Why HR owns half of the economic growth equation

Is HR taking viewing its role too narrowly?
Does HR view its role too narrowly? (Photo: Pixabay)

Imagine the human resource professional walking through the hallways knowing that she was responsible for half of her company’s growth.  Would knowing this change the conversations she had, the questions she asked and even the data she measured and observe?  Wouldn’t it impact her entire perspective?

Economic Growth
The formula for economic growth shows HR to have a bigger role in the business than many people realize.

One measurement of a country’s economic growth is its workforce multiplied by financial capital multiplied by productivity. Let’s equate a country’s economic growth with the firm’s incorporated under its flag.

Let’s consider the three multipliers of economic growth. HR is responsible for the firm’s human capital – the very essence of our beloved profession.  It is fair to posit that HR’s wheelhouse includes none of the second multiplier, the company’s financial capital.

The third multiplier, productivity, arguably falls under the responsibility of both Chief Technology and Chief Human Resource Officers.  A portion of productivity improvements is owed to deployment of more efficient technologies.  Another portion of productivity, though, is due to how work is organized, how jobs are designed, and even how workers are incentivized against the company’s culture – all under the purview of HR.

Economic Growth 2
HR owns half the formula for economic growth.

A more aggressive argument would maintain that even the technology portion of productivity is accomplished by employees that are recruited and incentivized by HR.  But we are not haggling over an equation but arguing to influence the mindset of HR professionals by asking if they conduct themselves realizing how much of their company’s economic growth they own?

Bereft of that knowledge, the profession falls short. Armed with the mindset that half of the growth equation falls under its purview, HR can fulfill its true potential in leading their company’s growth.

Knowing this can change everything because if you adjust a canon by mere inches, it changes the trajectory of a cannonball by a mile.

The Least You Need to Know:

  • Three multipliers of economic growth are human capital, financial capital and productivity. HR arguably owns at least half of this equation.
  • Operating under this premise transforms the HR mindset to one of a business mindset with HR expertise.

Vincent Suppa works with startups and investors and teaches graduate courses at New York University. His email is suppa@suppa.org.

© Vincent Suppa 2015