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Human Capital: The disenfranchisement of employees

For a while now, the phrase “Human Capital” has replaced “Human Resources” as the buzz phrase to refer to people in an organisation.

I suspect the well-intentioned people within the “job title and department naming” department were thinking that it suggested an association with capital and investment. How wrong they were. Let’s look at some of the employment themes over the past 5-10 years:

Disenfranchisement of employees

Go back 10 – 15 years and there was a much stronger association between people and who they worked for. People expected to have a job in an organisation for their career. They associated their identity with the company: “I’m a Mars person” or “I belong to Shell”. Whilst I am sure that this is still true for some larger organisations, and some employees, many people have had this contract broken.

Pensions debacle

One good reason to stay with a company was the pension rights. By staying in a company with a final pensionable salary scheme you built up a strong pension, guaranteed to provide after you have retired. However the increasing life expectancies have driven a cart and horse through the actuarial calculations and Gordon Brown’s stealthy raiding of the pensions dividends for tax purposes, have together undermined these attractive schemes.

People treated as merely human capital

Remember that capital is a commodity. It is traded and swapped in markets. You don’t invest in cash, you use cash to make some thing else (which will turn into cash). You borrow it and put it back. It is a commodity. We are seeing the same with the investment in people.

Partly due to the breaking of the contract of employment and the disenfranchisement of employees and partly due to capital constraints, training was dropped back. The expectation that people will not stay as long as they would means you either find a cheaper way to train then, don’t train at all or rely on people who have been trained by others. The result, created a merry go around of employment, where the only ones winning are the recruitment companies and

Permanent contracts?

Let us take another example. A few years ago a well qualified colleague of mine was offered a job in an IT development company. Typical terms, 6 months probation period, 3 months notice after that. Despite doing an excellent job, he was made redundant at 5 months and 3 weeks (when the notice period was still a week). Within 2 months he was in another job and six months later he was in the same situation again, being made redundant after 5 months and 3 weeks. This time it was because he had done such a good job, he had put himself out of a role in their minds. In neither case was he made redundant for adverse reasons.

You can imagine that now, whilst he is in a “proper job” with a full time contract, he is constantly thinking he has 6 months’ employment left and that he is only as good as his last 6 months of deliveries.

In a final case, a friend of mine was offered a contract in a large company to replace a maternity leave. When I asked about the day rate and we did the calculations, we worked it out that he was being paid the same effective salary as the full time employee he was replacing. Moreover, the company was not factoring in the costs of employment sich as NI and taxes. He received no offer of holiday time and no other benefits such as insurances. He would be taxed out of this. They thought this reasonable.

I recall arriving in an established company during the late 90s having moved from a redundancy to another job and then to this one. My first reaction was, “Gosh, these people have no fear in their eyes!”. They were walking around as if the waves of redundancies on the outside world had not been happening. I was asked, by a lovely chap who had been in the company for 25 years whether I was a full time employee or a contractor.

I explained, I had a full time “permanent” contract, that was on 3 months’ notice, whereas the full time “contractors” I was working with had contracts that provided for 6 months’ notice.

He looked at me as if I had come from another planet. Two years later a large proportion of those people were made redundant and within 5 years, the place was down to around a quarter of its original size.

Anti-big corporate

One other piece in the jig-saw is the invidious trend towards regarding large organisations as nasty, selfish, money- grabbing, don’t care about the environment, unethical monoliths that need to be brought down.

The BBC do it when they talk about profits without a reference to the investment return. Enron and Parmalat stand as blotches in a landscape that includes philanthropists who put their hard earned money back into society (yet people ignore). Television soaps put out the image of the rich as unworthy cheaters. Directors responsible for the running or large corporation at risk of losing their property, are seen as money grabbers. The green lobby is on the same wagon playing ethical and moral cards, where economic ones could be played.

No matter that the prosperity, increases in life expectancy and health, televisions that peddle this trash, and the ability to communicate together like we do, comes about largely due to these people working in these corporations.

The brand “me” generation and portfolio careers

When I first joined IT it was apparent that people in IT thought of themselves as part of the IT industry rather than a part of the company that employed them. The exceptions were those employed by the large IT firms.

Now we have the logical extension of that. People regard a career as a series of jobs seen in retrospect. We protect ourselves from unemployment by creating multiple sources of income through internet companies run in the evening, trading on ebay, property investments and other side (or main) businesses.

In “The brand you” Tom Peters makes it clear that you run your career now. You develop multiple sources of income. You develop your credibility beyond your cv through the internet, to others around you whom you connect with.

At the same time our communities have become on-line communities, and multiple ones as well.

Is it recoverable to create human beings?

So the interesting questions for organisations are:

“Can we as an organisation win back the loyalty, commitment and affiliation of our people?”

“What do we as organisations have to do to make it worthwhile investing in our people?”

“How do we regain their trust?”

“How to we develop a sustainable trust that will make a difference to us as an organisation?”

I welcome your comments and will put more later…