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Management Essay | Human Resources Essay

"Investment in human capital will be the foundation of success in the global economy" (DfEE 1998).

Discuss this proposal in relation to learning at the individual, organisational and national levels.

Capital has become multidimensional in the economic literature of the twenty-first century and has been extended to include such terms as financial capital, organisational capital, intellectual capital, human capital, structural capital, relational capital, customer capital, social capital, innovation capital, and process capital. The movement towards developing the human resource in an organisation is linked to HRD, and is discussed in literature as the human capital.

The fundamental principle underpinning Human Capital Theory is the belief that peoples’ learning capacities are of comparable value to other resources involved in the production of goods and services (Lucas, 1990). When the resource is effectively utilized, the results are profitable for the individual, organisation and society at large (Lucas 1990 cited in Nafukho, F et al 2004). Whilst this resource is described as the ‘human capital’, this is a sterile and limited interpretation of a variety of personal characteristics and dispositions which employees bring to the workplace (Alcorso, C. 2003).

Human capital is typically treated as a homogeneous concept, and very little is understood about how different types of education, tertiary, secondary, shape the overall development process (Ramcharan, R 2004). Therefore Human Capital Theory seeks to explain the gains of education and training as a form of investment in human resources (Nafukho, F et al 2004)

Most organisations recognise that in today’s business climate, survival depends upon workforce capability and the ability of the leadership to produce the best performance from the employees. Therefore maintaining the leading edge and surviving, organisations have to predict and create their future. "The only irreplaceable capital an organisation possesses is the knowledge and ability of its people. The productivity of that capital depends on how effectively people share their competence with those who can use it" (Mullins, L 1995:259).

Within the operation of an organisation there are many individual interrelated components, which have an impact on the performance of the organisation. The human resource is said to be the most valuable resource, but does not always receive the respect, and the financial recognition to develop. Other resources within the organisation have a higher value placed on them and they are protected by rules and regulations (Mumford, A 1997:78).

The appearance of knowledge based economies has deep implications for the factors of growth, the organisation of production and its effect on employment and skill requirements. This may call for new directions in industry related government policies (DTI White Paper). The UK government aimed their learning policies towards the emerging knowledge economy. The Prime Minister stated that "education is the best economic policy we have and that, through the policy of lifelong learning, the UK would have the knowledge to compete in the new economy (Tony Blair PM 1998)

Best (2001) discussed the new economy, as a knowledge-based economy without borders, where the race is between companies and locales over how to learn faster and organise more flexibly to take advantage of technology-enabled market opportunities (Best (2001) cited in DeFillippi, R. 2002). Organisations have changed in the way they operate, shifting from immobile-wired infrastructures to mobile, miniature, and wireless modes of communication, computing, and transacting. Customers now demand 24 hour service, with any time, any place" solutions of their problems (DeFillippi, R. 2002).

These changes are reflected in the radical shifts in management theory; these shifts need to be reflected in the theory of training and development. The move towards a knowledge economy makes these changes vital to the survival of the organisation. Ideas of training tend to focus on results; typically they are short-term and assume transferable skills. Ideas of personal development may be insufficiently focus on the workplace. Therefore for an organisation to enter the knowledge economy, it is vital for them to review their training and development to a broader aspect (Bryans, P. & Smith, R. 2000).

The UK Government in 1998 set out its policy on life long learning in a discussion paper. David Blunkitt (1998) described this radical shift in policy as Learning is the key to prosperity, for each of us as individuals, as well as for the nation as a whole. This higher investment in the human capital is the foundation of the success of the UK within the knowledge based economy (Blunkitt, D. cited in Green Paper 1998).

The Government stated that they were placing learning at the centre of their objectives. Through consultation the aim was to place learning as a life long process, building on human capital by encouraging the achievement of knowledge and skills, that emphasis creativity and imagination This life long learning would be in place by the first decade of the new millennium (Green Paper 1998).

The labour force in competitor countries is educated to higher levels than those in the UK, and that higher education qualifications will ever more be in demand to address future skills needs, particularly at the technical and associate professional level. Foundation degrees have been introduced as a method for non-academic or professionally qualified employees to obtain the correct skills to enhance their role and future career prospects. Although these degrees are not the only method to bridge the skills gap, they should be considered together with more traditional methods of learning. With employers working closely to compile the courses they facilitate opportunities to create diversity and differentiation within education establishments (M. Doyle 2003).

It is argued that the policies of both the British government and of the European Commission (EC) with regard to building a learning society are considered to be timid, narrowly conceived and inadequate to the task. Politicians are trying to construct a new society with the intellectual equivalent of straw rather than bricks. There are not enough resources being allocated to the knowledge economy, and this factor will impinge on the success of the policies (Coffield, F. 1998).

