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. 

This study suggests that both generic and unit-specific human capital are valuable, as a sufficient level of generic human capital is important for the development of unit-specific human capital. Both types of capital should therefore be acquired and/or developed. When attempting to develop human capital, managers may want to consider the state of their organization or unit. If they already have a high level of unit-specific human capital and want to stay ahead of the competition, managers should ensure that there is a steady pipeline of generic human capital. However, if they are falling behind the competition, they should consider developing their unit-specific human capital in order to catch up in the short-term.

 

Ployhart, R. E., Van Iddekinge, C. H., & MacKenzie, W. I. (2011). Acquiring and developing human capital in service contexts: The interconnectedness of human capital resources. Academy of Management Journal, 54(2), 353-368.