This chapter clarifies the traditional concept of Human Resources with Human Capital. Human Capital views people as assets for what knowledge and skills they bring to a company. While the term, Human Resources, seems like a synonymous definition with Human Capital, over the past few decades, HR has developed into a term used to describe the management of people. Human Capital, on the other hand, recognizes a business leader’s need to surround themselves with other knowledgeable people who possess experiences in specific areas of specialization to help their company succeed. In short, business managers manage projects, materials and time. Business leaders inspire and guide people.

1. MANAGING HUMAN CAPITAL
Mini-MBA Course
Ch.3
Prepared by:
Amr Abdel-Aziz
Computer science, Helwan University
Amr.abdulaziz@outlook.com

2. DEFINITION

When one hears the term, Human Capital, it is
often confused with Human Resources. Human
Capital is viewing people, your employees, as
assets for what knowledge and skills they bring to
your company. While the term, Human Resources
[HR], seems like a synonymous definition with
Human Capital, over the past few decades, HR has
developed into a term used to describe the
management of people. Human Capital, on the
other hand, recognizes a business leader‟s need to
surround themselves with other knowledgeable
people who possess experiences in specific areas
of specialization to help their company succeed.

3. HUMAN RESOURCES

In large corporations, the Human Resources department
usually administers all the management issues related to a
company‟s employees. This can range from interviewing and
hiring a new employee, to employee training, to administering
company policy and paperwork, to implementing performance
reviews, and finally to firing those people who are not
productive. While all of these tasks must be done for a
company to function, this is a very authoritative and potentially
destructive approach, since this kind of people management
does not encourage inspiration, nor does it recognize the
value of an individual‟s worth. What is even more alarming is
some companies will hire an outside HR specialist to do this
type of management for them, further separating the new
employee from the culture of the firm.

4. STRONG LEADERSHIP

Strong leadership recognizes employees and their
talents as Human Capital, especially when it comes
to the amount of innovation one can create. What
is different in the business leader‟s approach is how
they include their team and value individual input in
the management process. Unfortunately, many
managers get caught up in achieving the necessary
tasks and forget the human needs.

5. ORGANIZATIONAL ENVIRONMENT

Organizational environment is about how a
company is organized and how a business leader
establishes tone through people leadership. It
describes the attitudes, beliefs and values of a
company which influences employees, Human
Capital, and their behavior. In other words, it is the
personality of the company.

6. TONE OF OE

The tone of an organizational environment will have
its roots based in the mission statement of the
company. It is from the stated mission employees
establish their shared goals and beliefs. From the
mission statement, a business leader takes their
basic cues, then establishes the focus from which
all decisions and attitudes are developed.

7. ESTABLISHING TONE

As a business leader, you can establish a positive and
proactive attitude by being the empowering center of your
team. Ask for and expect creativity from your
employees. Listen more than you talk. As a general rule,
consider how you might be actively listen for about 80% of the
time in a conversation and only speak about 20% of the time.
This means that asking strategic questions becomes a
primary way of communication. The act of explaining becomes
rare, as belief in the potential of people drives your thought
process. Welcome views that conflict with yours because you
just might learn something new. Be encouraging, and support
your employees as they work through a project. Be
patient. Recognize and reward success, as well as recognize
and learn from failure. And dare we say it? Have
fun. Remember, to be a business leader, instead of a
business administrator, you are the inspirational center of your
organization.

8. EXAMPLE [B]

Mrs. Linda Sparks was a respected school principal who had been in her
leadership position for over twenty years. What made her guidance so
effective was Mrs. Sparks loved what she did. She truly had a passion
for the teaching profession and a love of learning. One aspect that made
her the inspirational leader of her faculty and of her students was her
positive and upbeat attitude. Every morning she invited her students to
join her in broadcasting the school-wide announcements, and at the end
of each broadcast, Mrs. Sparks and the students would encourage their
peers to do their “Tigerrrrrrrrrrr best!” Why their tiger best? Well, the
school mascot was a tiger. However, what she meant by this and what
the faculty and children understood by this is Mrs. Sparks expected
excellence and effort from each person every day. She believed in the
Human Capital with which she surrounded herself every day. Mrs.
Sparks understood that people respond to an inspirational, positive tone,
and that is what everyone in her school did. Through Mrs. Spark‟s
proactive guidance, her people were inspired to be excellent and to be
progressive.

9. INDIVIDUAL PERCEPTION OF ENVIRONMENTAL CULTURE

Not only is the organizational environment driven by
an inspirational leader, it is also driven by the
perception of individuals based on what they see,
hear and experience. The leader‟s goal is to have
these perceptions described similarly throughout
the organization. Furthermore, environmental
culture mostly appears in the simplest tasks. Mrs.
Sparks understood this.

