How important is human capital?

How important is human capital?

That’s the question Dan Ariely asks in his work on The Human Capital Factor™.

? Unsurprisingly, he finds human capital matters a lot for business performance and that’s the case across industries, not just for e.g., knowledge work.

In terms of what’s important for people and jobs, he highlights:
✔ Task satisfaction
✔ Feeling appreciated
✔ Psychological safety
✔ And “the degree to which companies provide the conditions where employees can align their own utility with that of the company and its stakeholders.”

He argues there are two building blocks for a strong Human Capital Factor overall:

1️⃣ Motivating Goodwill – “the range between the minimum effort required by an employee to keep their job and the maximum effort possible by that employee if they’re fully engaged in their role.”

2️⃣ Utility Alignment – “the willingness of employees to execute tasks that are aimed at the wider benefit of the company.”

When you get both, you have Aligned Effort and high Value Creation (as shown in the 2×2 here).

The alignment piece is interesting. It’s something we see in our work, but it’s often missing from discussions of employee engagement. (We sometimes refer to it as “cognitive commitment”.)

? Read his new article on all this here:

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