The “Human Capitalist”

By Tom McGuire | September 20, 2018

The “Human Capitalist”: Who They Are

“Human Capitalist” is essentially a state of mind – it is how critical talent in our knowledge economy identify with employment opportunities.  You know who they are.  Top candidates with skills that are in scarce supply. These are experienced, savvy candidates for roles like Software Engineer, Data Scientist, Specialized RN, etc. They are often sought after across multiple industries and geographies. The Human Capitalists for your most important roles take longer, cost more money, and bear higher risks - and rewards - to recruit than talent for other roles.

The competition for talent – and the limited supply of candidates who can perform well in your most critical roles – marks one of the most rapid changes in the talent landscape over the last five years. We're living in the most difficult hiring environment that most of us have experienced in our lifetime. And it’s not only a function of supply and demand.  The mindset of talent has completely changed in this environment.  As you will see in this article, top talent view themselves much more as investors than as employees.

What’s common about these people is their critical importance to their companies.  They are responsible for building and maintaining the intellectual capital that now represents the most valuable asset in the world: proprietary technology and databases, strategic customer relationships, patents, etc.

The “Human Capitalist”: Why Your Business Depends on Them

Human capitalists are very different from most workers; human capitalists generate the intellectual capital that represents nearly 90% of the value of many modern companies. Human Capitalists bring the most essential human capital to their companies. In our second annual study of the DJIA, on average 20% of the roles in a company contribute to 80% of the value of the business. That 20% of roles are those for which winning the Human Capitalists, on their terms, is essential to a company’s sustainable success.

To further define the work of Human Capitalists, these individuals don’t need a leader to define how they should achieve their goals (as in, “here’s how I want you to build a new advertising campaign that goes viral”). Instead, the focus of their work is on solving for and achieving the desired result (later assessing: did that new ad campaign go viral?) Human Capitalists who can consistently achieve the results that will help grow the enterprise value of the business are literally worth their weight in gold.

The “Human Capitalist”: How to Win Them

1. Figure out which roles in your organization are truly “critical” and demand hiring of top notch “Human Capitalists”

The first step is to identify those critical roles in your organization which actually end up driving a hugely disproportionate amount of intellectual capital. To do this, involve a cross-functional team of business leaders who can discuss the organization’s growth plan, the talent implications of that plan, and from there, the 2-3 roles which are most important to its success.

2. Understand how Human Capitalists think

These elite candidates treat their careers the same way that investors treat their stock portfolio decisions. Here's why: for Human Capitalists, employment decisions are investments – they cannot afford to spend months or years in a job that does not add to their future potential and personal wealth.

As with financial investors, they expect a mix of “capital growth and dividend payout” consistent with their investment goals and risk tolerance. “Capital growth” for these candidates is the means to increase their capacity for generating future personal returns. It means their ability to acquire certain experiences, knowledge and skills as a result of this investment (their employment) decision. A track record of successfully “investing” in reputable companies adds fuel to their growth potential.

“Dividend payout” for the human capitalist means reward in all forms such as salary, short and long-term incentives, perks and benefits. Clearly this type of compensation is baseline and must be competitive; it won’t sell the job on its own. Why? The potential for acquiring new knowledge, unique experiences, and innovative skills – the “capital growth” opportunity - far outweighs the day-to-day compensation for these candidates.

Want to get actual data about what the candidates you most desire for your most critical roles really want?  Then it’s time to treat these critical roles like a new product launch.

3. Design and implement a completely different talent acquisition approach

Think of an in-house executive search strategy that goes much “lower” than your typical executive search services. This requires passive candidate sourcing and candidate management techniques like none other – regardless of the job’s “level”. It requires a defined, thoughtful, step-by-step approach to attracting and winning such talent, highly credible, informed and competent (and compensated) recruiters, and a deeply collaborative relationship with hiring managers and interviewers.

Speaking of compensation, the total comp package for the sought after ‘Human Capitalist’ roles must be carefully considered. These are not the roles by which to achieve a company-wide compensation goal of being “75% of market pay”, for example. In fact, these roles might require paying 200% of market for the right talent – and recruiters must have the ability and flexibility to work intelligently within this concept.

4. Don’t take your eye off the retention ball

Human Capitalists routinely reassess their situations, because they can (consistent with their goals). They make a personal and private assessment of where they stand versus where they expected to be when they initially started the job (i.e. initially made their investment). This typically takes place at the 2-3 year mark, when Human Capitalists either quit by choosing another, better “investment” – or “reinvest” by committing to another 2-3 year period of time. This cycle is really no different from that of a financial investor, but much less visible.

Every two years or so, the Human Capitalist will quietly decide to either resign or re-sign.

All this is to say that the old-school approach to talent acquisition and talent management simply isn’t going to work with today’s Human Capitalists. Our advice?  Start with identifying your organization’s most critical business goals and the roles that are most important to achieving them. From there, the way you engage and attract these individuals is markedly different from the way hiring might work in other parts of the business. Evaluating the success of these efforts is essential too - indicators such as passive candidate pipeline health, quality of hire, source effectiveness - become essential KPIs.

Want to pivot your talent acquisition approach and begin winning Human Capitalists more often for your organization?  Learn more about the work we do in this area or drop us a note an get an immediate response. This can't wait.

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