10. CONT. EXAMPLE[B]


As the inspirational leader of her faculty and school, Mrs. Sparks
communicated with her employees in regularly scheduled meetings,
as well as made time to meet with each person personally to check
on their progress, to answer any questions they had, and most
importantly, to serve as their mentor. Her faculty knew what her
expectations were and also knew that she respected them for the
individual knowledge and skills they brought to their work. Her
faculty teams were organized by grade levels and were given the
encouragement to discuss their students‟ performance and formulate
their own approaches for improvement. At these meetings, Mrs.
Sparks also served as a resource for her teams by finding and
sharing research and strategies they may want to consider. This is
an example of a leader guiding her people, and it reinforced the
positive, creative environmental culture she established. The
business leader plays an important role in the forming of an
organizational environment, because they are the person who is
leading people and guiding their Human Capital.

11. CONCLUSION

Nevertheless, it is hard to share the same values
throughout a company, but by trying to do so
increases productivity. Realistically, not all cultures
impact employees. Therefore, every leader, no
matter if they are managing a small or a big
business, needs to make sure that the
values, goals, and attitudes of the culture are well
communicated for optimum productivity.

12. THE MOTIVATION

Motivation is what inspires people for action. When
an employee starts work at a new company, in the
beginning they are very excited about it and
extremely motivated to work at optimum levels.
However, as time passes their motivation naturally
begins to drop, and they look for new ways to
become inspired. They need to keep their
motivation level up to perform efficiently. Here is
when the business leader is charged with inspiring
their team.

13. 
When you are managing your own small business it
is easy to lose your motivation sometimes,
especially if you are running a business alone. Lots
of stress and pressure can wear you down, which
can lead to a drop in your levels of motivation.
Therefore, it is necessary for you to make a
personal motivation plan. There are numerous
practical tips that you can implement to boost your
everyday work-life, which will help you maintain
your motivation and keep up the good spirit!

14. PRACTICAL TIPS

Set measureable goals for yourself to see how you
progress: Long term goals help the business to go in the right
direction whereas short term goals help to accomplish the long
term goals. If you want to keep track of your goals write them
down on a timeline and refer to them regularly to see whether
you are on the right path or you whether you need to change
anything.

Remind yourself what the source of your inspiration
is: When you are running your small business the everyday
stress might make you forget why you wanted to start the
business in the first place. Remind yourself what inspired you to
do what you do. If you had your first idea after talking to a certain
person, then meet this person again. If you were inspired during
a seminar, look for your old material from this seminar or attend
the seminar again! Remember what your business means to you
and you will certainly manage to win your motivation back!

15. PRACTICAL TIPS

Be organized and have a daily routine: If your business life is
unorganized you can lose motivation. It is easy to feel
overwhelmed when your desk or your calendar is a mess.
Establish a general order around yourself and your workplace
and set up simple rules that you should follow. Make a regular
schedule and you will see your motivation will come back again.

Network: Isolation is one of the most difficult challenges of
being an entrepreneur.
Make connection with other small business owners; share your
ideas and methods for maximizing your motivation. You can
renew your interest in your business by sharing your experience
with other and hearing about other‟s experience.
Once a leader has righted his/her organizational plan, it is then
time to synergize using Human Capital. No where is this more
evident than in team brainstorming.


16. TIME OF BRAINSTORMING


Human Capital is at its best when members of a team
get together for problem solving. Sometimes, we think
of all possibilities, but we still arrive at the same solution.
What if there was a way to think out of the box and find
the right solutions in a different way? Most of the time,
we see difficulties in a situation/task because we always
look at problems from the same angle, which prevents
us from finding creative solutions. Using different
brainstorming techniques in groups, or alone, can help
us in solving problems and creating new ideas. Consider
each employee as a book full of ideas not yet written.

17. GROUP BRAINSTORMING

When you brainstorm in a group, you must first make
sure that everyone in the group understands what the
focus is and that everyone agrees with it. Keep the
objective simple and set up a time limit. Then when you
start the actual brainstorming activity, explain the
concept to your team. Everyone should suggest ideas
randomly, and your job as the leader/facilitator is to
encourage the whole team to take part. Write down all
the suggestions on a piece of paper that everyone can
see. When the time is up, look at the collection of ideas
and categorize them, together with the members of the
group. It is very important not to leave out anybody‟s
idea and no one should feel left out because if they do
they might be reluctant to contribute the next time.

18. 
When you are done with the actual brainstorming
you will come to the most important part: the
implementation. Talk about the next steps and
agree who is responsible. Make sure that you have
a positive outcome after the session; members
should feel that their effort was valuable. If they feel
that their ideas will be implemented, they will be
more motivated to work towards the final result.

