Leveraging Human Capital: Are Your Employees Getting Enough Sleep?

Publication: Journal of Applied Psychology (Online First Publication, 2015)
Article: Sabotaging the Benefits of Our Own Human Capital: Work Unit Characteristics and Sleep
Reviewed by: Ben Sher


Human capital refers to specific employee characteristics that can make a business successful. Traditionally, industrial-organizational psychologists have used the acronym “KSAO”, which stands for knowledge, skills, abilities, and other characteristics, to classify an employee’s work-related capabilities. When these KSAOs are useful for an organization’s overall economic outcomes, they are considered human capital.

Organizations often use sophisticated selection systems, or elaborate training programs to make sure that their employees have the right type of human capital that can make them economically successful. But just because the employees have the “right stuff”, does not mean that business outcomes are determined. Organizations also must find ways to harness the power of their human capital and get the most out of it. For example, if an organization pushes employees to work harder, it might think that it is spending more of its human capital—getting more bang for its buck.



Researchers are aware of the tendency for organizations to try to squeeze more out of its employees, and ostensibly get more out of its human capital. They call these efforts human capital leveraging strategies. But do they work? An organization that pushes its employees to the extreme may be leveraging human capital, but is this really an effective strategy that will lead to better business outcomes? Researchers (Barnes, Jiang, & Lepak, 2015) have released a new model based on existing research studies that predicts what happens when organizations try to squeeze a little more out of their employees.



The authors discuss five different strategies that businesses use to get the most out of their human capital. While they agree that these strategies may initially enhance team performance and provide an initial boost in productivity, they caution that these same strategies may lead employees to get less sleep (in terms of time), and worse sleep (in terms of quality) at night. Sleeping problems are associated with many negative workplace outcomes, such as bad moods, “cyberloafing”, decreased productivity, and more unethical behavior.


These are the five strategies that may eventually lead to disrupting employee sleep:

  • Extended shifts: With longer shifts, organizations get more labor out of their preexisting workforce. Longer shifts also mean less time off the job, and fewer hours to sleep. Long hours may also more readily contribute to irrecoverable exhaustion.
  • Night shifts: When companies keep working through the night, they add to the hours of money making. Yet night shifts are notorious for disrupting circadian rhythms and employee sleep.
  • Schedule instability: Organizations may rotate employee through different time shifts, especially if there are some shifts at undesirable times. These changes may help maximize working hours for the organization, but the changes can wreak havoc on employee sleep patterns.
  • Norm for work over sleep: An organization might communicate the message that they value when their employees work long hours and forgo sleep. For example, an employee might be praised for work emails sent at 1am. Sleep will be compromised under these conditions.
  • Norm for constant connectivity: Organizations might urge employees to be constantly connected to their work email or smartphone. Sleep will be compromised when work intrudes on an employee’s time off.



The authors expect all five of the above techniques to lead to short-term productivity. This is not surprising. After all, each of these techniques leads to employees working more hours and sacrificing their personal time. Any organization that works employees harder with disregard for their health and well-being will probably notice a quick uptick in business success. But in the long run, this strategy is doomed to fail. Human capital is just as much “human” as it is “capital”. Organizations that do not consider how their policies affect the health and well-being of their employees will not be able to get the most out of these employees in the long run. If your policies are making your employees sleep deprived, you can expect long-term failure.


Job Redesign: Don’t Sweat the Small Stuff (IO Psychology)

Topic: Talent Management
Publication: Harvard Business Review (JAN/FEB 2013)
Article: Redesigning Knowledge Work
Authors: Martin Dewhurst, Bryan Hancock and Diana Ellsworth
Reviewed By: Susan Rosengarten

TR_PR_7_30_10_09_-_290More and more organizations are finding ways to outsource busy work, enabling employees to focus their time on tasks that require specialized knowledge and expertise. Skilled laborers like engineers, scientists and salespeople are harder to find these days, and according to research by the McKinsey Global Institute, a talent shortage in these areas is going to get worse in the coming years. Therefore, organizations are redesigning high-value knowledge job roles and contracting external firms to take care of routine operations so employees can focus their attention and efforts on work only they can perform. This not only helps to address talent shortages but according to Dewhurst, Hancock, and Ellsworth it also lowers costs and increases job satisfaction. So how do you go about maximizing your human capital and making the most of your organization’s talent? Well the authors recommend a couple of easy steps any HR practitioner can follow.

Step One: Perform a gap analysis. Identify talent with ‘must have skills’ your organization presently has and consider how your workforce and your organization’s needs will change over the next five years.

Step Two: Refine job descriptions where talent is scarce to best leverage your resources. Identify the essential functions your employees are hired to perform, and cut out responsibilities that can be delegated elsewhere.

