Organizations are realizing that their human capital extends beyond their permanent full-time employees. In today's environment, organizations have expanded their reach to include other groups that are critical in achieving the mission of the organization. These entities include contractors, part-time employees, outsources, interims, temps, consultants, universities, international partners, strategic third-party suppliers, and others.
In a briefing on competitive advantage through people, the London Business School describes key ideas on managing human capital strategically (http://www.bestofbiz.com/briefings):
People are the key strategic resource in an information-based, knowledge-intensive, service-driven economy.
Competing for the hearts and minds of talented people and their knowledge and/or technical expertise is just as crucial as competing for markets and customers.
Rather than just allocating financial capital to competing projects, programs, units, or divisions and leveraging them for a financial return on investment, top managers should also nurture individuals' expertise and initiative and leverage those qualities through sharing knowledge across the organization.
Employees should be seen as more than raw material to be acquired and consumed.
Responsibility for the strategy of developing people lies with the chief executive, the top team, and all managers.
The London Business School also found that leveraging human capital is typically done through social interaction and informal social networks. Managers should therefore nurture these networks and identify key players. For example, at British Petroleum, social networks were developed and encouraged. British Petroleum created cross-unit collaboration and knowledge sharing through online communities and "peer assists/peer groups"; for example, frontline people in one unit were encouraged to contact someone in another unit for advice on a problem or task, and business units engaged in similar activities and facing similar challenges were established (http://www.bestofbiz.com/briefings).
The strategic use of human capital can lead to increased innovation in an organization. For a 2001 white paper titled "Building and Exploiting Intellectual Capital: The Role of Social, Human and Physical Resources," Smith, Collins, and Clark of the University of Maryland-College Park did a field study of fifty-seven public high-technology firms and found that a firm's rate of innovation is a function of the level of intellectual capital in the organization. Intellectual capital, in turn, is predicted based on the level of physical, human, and social capital, and the interaction of these variables with intellectual capital. Smith and his colleagues found that the effects of intellectual capital on the level of innovation were greater when combined with high social, human, and physical capital. Smith indicated that "organizations benefit most from knowledge development capability when they hire smart, well-educated, experienced knowledge workers with strong tie networks and put them in an environment that is rich in physical resources."
David Walker, in his July 18, 2002, testimony "NASA Management Challenges: Human Capital and Other Critical Areas Need to be Addressed" to the Committee on Science, Subcommittee on Space and Aeronautics, House of Representatives (GAO-02-945T), said that "the agency [NASA] is taking on a major transformation aimed at eliminating stovepipes, becoming more integrated and results-oriented, and reducing risks while working more economically, efficiently, and effectively." NASA has developed a strategic human capital plan and is developing an agencywide workforce planning and analysis system.
Across the federal government, one important problem facing agencies is the lack of a consistent strategic approach to marshaling, managing, and maintaining the human capital needed to maximize government performance and ensure its accountability. NASA's strategic human capital plan incorporates strategies, tactical actions, and metrics to support human capital goals. According to Walker, NASA is pursuing the following (GAO-02-945T):
Renewed attention to hiring applicants just out of college and intentions to pursue this even more aggressively in coming years.
Using the Federal Career Intern Program to hire recent science and engineering graduates.
Supplementing the workforce with nonpermanent civil servants, where it makes sense.
Implementing a program to repay student loans to attract and retain employees in critical positions.
Exploring legislative proposals to streamline hiring procedures, make noncompetitive conversions of term employees to permanent positions, offer larger recruitment and retention bonuses, expand use of early retirement, and provide authority for permanent and enhanced buyouts.
Knowledge management has an important role to play in NASA's human capital strategy. GAO identified many barriers that hamper knowledge sharing at NASA. Some of the obstacles were (GAO Report 02-195, January 30, 2002):
Program and project managers believe that senior management support was lacking for sharing lessons learned.
Significant cultural barriers to knowledge sharing exist beyond the difficulties associated with a stovepiped environment.
Non-agencywide incentives existed for sharing knowledge.
Many managers simply lacked time to take part in knowledge sharing activities.
The sharing of lessons learned was not highly valued across the board.
NASA is addressing these concerns. For NASA to continue its journey in creativity, innovation, and space exploration, knowledge sharing activities within NASA and its partners should be central to NASA's mission and human capital strategy.
Besides NASA, other government agencies are making strategic partnerships integral to their human capital plan. The U.S. Department of Interior (DOI) developed their "Strategic Human Capital Management Plan FY2003-2007" (September 9, 2002, http://www.doi.gov/pfm/human_cap_plan/pdf/entire.pdf), which highlights, in part, the importance for "building partnerships with federal, state, and local governments, citizens, and organizations to address landscape issues that transcend individual agency boundaries." In order for DOI to achieve its vision and performance goals, establishing and outsourcing partnerships is an essential piece of DOI's strategic human capital plan.
The DOI is facing many of the same challenges that other government agencies are experiencing. According to DOI's Human Capital Plan, some of these include an aging workforce; insufficient numbers of people with pivotal business and information technology skills; a need for enhanced law enforcement capability; and a need for negotiating and partnership skills among all employees in the field. The plan indicates that partnerships, science, and effective management are keys to fulfilling DOI's mission and achieving its core mission goals in bureaus and offices throughout the department. Partnerships with other entities within and outside of the department enhance communication and extend the department's capabilities.