19. PERSONAL BRAINSTORMING

Personal brainstorming can be very useful, whether
you have to organize your thoughts, take a
decision, plan a presentation or start a new project.
Studies show that when individuals brainstorm
alone they generate more ideas than when they are
in a group. However, you might not develop your
ideas fully when you are on your own, because you
are lacking the experience of the group.

20. BRAINSTORMING TECHNIQUES

To make your brainstorming job easier, there are few
great brainstorming techniques you can use when you
want to create new ideas. The most important thing you
have to do when you want to solve a problem or come
up with a new idea is to THINK OUTSIDE THE BOX!

Most of the time it is very challenging to think as though
we are someone else or we are in a different situation.
However, if you are caught with a problem you don‟t
know how to solve, these techniques are proven to be
helpful:

21. BRAINSTORMING TECHNIQUES

Face the problem in a different place: Imagine you are in a different
country or geographic location; think how you would solve the problem if
the risks were no longer present! Or you can ask yourself – what would
you do if you had no fears?

Think of yourself as a different person: How would you approach the
situation if your gender was different or if you were older or younger? How
would you try to solve the situation if you came from a different culture?

Start with the ideal end state in mind: considering the ideal situation gets
you out of the band aid approach that most people fall into when trying to
fix a problem. Too often, the problem is only a symptom to a greater
systemic issue. Going beyond the problem into the systemic view starts
with creating the ideal situation. Working backwards from there allows you
to resolve future similar problems before they occur.

Using these techniques can bring new energy and inspiration to a project
and will encourage your team to develop creative solutions to help your
company be and stay successful.

22. WEAK AND STRONG CULTURES

even though every business culture is different, an
organization's environmental culture can generally
be described as being strong or weak. A strong
culture will have focused facilitative leadership;
whereas, a weak culture will have ample
management, without much leadership. Within a
weak culture, employees are merely numbers
following rigid rules. The concept of human capital
may only exist in theory.

23. 
Conversely, in strong cultures, employees„ knowledge and
creativity is central to the success of the
organization. Specific processes are in place to ensure that
knowledge starts within the minds of the employees. In order
to facilitate the knowledge transfer, the key values and visions
are shared throughout the organization and all employees
believe in them. Everyone knows what they have to do and
what is expected from them. Usually, people working in a
business with a strong culture are more dedicated to their
work and respond wisely and more quickly than they would in
a business with a weak culture. Regardless of the current
culture, the dynamics of human beings makes culture a living
entity. Successful leaders are constantly working to further the
thought processes within their organization. For example, a
basic action taken by successful leaders is to change their
language. Instead of the common greetings like hello or good
morning, they would ask, „what have you learned today“?
Such language shifts the thought process of those involved
and transform a culture into a learning organization where
human capital evolves around knowledge creation.

24. CONTINUOUS CULTURE DEVELOPMENT
The creation of a culture and how it is carried on is quite
organic. The founder and/or the boss of the business is the one to
define the culture initially with their personality. The traditional
approach tends to have this individual set out values that should
be shared, spread and carried on. He/she needs to clearly
communicate the organization's goal and what the organization
itself should be. Unfortunately, this paradigm of thought tends to
create more animosity. Most people don‟t like being told what
values they have to follow and reject conformity. Unconventional
wisdom opens the discussion about organizational values to all
employees and stakeholder groups. A collaborative process
creates partners in knowledge creation. In this case, the new
knowledge created is an authentic set of shared values. Just the
process of the open dialogue creates a culture that reflects
principles of human capital.

25. PRESERVING THE ENVIRONMENTAL CULTURE

A healthy organizational culture starts with selecting the right
employees. You should only hire people that really fit into the
dynamics of the company, and the organization must help the newly
recruited workers to learn the culture. Finding the right people, or
Human Capital, to work for your team is one of the most important
decisions of any business leader. This recruiting process consists of
careful planning and preparation, the interviewing process, and
finally, the hiring of the right person for the team. Recruitment
planning is having the individuals who are already on your team
identify the talents that already exist among the group and compare
those with what talents are needed by the company. If there is
already a suitable person on the team, then you will not need to
search for additional people from outside the company. Should the
team agree someone from the outside is needed, then planning for
that person begins. Remember, you are encouraging input from your
employees in this process; however, as a leader you may have to
make the final decisions once everyone‟s ideas have been shared.

26. CONCLUSION

Lastly, in order to perform well and empower
yourself and others, you need to recognize your
personal strengths and the strengths of your
team. Unfortunately not many people know what
their strengths really are. The best advice is to
follow your passion: Simply do what you love to
do. As for your employees, encourage them to do
the same and use their knowledge and skills to
move the company forward.

27. THANKS