Step Three: Develop ways to fill the skills gaps. Outsource work to contractors that do not require your employees’ specialized expertise or in-person interaction.

Step Four: Rewire the process for knowledge and talent management. Change your organizational culture to support these operational changes and learn how to integrate these contractors into your organization. Identify top performing remote hires and further develop and utilize their skills. Find ways to capture keen insights these hires have and facilitate knowledge transfer within your organization to employees who could benefit from this information.

Dewhurst, M., Hancock, B., & Ellsworth, D. (2013). Redesigning Knowledge Work. Harvard Business Review, 91(1), 58-64.

human resource management, organizational industrial psychology, organizational management




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A Closer Look at Human Capital as a Competitive Advantage (Human Resource Management)

Topic: Talent Management, Turnover
Publication: Academy of Management Review (JUL 2012)
Article: Rethinking Sustained Competitive Advantage from Human Capital
Authors: Benjamin A. Campbell, Russell Coff, & David Kryscynski
Reviewed By: Susan Rosengarten

All organizations want the secret to retaining top talent; I challenge you to find me one that doesn’t! Turnover and new-hire training is costly and organizations are always looking to curtail their expenses and get the best bang for their buck. Finding job candidates with the right mix of knowledge, skills, and abilities can be tough, but getting the right people to stay once you’ve found them can be even tougher.

Conventional wisdom suggests that a firm’s human capital can be a source of great competitive advantage, but only if the variables of employees’ jobs restrict them from seeking employment elsewhere. Employees with general human capital, or knowledge and skills that can be applied in other settings, have greater market value than employees with firm-specific human capital, which does not transfer to other settings quite as well. However, Campbell, Coff, and Kryscynski (2012) suggest that there’s more to the story than meets the eye and this approach to human capital mobility may be overly simplistic. They say that factors of supply and demand play a crucial role as well. Under the right conditions, employees with firm-specific human capital may be far more mobile and tradable than you might think. Conversely, supply and demand factors can restrict employees with general human capital as well. Specific supply factors outlined in this article include the hassle of having to search for a new job and whether or not an employee can accurately appraise what his skills are worth and would command on the market. On the other hand, demand factors focus on how valuable an employee’s skills are deemed to be by potential employers.

So for all of you managers out there, use this information to your advantage! Compensation designs, employee selections, and job designs can be strategically created and leveraged to create supply and demand constraints and, ultimately, to produce a competitive advantage for your firm.

Campbell, B. A., Coff, R., & Kryscynski, D. (2012). Rethinking Sustained Competitive Advantage From Human Capital. Academy of Management Review, 37(3), 376-395.

human resource management, organizational industrial psychology, organizational management



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Can Mindfulness Make Your High Potentials Higher Promise? (IO Psychology)

Topic: Burnout, Leadership, Talent Management
Publication: The Industrial-Organizational Psychologist (JAN 2012)
Article: Accelerating the Development and Mitigating Derailment of High Potentials Through Mindfulness Training
Authors: R.A. Lee
Reviewed By: Chelsea Rowe

High Potential employees (HiPos) are the highly sought after, cream of the crop, high performing, next generation leaders.  Senior management proactively seeks these stars and then sends them through numerous assessments, coaching, special training, and other rigorous developmental opportunities with the intention of producing a bigger, better, faster, stronger next generation of leadership for their company.  Despite confidence and extra investment in these HiPos’ promise, these shining stars often fail to live up to their fabled promise or worse: burnt out.  So how can companies increase the likelihood of retaining their stars and develop them without burning them out?

Some researchers are pointing to something called mindfulness. Andy Lee (2012) describes mindfulness as “being fully present and aware of what is going on right now.”    Lee ascribes three primary components of mindfulness: 1) present focus – thinking about the here and now, not the past or future, 2) awareness – actively monitoring one’s own thoughts and emotions and, 3) non-judgment – keeping an open mind, allowing one to see things for how they are (without evaluating value).  Lee (2012) suggests that developing one’s mindfulness leads to improved personal well-being (also related to increased commitment and reduced turnover intentions) and social functioning.  Additionally, increased mindfulness may serve to prevent irrational decision making, lessen the need to defend one’s ego, lead to greater empathy, stress relief, and improved mood.

Sounds great! Now what does mindfulness training look like?  Mindfulness is a more widely used concept in the therapeutic setting – only recently is it making its way into the workplace.  While Lee says there are no current standards or best practices for this form of development yet, some companies have already developed mindfulness training programs.  Quality programs will measure an aforementioned outcome (e.g., improving employee well-being).  They will involve some form of coaching and consistent advice towards developing mindfulness, and apply mindfulness principles to work-related challenges.  Value is may also be added by working to specifically identify one’s biases, values, and priorities. Lee (2012) emphasizes the importance of patience – mindfulness does not happen over night.

