From HR to Human Capitalist

My journey from HR to Human Capitalist has been an interesting one. When I began my career in the field twenty years ago, I was the odd one. I had no HR experience but ten years experience from the business side of things. I knew how to run a P&L, manage large teams, analyze and respond to market conditions, and nurture a portfolio of clients. Every decision I made was through the lens of increasing revenue and profits while mitigating risks. Unfortunately, my colleagues at the time found no value in this.

I tried hard to fit in and tried to take on more of the "HR in the Ivory Tower" mindset. I enjoyed knowing the policies and navigating the sometimes crazy terrain that is HR but I never really felt like I was being authentic. At my core, I was and always will be a consultant.

Luckily, there have been more business-minded professionals seeping into the HR profession. They have helped to transition many HR departments to become the consultative arm of the firm rather than the hall monitor. I feel the pandemic kicked this into high gear as business leaders were looking to their People Partners to understand the human parts of the business. There was more focus on data and data-driven decisions, less on what policy or guardrails needed to be obeyed.

Now with the influx of Artificial Intelligence (AI), the imperative has once again shifted: the traditional HR ways of doing things are going to have to change to a more Human Capital mindset.

This mindset views the role of HR Leader as the one executive on the leadership team responsible for the largest expense and largest revenue-producing asset, the firm's employees. It is through this lens that every decision is made, every consultative session moves through, and how the organizations of the future will not only survive but thrive.

Let's look more into what this actually means.

What is Human Capital?

Human capital refers to the economic value of a worker's experience and skills. It encompasses assets such as education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality. The Human Capitalist mindset is transforming how business executives view the Human Resources function in the organization.

According to the World Economic Forum's Future of Jobs Report, organizations that invest in human capital development see up to 11% higher productivity and profitability than those that don't. This perspective shifts HR from a cost center to a value creator.

HR leaders need to be aware of the changing landscape of the industry and be prepared to adapt. This may include developing a growth mindset and embracing a more Human Capitalist mindset. HR leaders can also help to create a culture of lifelong learning and innovation in the workplace.

What implications, development, and transformation would someone have to make to go from HR to a Human Capitalist?

There are several implications, developments, and transformations that someone would have to make to go from HR to a Human Capitalist. One is to develop a deep understanding of the business. This means understanding the company's products, services, customers, and competitors. It also means understanding the company's financial statements and how the HR function can contribute to the company's bottom line.

Another implication is to develop a strong understanding of human capital management. This includes understanding how to attract, develop, and retain top talent. It also means understanding how to measure the return on investment (ROI) of HR initiatives.

Let's face it, AI is here and will only become more disruptive as the years pass and the technology evolves at a pace we have never seen before. The impact of AI on jobs will require Human Capitalists to be focused on how to rethink, reskill and redeploy the company's largest assets. They will have to spend part of their time in the present but be more obsessed with the future and how to start preparing for it today. This proactive mindset will be the lifeline an organization needs to survive the bumpy road ahead of us.

A Deloitte study found that organizations with strong HR business partners who understand the business context are six times more likely to be high-performing and eight times more likely to have strong talent outcomes.

Finally, HR leaders need to develop a strong consultative leadership presence. This means being able to influence and persuade others. It also means being able to build relationships and trust with key stakeholders. To achieve this, they must demonstrate a deep understanding of business priorities, aligning HR strategies with organizational goals. They should proactively address challenges, driving strategic initiatives that add measurable value. Ultimately, this approach positions HR not just as a support function but as a critical driver of business success, shaping the organization's future trajectory.

The Human Capital Mindset

The Human Capital mindset is a shift in thinking from viewing employees as an expense to viewing them as an asset. This mindset recognizes that employees are the most valuable resource a company has. It is a belief that HR leaders should be focused on investing in their employees and developing their skills.

This mindset is transforming how business executives view the Human Capital function in the organization. In the past, HR was often seen as a necessary evil. It was a department that was responsible for compliance and risk management. However, the Human Capital mindset is changing this perception. HR is now being seen as a strategic partner that can help the company achieve its business objectives.

The Implications of the Human Capital Mindset

There are several implications of the Human Capital mindset. One is that HR leaders need to be more data-driven. They need to be able to track and measure the ROI of their HR initiatives. This data can then be used to make better decisions about how to invest in employees.

Research by McKinsey & Company shows that companies that leverage people analytics are 2.3 times more likely to outperform their peers in quality of hire, 2.5 times more likely to achieve better talent retention, and 2.1 times more likely to effectively assess employee performance.

Another implication is that HR leaders need to be more focused on employee engagement. They need to create a workplace culture where employees feel valued and appreciated. This can be done by providing employees with opportunities for growth and development.

Finally, HR leaders need to be more focused on building relationships with key stakeholders. This includes building relationships with business leaders, employees, and other HR professionals.

The Development of a Human Capitalist

There are several things that HR leaders can do to develop a Human Capitalist mindset. One is to get involved in the business. This means understanding the company's products, services, customers, and competitors. It also means understanding the company's financial statements. If you do not understand how to read financial statements, there's little excuse for not learning considering resources like AI and YouTube (the world's LMS).

Another thing that HR leaders can do is to develop their human capital management skills. This includes learning how to attract, develop, and retain top talent. It also means learning how to measure the ROI of HR initiatives.

As we navigate this transformation, it's crucial to recognize that soft skills will become even more valuable in an AI-driven workplace. Human Capitalists must be adept at fostering these uniquely human capabilities while leveraging technological advancements.

Lastly, HR leaders can develop their leadership presence. This means learning how to influence and persuade others. It also means learning how to build relationships and trust with key stakeholders.

The Transformation from HR to Human Capitalist

The transformation from HR to Human Capitalist is a journey. It is a journey that requires HR leaders to develop new skills and knowledge. It is also a journey that requires HR leaders to change their mindset.

The Harvard Business Review notes in their article "The New Role of the CHRO" that successful Chief Human Resource Officers who transform into strategic business leaders focus on three key areas: predicting outcomes, diagnosing problems, and prescribing actions that add value to the business.

The HR leaders who are able to make this transformation will be well-positioned to help their organizations succeed in the future of work. The HR profession is changing. The HR leaders who will thrive in the coming years are those who embrace a more Human Capitalist mindset. These leaders will be able to help their organizations achieve their business objectives by leveraging the power of their human capital.

Call to Action

I hope this blog post has helped you to better understand the changing landscape of the HR profession. If you are an HR leader, I encourage you to embrace the Human Capitalist mindset.

Please visit my website at https://linktr.ee/humancapitalist to learn more about the future of work and how to prepare your organization for the impact of AI.

Looking for more insights on navigating HR transformation? Check out my articles on AI Revolution in HR and what HR can learn from business leaders.