Nov. 17, 2020
Professor Patrick Wright recently published a scholarly paper in the Human Resource Management Review that explores how companies can build community and acknowledge their employees’ intrinsic value to make their organizations more competitive.
Part of the Moore School since 2012, Wright is the Moore School’s Thomas C. Vandiver Bicentennial Chair, director for the Center for Executive Succession and a management and Master of Human Resources professor. In “Rediscovering the ‘Human’ in Strategic Human Capital,” Wright focuses his research on why the human or psychological aspect is as important as the economic one when considering human capital.
“The field of strategic human capital was founded to try to connect those engaged in a conversation about human capital in the field of economics with those engaged in a conversation about human capital in the field of psychology,” he said. “As the field has evolved, the economics voice seemingly has become more pronounced. I wrote this article to suggest that while that voice is important, it cannot be the only voice in this field because it misses important concepts and constructs relevant to human decision-making.”
Wright defines human capital as the individual’s set of knowledge, skills, abilities and other characteristics that have the potential to bring value to organizations.
“Strategic human capital deals with how firms seek to attract, select, motivate, develop and retain people that have the human capital that help the organization compete,” he said.
The founder of the concept of human capital and an economist, Gary Becker, focused on the choices people make to invest in developing their human capital; the economics-based approach emphasizes strictly rational, maximizing decision-making and concentrates almost entirely on financial outcomes, Wright said.
“However, psychologists tend to explore other outcomes such as meaning, community, relationships, etcetera, as being things that have important influences on decisions,” he said.
Wright’s research in “Rediscovering the ‘Human’ in Strategic Human Capital” recommends more of a balance between the economic focus and human decision-making.
Some of the questions he poses in his research include:
- How does one’s identity impact financial choices to invest or not invest in varying forms of human capital?
- How does an individual’s pursuit to find meaning influence how they choose between different forms of work, like taking an accounting class, and non-work, such as taking a pottery class, related to human capital?
- For firms that provide greater fulfillment of meaning and purpose, do they attract and retain human capital at a lower economic cost, and can this opportunity to gain meaning and purpose at work become a source of competitive advantage for the organizations?
- How can individuals’ desire for community at work drive relationship building that can enable easier knowledge transfer and minimize miscommunications?
- Can firms that foster community experience lower knowledge transfer costs and greater social capital, and subsequently, that sense of community provide competitive advantage?
- Do firms that acknowledge employees’ intrinsic value apart from their economic value experience a greater ability to attract, motivate and retain human capital resulting in increased economic value and a source of competitive advantage?
- Why is it important for economics-based strategy and psychology-based human resources to engage in strategic human capital conversations?
“Economics- and psychology-based researchers look at different aspects of the same phenomenon, so conversations that include both voices can hopefully provide a more thorough and accurate description of reality,” Wright said.
Wright emphasized economics-based logic pays little attention to aspects of what it means to be human, and humans cannot completely disregard their subjectivity when making decisions.
“We are spiritual beings who seek meaning and purpose, at least in part, through our work,” he said. “Individuals have inherent value that goes beyond simply what we can do for our organization.”