The DOI's five-year human capital plan centers on integrating the department's employment of the "4 Cs" (consultation, communication, cooperation, all in the service of conservation), and managing for excellence. The plan indicates that due to stovepiping there is an inclination towards hoarding knowledge instead of sharing and communicating knowledge. Knowledge management is an important function that needs to be further emphasized throughout the Department.
The Department of Interior indicates the growing need to deploy a sizeable and diverse nonpermanent workforce. For example, in FY2000, the number of volunteer workers was almost three times the number of employees in DOI's paid workforce. Here again, the importance of reaching out to others and partnering is a key part of the human capital strategy and achieving the Department's mission. The plan cites the Golden Gate National Recreation Area as a case study in partnership building. In FY2002, the park brought in $0.83 for every $1 of appropriated funds through its partnership revenue and volunteer programs. In FY2002, 380 Golden Gate employees worked with over 11,000 volunteers in nearly all of its varied programs. The Plan also states that forest health and wildland fire prevention efforts can only be successful through collaboration with states, local governments, tribes, and other partners (http://www.doi.gov/pfm/human_cap_plan/pdf/entire.pdf).
Building strategic partnerships is essential to organizational existence in today and tomorrow's environments. An organization's human capital strategy must encompass the relationships built both internally and externally. In knowledge management lexicon, this is called human capital, structural capital, and social capital. Human capital is the "brainpower" of the employees. Structural capital is the intellectual assets that can't easily be brought home with the employee (e.g., intellectual property rights, patents, certain databases, etc.). Social capital or relationship capital is knowledge from the customers, suppliers, third parties, or outside partners that can then be assimilated into the organization's knowledge base.
In a November 2001 colloquium on "Developing Global Leaders" at the Federal Executive Institute, "global competencies" was cited as a key area for federal leaders to possess. According to the Winter 2002 issue of The Business of Government magazine (IBM Business Consulting Services, Arlington, VA), a considerable and growing number of federal agencies are involved in international work. The Social Security Administration has bilateral agreements with eighteen nations. The Environmental Protection Agency, U.S. Department of Agriculture, U.S. Customs Service, the U.S. Geological Survey and many other U.S. federal agencies have relationships and partnerships with foreign counterparts. In a 2001–2002 survey conducted by the Federal Executive Institute, 37 percent of U.S. federal executives reported collaborating with other agencies or organizations on international projects. Dana Brower, Terry Newell, and Peter Ronayne from the U.S. Office of Personnel Management recommend that interagency and public/private partnerships need to be strengthened to provide for global leadership development ("The Imperative of Developing Global Leaders," The Business of Government Magazine, Winter 2002).
Developing private-public strategic partnerships has also been acknowledged by the U.S. Army as being important. Major General James Jackson (Commanding General, Military District of Washington, U.S. Army) commented in a radio interview (www.businessofgovernment.org) about the necessity for private sector partnerships: "the Army decided the best way to improve base housing infrastructure is to partner with private firms who build houses." Similarly, he said, "the U.S. Army is good at many things. But some things we're not as good at as the private industry. And so the desire is to get the experts to do the things that they're good at, and let us go back to doing the things we're good at" (www.businessofgovernment.org). In another radio interview, Stephen Perry, the Administrator at General Services Administration (GSA), said that "another part of that reform would be to enable GSA to enter into public-private partnerships" (www.businessofgovernment.org).
University-government partnerships have existed for many years. According to the National Science and Technology Council, "federal support of basic research is focused at universities where the training of young scientists and engineers is advanced synergistically with the creation of new knowledge" (www.ostp.gov/NSTC/html/prd4.html). In President Bill Clinton's Administration, over $12 billion was being invested in universities for research (www.ostp.gov/NSTC/html/prd4.html). Under President George W. Bush, university-government partnerships are also encouraged. For example, President Bush proposed increases in federal investment in assistive technology research and development. According to President Bush's foreword "Fulfilling America's Promise to Americans with Disabilities,"
Rehabilitative Engineering Research Centers (RERCs) are recognized as conducting some of the most innovative and high-impact assistive technology research in the Federal Government. The 15 RERCs are housed in universities and other non-profit institutions around the country and focus on a specific area of research—-for example, information technology access, prosthetics and orthotics, and technology for children with orthopedic disabilities. To advance research specifically targeted to the disabilities community, the Administration will significantly increase funding for the RERCs. (http://wdsc.doleta.gov/disability/htmldocs/new_freedom.html)
The National Science Foundation in the United States believes very strongly in partnerships for innovation. According to John Hurt of the National Science Foundation, the U.S. innovation system is evolving due to the increased role of research in innovation, the demise of large corporate basic research laboratories, the increased role of newcomers and small firms, the increased role of academe (research and education), the importance of public funding for research, and the pervasive nature of information technology (http://www.nsf.gov/pubs/2002/nsfo2060/nsfo2060.htm). According to Hurt, patents granted in the U.S. patent system are increasingly linked to public research, and two-thirds of the cited papers were published by organizations primarily supported by public funding. Various lessons learned have resulted from partnerships between universities, industry, and government (http://www.nsf.gov/pubs/2002/nsfo2060/nsfo2060.htm):
Firms that collaborate with universities report that more than 10% of their products resulted from the collaboration.
Industry wants universities to concentrate on research and education, rather than the development of products.
Small businesses affiliated with academia are significantly more successful than those that are not.
The lasting impact of successful state programs has been the development of the intellectual infrastructure for research and education.
Partnerships between universities and governments and industry and business have been most successful when each partner does what it does best, leaving the remainder of the innovation process to the others.