Teams & Groups

The Interconnectedness of Human Capital Resources

The phrases “human capital” and “human capital resources” have become buzz words that have gained popularity among HR professionals and researchers. You may wonder, what exactly is human capital, and why should you care?

Defining Human Capital

Human capital, or the combined knowledge, skills, and abilities of a group of people, is often thought of at the unit level.  A unit is simply a general term for any collection of employees that are all working towards a common purpose.  In some organizations, a unit can be a department or team.  For others, it may be the entire organization.  Human capital resources can be considered as either generic or unit-specific.
  • Generic Human Capital – Resources that can be transferable across different jobs or organizations (i.e. an employee’s general cognitive ability, personality factors, etc.).
  • Unit-Specific Human Capital – Resources that are non-transferable and are only applicable to a specific unit (i.e. knowledge of a department’s unique filing system, the ability to understand an organization’s jargon, etc ).
Human capital is dynamic, which means it is constantly fluctuating over time.  Factors such as constantly improving technology, employee turnovers, organizational climate, and others may lead to differing degrees of importance for the human capital resources that an organization has. With that in mind, should organizations value one type of human capital resource over the other? The answer to that question varies, but understanding the interconnectedness of the two levels may help.

Generic vs. Unit-Specific Human Capital

Imagine that your department needed to transition to a new coding and filing system. After receiving training in this new system employees should possess the unit-specific human capital resources that allow for higher job performance (i.e. they understand the new system, and can use it efficiently).  This higher performance then leads to better outcomes for the department and company as a whole. Managers should be careful to not overlook the role that generic human capital resources play in the example above. Generic human capital resources are needed prior to adding unit-specific human capital resources.Without them, employees would lack the necessary skills and abilities that allowed for the development of this new skill-set. Therefore, generic human capital resources are often the knowledge, skills, and abilities that an employee can use to master unit-specific human capital resources that are uniquely valued within an organization. In other words, the employees in the previous example would need to possess enough cognitive ability to understand the new system, before they would be able to master it and increase their productivity. This connection means that both generic and unit-specific human capital resources are linked to increased job performance, which may lead to increased effectiveness for the unit or organization.

Practical Applications

The interrelated nature of generic and unit-specific human capital means that managers should be aware of both levels of resources.  An increase of generic human capital resources means that, at a future date, there will be an increase at the unit-specific resource level.  A careful balance of investing in the future flow of job performance (i.e. hiring new employees to bolster the generic resources) and investing in the present job performance levels (i.e. internally promoting employees to utilize organizationally-specific knowledge) may help an organization maintain an advantage over its competitors.

Kelly Whalen


This was a summary of the research and practice implications from: 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.