People continue to learn throughout their life, whether this is formally taught or just experienced. The process of life long learning requires continuous adaptation. This is gained from increased knowledge and improved skills, which aid the individual to adapt to or change the environment. This allows for new possibilities and outcomes from situations that they face. These changes can raise the individual’s self esteem and confidence. Therefore the learning can generate far-reaching changes in both the individual and the environment (Beardwell I et al 2004).

Education investment is ongoing over time along an optimal path, but its rate of increase diminishes. Thus, the first generation experiences the biggest increase in schooling investment, but each subsequent generation becomes better educated than its predecessor, with the difference in attainment across generations declining with time (Ramcharan, R 2004).

This onus for training is now on the individual. Organisations no longer offer a job for life; the "psychological contract" between employer and employee has shifted. Employees are increasingly mobile, changing employment for promotion, reward and job satisfaction; top employees have more choice as to where to work. Workers have been forced to take more accountability for their own careers, going where the work is rewarding and where they can develop skills that will guarantee their employability in whatever organisation they chose to work for (Harrison 2002).

There is discourse amongst authors on the theory behind the policies of lifelong learning. Beardwell I et al (2004) discussed life long learning as an ill-defined concept. Although the name may suggest individuals are continuously learning within their lifetimes, with initiatives that the government have set up, he argues that the concept is too wide and thus too amorphous to manage effectively (Beardwell I et al 2004:349) The idea to create and support life long learning requires a considerable degree of coordination with the various partners, to enable the notion to succeed (Beardwell I et al 2004).

Dixon (1994) describes the essence of a learning organisation as the organisation’s ability to use the amazing mental capacity of all its members to create the kind of processes that will improve its own (Dixon 1994 cited in Wilson 1999). They are organisations where individuals constantly expand their capacity to create the results they truly desire. They have systems, mechanisms and processes in place, that are used to continuously enhance their capabilities to achieve sustainable objectives. To achieve this strategy there is an open culture which promotes learning in both formal and informal methods. Mistakes are discussed and reviewed, theoretically without blame being apportioned (Wilson 1999).

Through the constant reviewing learning organisations are adaptive to their external environment, continually enhance their capability to change and or adapt, develop collective as well as individual learning and use the results of learning to achieve their objectives. There is free exchange of information, with systems in place to guarantee that expertise is available where it is needed; individuals network extensively, crossing organisational boundaries to develop their knowledge and expertise. Within this culture employees’ diversity is treated as a strength, and individuals are encouraged to develop ideas, to speak out, and confront actions. Capra (2002) discussed the change in organisations as a contrast in the metaphor of organisations being machines to that of organisations as living systems (Capra 2002 cited in Nixon 2004:58).

The radical changes that are apparent in the new economy require workers to possess greater skills and knowledge than their predecessors. This will require input at national, organisational and individual level. Organisations have changed their policies and therefore their attitudes towards developing their work force, although the onus on training is still on the individual. The human capital is considered to be the vital component in the knowledge economy.

Bibliography

Books

  • Beardwell, I. et al. (2004) (4th Edition) Human Resource Management a Contemporary Approach Prentice Hall, Harlow
  • Harrison, R (2002) (3rd Edition) Learning and Development
  • CIPD, London
  • Mullins, L (2005) (7th Edition) Management and Organisational Behaviour
  • Prentice Hall, Pearson Education, Edinburgh
  • Mumford, A (1997) (3rd Edition) Management Development
  • IPD Publications, Great Britain
  • Wilson, John P. Human Resource Development: Learning & Training for Individuals & Organisations(1999) Kogan Page London

Journals

  • Alcorso, C. Immigrant employees in hotels (August 2003) Labour & Industry, v14
  • Bryans, P. & Smith, R. (2000) Beyond Training: Reconceptualising Learning at Work Journal of Workplace Learning 2000Vol.12
  • Coffield, F. (1998) A Tale Of Three Little Pigs: Building The Learning Society With Straw. Evaluation & Research in Education, Jan 1st, 1998
  • DeFillippi, R. (2002) Organisational Models For Collaboration In The New Economy. Human Resource Planning, Dec 2002 v25
  • Doyle M. (2003) Discourses of Employability and Empowerment: Foundation Degrees and Third Way discursive repertoires Discourse, Dec 2003
  • Nafukho, F et al (2004) Human capital theory: Implications for Human Resource
  • Development Human Resource Development International
  • Nixon, B. (2004) Creating a cultural revolution: the 21st century challenge for HRD Training Journal Oct 2004
  • Ramcharan, R (2004) Higher or Basic Education? The Composition of Human Capital and Economic Development IMF Staff Papers, July 2004 v51

Internet

  • DTI (1998) Building the Knowledge Driven Economy
  • Green Paper, accessed through www.dti.gov.uk/
  • DfEE (1999) Creating Learning Cultures: Next Steps in Achieving the Learning Age DTI White Paper, accessed through www.dti.gov.uk/

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