very well indeed. His observations and suggestions are rock-solid. (Chapter Nine all by itself is well worth the cost of the book.) My initial rating of his book was Four Stars but as I began to formulate my thoughts which comprise this brief commentary, I've changed my mind. When transmitting to the Amazonians, I shall increase that rating to Five Stars. How valuable this book is to you is a determination only you can make. One final point: For the cost of only one hour of my time as an independent management consultant, you can purchase at least four books on this critically important subject. If that isn't great value, I really don't know what is.

Rating:
Summary: A Business Book with Brains (and Heart and Soul)
Review: As an avid reader of business books and a management consultant myself, I cannot say enough good things about this deceptively straightforward, yet truly great book. Davenport does what other business authors do not typically set out to do: he engages both your mind and your heart. Through the use of metaphors, stories, and real-life case examples, he outlines a sound conceptual framework for understanding employees as investors. Without resorting to glib cliches and "soft-headed" truisims, he builds a logical and convincing case that outlines how any organization interested in greatness can unleash the potential that resides in every employee. By conveying a deep and profound respect for the power and talent of people, he challenges the "architects" and leaders of organizations to create environments that will bring out the best in everybody. By emphasizing the reciprocity of the employee-employer relationship, he shows us how any organization can create and deliver a deal(or deals)that will attract, retain, and motivate the best talent available.

Rating:
Summary: Jacket blurbs for HUMAN CAPITAL
Review: Here's what people are saying about Tom Davenport's HUMAN CAPITAL:

"A BUSINESS DICTIONARY FOR PEOPLE WHO PUT PEOPLE FIRST"--Jack Stack, author of The Great Game of Business. "THE NOTION OF THE EMPLOYEE AS INVESTOR REPRESENTS A MAJOR PARADIGM SHIFT FROM A TOP-DOWN, CARE-AND-FEEDING MANAGEMENT ORIENTATION TO ONE WHERE THE EMPLOYEE-INVESTOR IS AN EQUAL PARTNER IN THE MANAGEMENT EQUATION. I FIND DAVENPORT'S PERSPECTIVE TO BE HIGHLY RELEVANT IN TODAY'S BUSINESS AND WORKPLACE ENVIRONMENTS." --Andy Rich, Executive Vice President of Human Resources, Charles Schwab & Co., Inc. "THE NEW REALITY OF TIGHT LABOR MARKETS HAS FUNDAMENTALLY CHANGED THE LANDSCAPE OF EMPLOYEE MANAGEMENT. SUCCESSFUL COMPANIES ARE FINDING THAT EMPLOYEE KNOWLEDGE IS THE KEY SOURCE OF COMPETITIVE ADVANTAGE. TOM DAVENPORT OFFERS AN ENGAGING ROADMAP FOR EFFECTIVE MANAGEMENT IN THIS CHALLENGING NEW CONTEXT."--Peter Cappelli, Director, Center for Human Resources, Wharton School of Business

Rating:
Summary: Insightful!
Review: The 1990s may well be remembered as the decade of employee empowerment (at least in management theory circles), but very few companies ever put their money where their mouths were when it came to dismantling the old "command-and-control" structures. Thomas O. Davenport makes a fresh case for empowerment by placing the argument in the context of the current tight labor market, and presenting scarce knowledge workers as investors of human capital. These human capital investors should be valued, nurtured and rewarded by companies in much the same way that financial investors are cared for. Although many of the conclusions that result from this novel theory mirror those of earlier works in employee empowerment, we [...] strongly recommend this book for its original take on the changing nature of the employer/employee relationship.


Rating:
Summary: Age of Knowledge Workers - A handbook
Review: The strength of the book is obvious to every one, and can be summarized here.

I find the book more useful for students of library & information science, with plenty of tabulated / illustrated useful themes, such as, Knowledge worker (p.9), comptence building (pp. 131-132), intangible capital measuring (p. 216), job fulfillment & ROI (p. 33-34), etc.

contents:
1 Worker as Investor: A New Metaphor
2 Human Capital Investments and Returns
3 Human Capital and Competitive Strategy
4 Hiring Human Capital Investors
5 Setting the Stage Through Workplace Environment
6 Paving the Way for High Investment
7 Building Human Capital
8 Holding On to Human Capital Investors
9 Optimizing and Measuring Human Capital Investment

Davenport reminds succintly, "people are not costs, factors of production, or assets. They are investors in a business, paying in human capital and expecting a return on their investment." In order to make human capital work, as effectively as possible, this CEO stresses on the fact that the management must make sure that people understand how the organization becomes successful--i.e., only with humans, humans and humans--NOT with the old currencies of capital, assetts, credits, and debits in the ROI and ROA.

The weakness in Davenport's book is is that it focuses on professional investment ONLY. Professional and personal mind as a whole gives a fuller picture. Whereas, ignoring the personal side, leads to lopsidedness. An individual investor has his / her energy, synergy and soul contributing in workplace-- they are not Just Robots. Those who are looking for such a holistic picture have to look elsewhere and in other books. My listmania, at Amazon has many titles which facilitate looking at the investor in a holistic sense.

This listmania is facilitating accommodation, tolerance and striking adjustment among the co-investor, among the teammates, etc. 'Religion in workplace (religious practice in work hours)' (...)

Nevertheless, Davenport gets the credit of making this idea so explicit and obvious: "worker is an investor," wherein the worker (oops, investor) is a free bird, with an added power to negotiate with the board, or get out whenever negotiations fail.

Rating:
Summary: Excellent summary of critical human capital investor issues
Review: This book is a valuable and well-written summary of key elements in the equation of how to entice employees - human capital investors - to invest in your enterprise to the benefit of both parties. It pulls together in one book, and one coherent framework, lots of valuable concepts. It is also full of practical ideas on how to implement those concepts. It's worth reading for those who are interested in leading people effectively.