From Human Resources to Human Capital; and now ‘Cross-cultural Capital’

I wrote in 2002 about the idea of a locus of human value, where predominantly in western cultures people are valued in an instrumental way, or as a means to an end. Hence people are regarded as resources in an organisation just like any other resource or commodity. This contrasted to many non-western cultures where people appear to be valued for what they are, with an intrinsic value – a more humanistic valuing of people (Jackson, 2002). Hence when western companies go to regions such as sub-Saharan Africa where a different perception of what people are (e.g. ubuntu – people are only people through other people, rather than individual carriers of value for the organisations) labour issues often ensue, and there is a lack of synergy between foreign (and often western-educated African managers) and local managers and staff. The instrumental approach is fundamental to western management principles, including HRM (with the emphasis on the R).  From this regard to people, the competencies approach was developed by people such as Boyatzis (1982), which has been integral to the HRM process from recruitment, through appraisal to training to reward to promotion. A review of the recent academic literature shows that the competencies approach is not much discussed, but may still be assumed. It still appears to be used by western companies who still wish to link strategic objectives, operational objectives, recruiting human resources through identifying what posts are required, and what competencies are needed in a job description to fulfil operational objectives by having the right resources. This is all very logical in the instrumental mind set.

The lack of direct references to the competencies approach in the academic literature now appears to have been replaced by the broader concept of human capital. Here, there is still reference to knowledge, skills, abilities and motivations that make up the value of an organisation’s human capital, but there is also a discussion of more implicit aspects such as attributes that are specific to that particular organisation. But of course this idea isn’t new and goes back to human resource accounting (e.g. Flamholtz, 1974; Cascio, 1982: to which I am afraid I made a more modest contribution in my book Evaluation: Relating Training to Business Performance, 1989, London: Kogan Page).

Yet my main point here is that these concept are all commoditising people, where people are accounted for like any other resource or capital asset – an ideas that doesn’t travel well across cultures (although my colleague Shuming Zhao, 2008 shows how the concept of human capital is catching on in China). I was then slightly concerned when in a recent conference I heard the term ‘cross-cultural capital’ (Eisenberg, 2013). Perhaps this is the next stage in the quest to reduce everything to accounting principles. but surely as cross-cultural specialists we should be more culturally aware of the origins of this type of valuing of human beings. Or, maybe the overriding pressure in our business schools is to sell these concepts to business leaders: perhaps dressing them up to give them a more commercial edge!

References

Boyatzis, R. E. (1982). The competent manager: A model for effective performance. New York: Wiley

Cascio, W. F. (1982) Costing Human Resources, New York: Van Nostrand Reinhold

Eisenberg, J. (2013) University-based approaches for developing students’ cultural competences: a review of recent empirical studies, presented at 12th annual IACCM conference, June 20-22, 2013, Rotterdam School of Management.

Flamholtz, E. (1974) Human Resource Accounting, California: Dickenson

Jackson, T. (2002) The Management of People Across Cultures: Valuing People Differently, Human Resource Management, 41(4), 455-75.

Zhao, S. (2008). Application of human capital theory in China in the context of the knowledge economy. The International Journal of Human Resource Management, 19(5), 802–817