According to the Forum for the Future, we will improve the quality of our lives when we derive goods and services from five types of sustainable capital. The Forum’s focus is on energy and environmental sustainability, but you can see – in their five capitals model – a structure for the Human Resources function of the future.
The five capitals future
Enough has been said, even on this site, about the demise of legacy HR. Saying any more is beating a dead horse. Whatever HR will be called in the future, the human capital will need some integrating principle and function. It will evolve out of legacy HR, but it will succeed only if it derives from the five types of sustainable capital.
The office plan
There have been many obituaries for HR management. Human Resources Information Systems (HRIS) will certainly bring a paradigm shift in HR functioning in any size company. PEOs and other functional models will move HR tasks off premises. Employees will realize more self-empowerment in their own assessments, training, and benefits. And, HR Specialists and clerical duties will take place in virtual worlds.
However, at some core level, business organizations need a center. Someone has to feed and audit the HRIS, network with the PEO, or cultivate a culture of engagement. Depending on the size of the employee base, this HR control center will grow as a team of better-educated and redirected strategists.
The five capitals
Visualizing models always simplifies things. And, this illustration suggests that the capital areas are distinct and bordered. But in fact, these borders will be permeable, and osmosis will blend these capital forces, giving and taking depending on fluctuating strengths.
- Natural capital includes the energy, materials, resources, and environment required to produce products and deliver services.
- Social capital refers to the value added to the organization by human relationships, partnerships, and co-operation.
- Human capital consists of the health, knowledge, skills, abilities, motivation, and intellectual property of the individuals employed.
- Manufactured capital covers the business’s material goods, tools, technology, machines, buildings, and all forms of physical infrastructure.
- Financial capital is evidence – in the form of currency – of the enterprise’s assets, productive power, and value of the other four types of capital.
The intent of the Five Capitals model is to persuade corporations that sustainability initiatives are good for the business as a whole.
HR has a place at the center.
To achieve and sustain this business model, you need a focus of activity, strategy, application, and administration. The shift in culture needs a place to operate and a decision-maker in charge of the evolving culture. This new role for Human Resources leadership takes a new education and a deep familiarity with all aspects of the business. It is not enough to know the vocabulary of finance or the terminology of operations. It is not a subject matter of study so much as it is an immersion in process and technique.
The HR office of the future will draw people from non-traditional sources. Staff will migrate to HR from process specialties because they are drawn to the model’s mission. HR personnel will organize around new principles of accountability and productivity. HR leadership will integrate and not administrate. It will intellectually have to integrate information, policy, and process across silos and operations that HRIS can only do digitally. Long story short, there will always be a need for someone to feed and read HRIS as well as someone to put its analytics into play if the five capital assets are to grow.