Lee (2012) says that mindfulness training as a HiPo development tool produces several work-related benefits.  Because it improves one’s capacity to take in and consider information about the current moment, mindfulness training may hasten learning during challenging and stressful situations.  Additionally, mindfulness may help to abate risk of derailment.  These are meaningful outcomes for retaining top quality talent and developing a strong succession plan.  Who couldn’t benefit from a little stress relief these days?

R.A. Lee (2012). Accelerating the development and mitigating derailment of high potentials through mindfulness training. The Industiral Organizational Psychologist, 49, 3, 23-34.

human resource management, organizational industrial psychology, organizational management


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Making an A-Team? (Human Resource Management)

Topic: Selection, Talent Management
Publication: Harvard Business Review (JAN 2012)
Article: Gilt Groupe’s CEO on Building a Team of A Players
Author: Kevin Ryan
Reviewed by: Liz Brashier

In a recent article by the CEO of the flash sales company the Gilt Groupe, Ryan (2012) discusses what makes a company truly successful. (Hint: it’s something we focus on the most!) According to Ryan, a business idea is worth next to nothing – without the right people to implement it. While most companies claim to put people first, Ryan asks a compelling question: “do most CEOs spend more time on recruiting and managing people than any other activity?” The answer is more often than not a “no,” and for this CEO, that’s a big problem. He also challenges CEOs to consider their relationship with the head of HR in their own companies, and to make sure that this person has a real seat at the executive table. The most important thing a CEO can do is build and maintain a top caliber “A-Team” of employees.

Ryan offers other key suggestions for building a high caliber team:

1) Add by subtracting: if employees are no longer productively contributing, then it’s time to let them go and bring new talent in. There is no where to put a stellar new hire if all the desks are occupied – not being utilized productively.
2) Check those references! According to Ryan, most hiring managers value the resume over the reference check, while checking a reference can often provide the most valuable insight into what this candidate’s work is like.
3) Make sure you understand why people choose to leave. Often, it’s because of a manager. If talented employees are choosing to leave, make sure that their manager understands an evaluation for him or her is up next.

The clear message from this article? Put your people first, especially when in the role of CEO. Obsessing over talent while serving as CEO could provide the greatest returns for the company.

Ryan, K. (2012). Gilt Groupe’s CEO on building a team of A players. Harvard Business Review, 90, 43-46.

human resource management, organizational industrial psychology, organizational management


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Increase generic human capital to increase unit-specific human capital

Topic: Organizational Performance, Talent Management, Strategic HR
Publication: Academy of Management Journal (APR 2011)
Article: Acquiring and developing human capital in service contexts: The interconnectedness of human capital resources
Authors: Ployhart, R. E., Van Iddekinge, C. H., & MacKenzie, W. I.
Reviewed by: Alexandra Rechlin

It is widely acknowledged that human capital is important, but does it matter whether the capital is generic (transferable to other organizations) or unit-specific (valuable to that particular work unit and not to others)? In this article, Ployhart, Van Iddekinge, and MacKenzie (2011) assessed both generic and unit-specific human capital in a large fast-food organization. They created and tested a model for how the two kinds of human capital relate to each other and to performance and effectiveness outcomes.

The level of generic human capital was based on the cognitive ability and personality of hired applicants, while unit-specific human capital was based on employees’ additional training.  The authors found that changes in generic and unit-specific human capital were positively related over time; that is, as generic human capital increased, so did unit-specific human capital. In addition, changes in unit-specific human capital were positively related to changes in unit service performance behavior (efficiency, service, quality), and changes in unit service performance behavior were positively related to changes in unit service effectiveness (unit financial success).

In other words, hire employees who are smart and whose personalities fit with their jobs.  This will establish strong bench strength and will set the organization up for success as employees are trained to build the skills necessary to excel in specific roles. 


Thinking about Building the Box: Practical Intelligence & Entrepreneurs

Topic: Job Performance, Potential, Talent ManagementPublication: Personnel Psychology (SUMMER 2011)Article: The Practical Intelligence of Entrepreneurs: Antecedents and a Link With New Venture GrowthAuthors: Baum, J. R., Bird, B. J., & Singh, S.Reviewed By: Thaddeus RadaAlthough general intelligence has been found to be a good predictor of potential success in a job, recent research suggests that other, more specific forms of intelligence may also be useful in predicting job success. One aspect of these other intelligence constructs that is particularly encouraging is that they can be developed. As such, if a particular type of intelligence were demonstrated to have an especially positive impact on individuals’ success in a given field, then education and training in this field could emphasize cultivating this form of intelligence in the people studying it. The current study, by J. Robert Baum and colleagues, examined one of these specific forms of intelligence, practical intelligence (PI), and its impact on the success of entrepreneurs. The authors focused on entrepreneurial success primarily because of the impact that entrepreneurs can have on business growth and job creation, qualities that are particularly important in light of current economic conditions.PI emphasizes the application of knowledge to novel problems or situations. In this sense, PI, although it is a distinct construct, can be roughly equated to common sense. The authors proposed a model in which the positive relationship between PI and industry experience, and PI and venture experience, are enhanced by two modes of learning: concrete experience and active experimentation. (more…)

