As the global economy rebounds from the Great Recession, organizations around the world are competing to recruit and develop talent possessing 21St century skill sets. The goal to grow human capital is a high priority for traditional industrialized nations and emerging nations alike—but why?
According to the 2013 Human Capital Report, produced by the World Economic Forum, “the key for the future of any country and any institution lies in the talent, skills, and capabilities of its people—its human capital.”
For the individual, as well as for societies and economies as a whole, “investing in human capital is critical; even more so in the context of shifting population dynamics and limited resources. Understanding and addressing challenges related to human capital is thus fundamental to short-term stability as well as the long-term growth, prosperity, and competitiveness of nations.”
Many countries around the world are suffering from high unemployment rates, and “the global economy is entering an era of talent scarcity that, if left unaddressed, will hinder economic growth worldwide.” This underscores the reality that today’s human capital professionals will have to compete globally to recruit top-tier talent in order for their company or organization to thrive.
A top-tier education system is the engine that will separate countries that produce the talent to succeed in a competitive global economy from the rest of the world. Those responsible for recruiting the best human capital must stay abreast of nations that have invested—or are investing—in better education systems that will provide the talent pool needed for a country’s domestic and international needs.
With the growing proliferation of technology-based online learning, the education playing field may become more level as citizens around the world—via an Internet connection—can attend degree-granting institutions of higher learning—quickly developing and increasing a nation’s high-end talent pool.
Human Capital Index
One of the strategic tools (and competitive advantages) for human capital professionals to utilize is the World Economic Forum’s Human Capital Index. The Index is a new way to capture and measure the state of human capital development around the world.
Traditionally, human capital has been viewed as a function of education and experience. But in recent years, health (including physical capacities, cognitive function, and mental health) has come to be seen as a fundamental component of human capital. Additionally, the value of human capital is critically determined by the physical, social, and economic context of a society because that context determines how a person’s attributes and skills can be rewarded.
The Index is based on four pillars that provide insight as to why some countries rank high in education and others do not.
- The education pillar factors in quantitative and qualitative aspects of education across primary, secondary, and tertiary levels, and contains information on both the present workforce as well as the future workforce.
- The health and wellness pillar contains indicators relating to a population’s physical and mental well-being from childhood to adulthood.
- The workforce and employment pillar is designed to quantify the experience, talent, knowledge, and training in a country’s working-age population.
- The enabling environment pillar captures the legal framework, infrastructure, and other factors that enable returns on human capital.
Let’s take a closer look at the education pillar. This component captures several dimensions of education: access to education and quality of education, which impacts the future labor force and the educational attainment of those already in the labor force. Access to education for today’s children and youth—the future workforce—is captured using net adjusted enrollment rates for primary school and net enrollment rates for secondary school, as well as through gross tertiary enrollment ratios and a measure of the education gender gap. The net enrollment rate captures all children who are enrolling at the right age for that school level. Many people are denied an education due to social and economic marginalization.
The new paradigm of talent acquisition
Because human capital is evolving and changing throughout the world at the micro and macro levels, spurred by greater access to traditional and online education, human capital professionals can tap into a larger, diversified, and culturally astute talent pool that possesses multiple skill sets to help companies and organizations thrive.
“At today’s leading organizations, talent is becoming entirely integrated into business strategies, capital investment and operations,” according to a 2013 Deloitte Global Human Capital Trends report. Business leaders consider talent to be the “critical factor in the push for sustainable growth and the need to manage new opportunities and risks in a more complex—and independent world. As a result, talent is now driving decisions that touch deeply on an organization’s core strategy.”
