The Ear of Human Resources

The emergence of Human resources as the most prominent factor of production is relatively recent. This has happened as other factors of production such as Land, Capital, and enterprise are no longer seen as scarce.? Let’s quickly examine this phenomenon.

Land – there is a systemic decline of value for Land-centric/resource-based enterprises, it can be seen in the change of most valued companies in the last 50 years. While 50 years back, the list of most valuable companies was dominated by companies having control or ownership of natural resources, now it is largely dominated by companies that are enhancing human ingenuity and capability i.e. idea based companies. This change is primarily due to the growing human population and our efforts to engage people in meaningful economic activity. Agriculture and resources-based enterprise has limitations e.g. if we engage everyone in agriculture we will run out of land and resource-based enterprise does not generate so many job opportunities. New-age organization (Such as IT firms and innovation organizations) which creates economic value based on human creativity and ingenuity on the other hand do not require much land e.g. a campus spread across 50 acres of land may create economic opportunity for about 30 thousand people or more. That is the reason all sensible governments are chasing investment from such companies by offering land for ventures for free or at a very nominal amount. Which government can afford to say they do not have adequate land for allotment say if Tesla, Google, or Meta wants to establish a development center in this region/country? ?

Capital – There was a time when capital was limited, and banking was a privilege of a select few. Democratization of banking and the emergence of alternative sources of capital such as Venture capitalism, crowdfunding, Angel investors, and govt aid for start-ups in most economies is making capital scarcity a matter of the past.

Enterprise – A definitive shift towards a knowledge-based/ Idea economy is unshackling enterprise from the grip of a few networked/ privileged people. It is also not practical anymore for only a few to address the ever-increasing economic opportunities.? What also adds to this phenomenon is a lot of kids across the globe getting access to education. From street vending to start up to establishing new-age organizations, every opportunity is getting matching candidates and more.

Let's now consider the fourth factor of production i.e. Labour. All things being equal and accessible as explained above the only factor of production that distinguishes a highly successful organization to marginally successful organization to unsuccessful organization is how an organization acquires, organizes, and manages its human resources.? ????

We have ushered into the age of prominence of human resources. It is enabled by 4 key factors. A. The emergence of the global language of business literally i.e. English/French and practically by common financial and non-financial instruments of business i.e. credit, LoC, Bank Guarantee, Sovereign Guarantee etc. ?B. The colonization of most countries by European powers has standardized and institutionalized science education. So, now a Korean engineer and an Argentinian engineer speak the same concept though in different mother tongues. C. Post 2nd world war, we have been able to establish a universally acceptable order for migration of manpower from one country to another. Thereby opening a valid window for covering skill gaps in given countries. D. Emergence of international and national labour institutions has established minimum working standards and laws have been enacted on the subject across all countries. It gave further impetus to global mobility of manpower.

Let’s examine transnational/ multinational organizations. Even though international trade has been prevalent for at least two millennia, the concept of multinational companies is relatively recent. European colonization, public listing of the company’s growth imperative, and finally technology development have aided to creation of multinational organizations. International trade treaties, the development of a reliable global supply chain, and the maintenance of peace at large across the globe are enabling Multinational organizations to sustain and flourish.????

A successful international organization must solve the talent puzzle. It must select the most optimum talent mix with attention to cost and a reliable supply chain to sustain profitable growth. Among the most important decisions pertaining to human resources that the organization must make is what aspect of work be insourced and what work should be outsourced. ??

With a global footprint, insourcing gives an additional option of onshoring a particular type of job and offshoring the rest of the jobs. E.g., an international organization can take a call that it would keep the product development, R&D, and sourcing at its headquarters or country of company’s origin and offshore center of excellence pertaining to legal, Human resource’s function, financial management and reporting, regional sales and Marketing, etc.

The development of reliable means of transportation and broad base agreement on global trade enables outsourcing for international organizations like never before. ?It is this global economic framework, that allows global centers of excellence, the current trend is technology gets developed in Western countries while manufacturing is outsourced to countries in the East. Over a period, countries in the East also catch up on the development of technology, and the cycle repeats. ???

There is the next set of human resources decisions that contribute to the continued success of international organizations. However, there is a precondition, first and foremost organization must determine what is its most critical competency, and among its employee base who are most critical to its success. ?At this point, an organization must put its faculty on talent management. Determining the right mix with view on diversity of age, experience, gender, ethnicity, and spread of diversity across different levels of organization. Creating fair and competitive total rewards for employees across the globe. Organizations must constantly invest in skilling their talent pool to keep them competent for today's jobs and roles in the future. ?Finally, its ability to identify and retain a pool of future leaders and map such talent for emerging opportunities is important. While these statements look like statements of intent and wish lists, each one of the activities would require massive effort and investment. They say “No two humans are the same, similarly no two organizations are the same” The biggest mistake the leadership team of an international organization should avoid is to superimpose a success template of a different organization on itself.