There was an old business truism that went “ultimately all large firms get into the real estate business.” Or something like that. The reasoning was that facilities and land were a big part of a firm's cost structure, and they became even bigger and more complex as the firm expanded. Thus, being adept at managing real estate was pivotal for a growing firm.
Looking back over more recent cycles, you could say the same for financial management. As firms grow, financial management—both internal issues in capital structure and managerial accounting, and external issues in project investing—plays a more pivotal role in the firm’s success.
Looking ahead, I’d assert we’ll see the same trend to human capital. Ultimately, as firms get bigger they’ll be in the workforce development business. Why? Today, technology effectively levels the playing field in many aspects of infrastructure and finance. Both are cheaper and easier to come by. With physical capital and financial capital playing smaller roles, human capital (the workforce) plays a more pivotal role. As with real-estate and finance, as firms grow and evolve in their given field, it make more and more sense to invest in building leading-edge capabilities in human capital development (HCD). [see longer blog on topic]
There’s one critical difference. While financial and real estate management have always been important activities, these activities are ancillary to most business models. In contrast, HCD is central to most business models.
A primary purpose of organizing a firm is to enhance the performance of employers, vendors, and key suppliers—to get them contributing more under the umbrella of the business than they could as outsiders. Otherwise, there’d be no rationale for organizing the firm in the first place. While other functions have historically shadowed the HR function, HCD is, definitionally, a central concern. The potential returns on investment in improving HCD capabilities are enormous. And, when you consider how much untapped potential we have in the workforce, the potential swings in performance are enormous.
Watch the HCD field. In particular, watch the technology driven functions, not because these are more important, but, because they’re today’s shiny objects. As such, these areas attract money and talent that traditional HR, education, and learning fields simply haven’t seen in the past. HCD is not a bullet list item on a beleaguered HR manager’s agenda. HCD is everyone’s business now.