Want to increase performance? Take a look at Psychological Capital

Topic: Performance, Talent Management, Human Resource Management
Publication: Personnel Psychology (SUMMER 2011)
Article: Psychological capital and employee performance: A latent growth modeling approach
Authors: Peterson, S. J., Luthans, F., Avolio, B. J., Walumbwa, F. O., & Zhang, Z.
Reviewed by: Alexandra Rechlin

You’ve probably heard about human capital being related to performance, but what about psychological capital? Human capital refers to the skills and knowledge that employees possess which are relevant to the organization. Psychological capital, however, is a higher-order construct consisting of efficacy (confidence), hope, optimism, and resilience. The study described in this article explores the variability of psychological capital within individuals and the relationship between psychological capital and performance.

Over a period of seven months, the authors assessed 179 financial advisors’ levels of psychological capital along with objective and subjective measures of performance. They found that participants’ levels of psychological capital changed over time, providing further evidence that psychological capital can be developed. The level of psychological capital was also significantly related to both the objective and subjective measures of performance; that is, performance increased as psychological capital increased, and performance decreased as psychological capital decreased. The authors also found support for psychological capital influencing performance, as opposed to performance influencing psychological capital.

This study indicates that if you want to improve employees’ performance, it is important to consider psychological capital. Organizations may want to consider including psychological capital development as part of a development and performance management program. How?  Training programs aimed at increasing psychological capital have already been developed and tested for both online and traditional workshop delivery. These programs help participants set goals in order to increase hope, and they teach participants to deal effectively with setbacks and create contingency plans, thereby increasing optimism. Through the use of positive feedback, vicarious learning, and modeling, training programs (and managers) can also increase employees’ efficacy.

Peterson, S. J., Luthans, F., Avolio, B. J., Walumbwa, F. O., & Zhang, Z. (2011). Psychological capital and employee performance: A latent growth modeling approach. Personnel Psychology, 64, 427-450. doi: 10.1111/j.1744-6570.2011.01215.x

human resource management,organizational industrial psychology, organizational management

Do you care about human capital? You should!

Topic: Organizational Performance, Talent Management, Strategic HR
Publication: Journal of Applied Psychology (MAY 2011)
Article: Does human capital matter? A meta-analysis of the relationship between human capital and firm performance
Authors: Crook, T. R., Todd, S. Y., Combs, J. G., Woehr, D. J., & Ketchen, D. J.
Reviewed by: Alexandra Rechlin

It is often assumed that human capital is related to organizational performance, but the research literature provides mixed support for that assumption. In this article, the authors conducted a meta-analysis of 66 studies to clarify the seemingly contradictory research on the relationship between human capital and firm performance.

The authors found that human capital was positively related to firm performance, but that the relationship was moderated by the type of measure used and the type of human capital. The relationship was stronger when performance was measured with operational performance measures (e.g., customer service satisfaction or innovation), as opposed to global performance measures (e.g., returns on assets or returns on sales). The relationship between human capital and performance was also stronger when the human capital was firm-specific as opposed to being general human capital.


How talent analytics – and I/O psychologists – can help organizations succeed

Topic: Business Strategy, Strategic HR, Talent Management
Publication: Harvard Business Review (OCT 2010)
Article: Competing on talent analytics
Authors: T. H. Davenport, J. Harris, J. Shapiro
Reviewed By: Liz Brashier

How many times have you made a “people” decision based on gut instinct? Whether it’s deciding which department needs attention, selecting a customer population to target, or trying to determine our organization’s overall health, Davenport, Harris, and Shapiro (2010) encourage us to make these critical talent decisions based on analytics rather than “going with a gut instinct.” In an article rife with illustrations of organizations that effectively use analytics to save money, increase profits, and retain the best talent, the authors give us six types of analytics to use when addressing talent issues:

  1. Human-capital facts focus on one piece of information regarding individual performance (i.e., turnover) that can be used to indicate organizational health.
  2. Analytical HR uses HR data to gain insight into which departments or functions need attention; by using the data to focus only on the areas that actually need help, managers can save valuable time and resources.
  3. Human-capital investment analysis allows an organization insight into which actions have the largest impact on performance.
  4. Workplace forecasts use metrics to make predictions about potential shortages and/or excesses before they actually happen.