Sustainability and Human Capital
All the recent discussions about sustainability have made me wonder about how it applies to my field, HRIS – or better, to the wider area of Human Resources.
If sustainability is to be defined in a simple way, I’ll take the Webster’s dictionary definition, saying that being sustainable is “using a resource so that the resource itself is not depleted or permanently damaged”. If that applies to water and energy, it must also apply to humans.
Sustainability for HR can mean different things inside and outside an organization. Internally, it means taking a good look at employees as an asset. As more and more companies are defining themselves as “knowledge companies,” their employees become “knowledge workers.” And the resource to be conserved is really the knowledge itself. Being sustainable then means to be able to conserve that knowledge, to avoid its loss during the process of replacing the
employee in an economical and non-disruptive way.
However, it is also relevant to look at HR sustainability from outside the organization. If being sustainable means not to deplete resources, we have to look at the value of the individual and at his/her cost to society.
Can we really apply the above definition of sustainability to the HR world and translate its meaning to the specific resources that employees and the workforce represent? To do so, we have to verify that the Human Capital is not damaged, and that it is replaceable at a reasonable cost. So, following this train of thought – how do we measure the depletion (or lack thereof) of the Human Capital?
In other industries and functions, such measure is quite easily accomplished. We can measure the wear and tear of planes, trains and automobiles. Books have been written on how to proceed and what elements are most significant; the fact that the train will not take it personally help us be objective. The train doesn’t care about its own depreciation, nor will be offended by our remarks.
Applying a similar process to the humans driving such trains introduces many different complexities. Pragmatically, individual “depletion” can be measured by a combination of hours worked, vacation taken and training completed. Such measures can then be generalized for teams, functions and groups, providing actionable items. From the organization‘s point of view, relevant skills and competencies can be evaluated against the time-to-retire, compared to the individual “depletion”, and allow a verification of the ease of replacement of the employee.
Speaking in resource management jargon, a high granularity, lumpy acquisition, low storability and controllability implies a “use-it-or-lose-it” bottom line; the Human Capital is a perishable resource. It must be used in the best of ways, keeping an eye on how it will be replaced: Hello, Recruiting and Succession Planning.
Sustainability for HR means the same as everywhere else. It is not just about economic performance, but it is about the impact on the community and on the environment.
For the sake of this blog, I did some research to see how the cost of a single human being can be evaluated. I found about 259,000,000 results, mostly leading to ethic debates on genetic research, slavery and cost versus value.
Only some marginal and humoristic information exists about the actual cost of raising an individual. It has been calculated that the raising a child in the US has a cost close to $300,000 (USD), not including college tuition (evaluated by the College Board in 2011 at about $160,000 for an average of four years). That brings the total to $460,000 (USD).
Yet, we still have to account here the society costs. City program investments (such as kindergartens, playgrounds, libraries and schools) and the family investment (missing wages of the caregiver, whether it is a parent, a grand-parent or external hired help, keeping in mind that missing wages also have an impact on health insurance and retirement bottom line) should somehow also be accounted for.
Given such costs, should it come as a surprise that occidental civilization is facing a sharp decline in birth rate? A recently published statistic  reports a 2011 birth rate as low as during the Great Recession in the 1920s (there are no records available from before then). The tie between economic distress and birth rate appears clearly: if the economy is slumping, we become more conservative with our spending — and families need women to help generate an income.
Barefoot and Pregnant is not a glamorous situation anymore. Nor has ever been.
Once established that there is a birth rate decline, we are ready to look at how to evaluate it. What does it means to society, to all of us? The jury is still
out, but it is easy to see that it implies a complete shift of society’s age structure. History cannot help us, as this situation has never arisen before, but it is logical to expect health and pension funds to be suffering from this.
Beyond this, what will it mean for the future of the workforce? A reduction of locallabor workforce by a third (as forecast by the Population Reverence Bureau for Japan, Italy and Germany) must have a heavy impact on any nation’s immigration policies, economic plans and growth.
At this point, it is fair to point out that the investment in Human Capital is done by private citizens, but the true ROI is for society at large.
As HR professionals, we are on the line to ensure that the sustainability and development of such a valuable and rare resource. Any worthwhile investment
has to be protected, grown and supported. It is true for industries and commerce, and it holds true when we look at Human Capital. As cities, countries and nations support citizens, educate children and look after public health, HR skills become more valuable for those in public service.
Speaking of Human Capital and of its management, the economical point of view must be supported in a civic and ethical way. It isn’t a matter of being nice, but of looking at employees as an asset to maximize, rather than a cost to minimize. Doing so is the only way we will be able to capture the skills, knowledge and
experience of a vastly diverse population, developed at high cost by our education system. 
Diversity programs are not just supporting compliance; it has multiple facets. Diversity isn’t about allowing everybody to have a say; it is about recognizing and capitalizing on the value such diversity brings. The relevancy of the Human Capital is closely tied to the multiplicity of voices, ideas and experiences it offers. It resides in the accumulation of each person’s soft skills with their hard-earned technical skills, making the workforce as diverse and rich as each of its
Losing sight of this runs the risk of spoiling the most valuable asset a nation has – and at the same time, the nation’s ultimate reason for existence: its citizens.
In order to apply any fancy theory to the real world, we must identify a win/win/win solution. If the company wins, if society win – the employee must also find “what’s in it for me” answer in a successful program… all protagonists must get a cookie, otherwise interest fades. It’s like a child’s birthday party.
In a real example, Johnson Precision (NH) is a manufacturer of precision plastic injection components.
A special-needs workers program has been put in place to integrate them in the workplace, supporting non-traditional employees to work side-by-side with their co-workers in every department, with the same expectations as everybody else. The wins are on all sides. On the employees side, special-needs workers received training and a good pay, while “traditional” employees gain confidence and proficiency by training the new comers. The company gained not only tax benefits (yay), but also credibility with customers for its social responsibility, as well as long term, productive employees. And society? Ensuring integration of special needs citizens is a pain point, and such a program helps to make them productive and self-supported.
In return, the win, win, win results gained the program a top-down endorsement that is ensuring its continuation and potentially its expansion. 
We have all heard multiple times that “employees are our most important asset”, isn’t it time we understand what we mean and act on it?
This is the value that HR can bring to the table. Know your employees, know your data and forecast the changes, supporting the incredible investments that society and families have done in people.
[This content is also availabe in a different format on my blog, http://chiarabersano.blogspot.com/]