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Tag Archives: human capital

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Telling graduates that, ”You are now officially credentialed as being smart,” author Walter Isaacson began his commencement address at Pomona College. “But,” he continued, because “Smart people are a dime a dozen, … Think different” is what matters.

With a “Think different” message, Isaacson reminded us of Steve Jobs’s quest for elegant products. His great new story, however, was about the unblinking stare that Jobs learned from his guru in India. That stare, paired with ”Don’t be afraid. You can do it,” pushed people to accomplish what they had thought was impossible. It inspired the first Macintosh team to cut the Mac’s boot-up time from 78 to 50 seconds. It brought uniquely great high quality glass to the iPhone. Repeatedly, it inspired and intimidated people.

I do recommend listening to the talk (below) because Isaacson’s stories about Steve Jobs and then Albert Einstein and Benjamin Franklin were interesting and his advice, though predictable, was to use your creativity to do good.

Watching Isaacson, I recalled a David Brooks column that conveyed a less obvious lesson from creativity. Comparing competition and creativity, Brooks said that alone, competition draws people to “a status funnel” that points “to the most competitive colleges and … companies..” and discourages change.

However, when competition and creativity combine, we get disciplined, reliable human capital and unique goods and services. The result is “creative monopolies” that dominate new markets and produce our Ben Franklins, Albert Einsteins and Steve Jobses.

Your opinion?

Sources and Resources: Each of Walter Isaacson’s 3 recent biographiesSteve Jobs, Einstein and Benjamin Franklin: An American Life, was excellent as was the NY Times David Brooks column, “Creative Monopoly.” And here, at econlife, you can see how Malcolm Gladwell looks at competition and creativity.

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Job Gains in Texas and Losses in Caifornia and Florida

Does your barista have a Ph.D?

When people have too much education for their job, the reason might be “cascading.” Explained by 3 researchers in a recent paper, the cascading story starts with the tech boom. During the 1990s, as tech firms popped up everywhere, so too did the demand for highly educated human capital.

Fast forward to 2000 when the tech bubble bursts and these highly educated individuals have to job hunt. Add the flow of new college grads and you have too many people chasing too few jobs that require their cognitive skills. The result? Highly educated individuals are doing jobs that require less knowledge. On the occupation ladder, they are cascading downward.

Although most of the cascading research is bleak, the good news is that more people want to become teachers. After having lost many of its gifted and talented to other occupations like the law and medicine, the teaching profession is again more attractive. With a 17% acceptance rate, Teach for America has become as selective as competitive colleges.

Our bottom line? Cascading might represent a reason that the unemployment rate has dropped so slowly in the US. Having hit a high of 10% during October, 2009, the unemployment rate was still 7.5% during April. The authors of  the cascading study believe that less demand for highly skilled tech workers is one reason. They agree that manufacturing is declining and we have had structural and cyclical unemployment. Also though, they suggest that cascading is creating unemployment and underemployment when it “crowds out” lesser educated workers.

Sources and Resources: For more discussion on cascading, this Freakonomics podcast was interesting while the paper on which it is based, “The Great Reversal in the Demand for Skill and Cognitive Tasks” provides all of the details and the math.

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How can my boss affect my productivity?

At Pixar, the restrooms are where Steve Jobs wanted them to be. Because they were located near a huge central atrium, they helped to generate a collaborative community. Seemingly haphazard, restroom traffic flow was an intentional strategy for enhancing labor productivity. It was how Steve Jobs used the work environment to optimize employee performance.

Yahoo CEO Marissa Mayer appears to have the same goal. Mayer recently directed Yahoo employees to cease telecommuting. For Mayer, it was about getting people to the office to interact as a community. Telecommuting might contribute to individual flexibility but it detracted from her goals for the firm as a whole.

Perhaps Mayer was thinking of the Steve Jobs quote from Walter Isaacson. “There’s a temptation in our networked age to think that ideas can be developed by email and iChat. That’s crazy. Creativity comes from spontaneous meetings, from random discussions. You run into someone, you ask what they’re doing, you say ‘Wow,’ and soon you’re cooking up all sorts of ideas.”

Assuming that interaction leads to productivity takes us to the next step. At Bank of America, employees, wearing digital tags, had their interactions quantified and located. Then, I guess, the Bank could optimize interactive environments when they saw where and how they existed. Studies suggest, for example, that coffee breaks boost productivity.

I worry.

Yes, an employer certainly should and could ask employees to work at work. But then, how far should they go to dictate the interaction that they believe enhances productivity? Furthermore, how much can my boss influence my productivity?

We should not conclude without defining labor productivity. It is just about inputs and outputs. Labor productivity is when your input, usually measured in hours but not necessarily, creates more output than before.

Sources and Resources: Always insightful, the James Surowiecki New Yorker column on Marissa Mayer was excellent. It reminded me of the digital sensor article in WSJ and Steve Jobs in Walter Isaacson’s masterful biography. The Steve Jobs quote is from p. 431.

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Your human capital might be affected by your birth date.

In Outliers, Malcolm Gladwell suggests that children born during the Great Depression had an advantage. Economic contraction meant couples had fewer babies. A cohort with fewer children, 1930s babies enjoyed smaller classes and better teachers. Because they were unable to get hired by colleges, over qualified teachers swamped the high schools. As a result, depression babies were more likely to be professionally successful.

Fast forward to the Great Recession. One group of adults called the boomerang generation moved back with their parents. Facing financial insecurity, others also postponed marriage and put off parenthood.

By 2011, the birth rate per 1,000 had plummeted. While the map below is for 2010, it reflects a decline in birth rates that began with the Great Recession, Dec. 2007-June 2009.

Returning to the Gladwell hypothesis, we can ask if the Great Recession will echo the Great Depression. For those who were born from 2008-2011, will their human capital be better nurtured through smaller classes and better teachers?

Births Per 1,000, 2010

Births Per 1,000 in 2010

Births per 1,000

Sources and Resources: A page turner of ideas and facts, Outliers is the wonderful book that introduces a slew of thought provoking hypotheses about success. It took me to statistical web sites here, here and here for my birth rate stats and map. You might also want to look at this Pew Research report.

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Thinking of human capital, leading politicians, successful pizza makers and top software sellers might be surprisingly similar.

We can start with Franklin Roosevelt and Abraham Lincoln. Associated with strong leadership, FDR’s style was assertive, bold, outgoing. By contrast, for Abraham Lincoln, we might say that he was reserved and contemplative. And yet, we associate both men with successful leadership.

Wharton School researchers observed how both leadership styles could work. Using data from pizza delivery businesses, they saw dominant outgoing managers clash with proactive employees. Because the “chemistry” was wrong, the bosses sometimes were threatened and the workers, demoralized. On the other hand, when the extravert boss had an introvert employee, productivity was higher. Correspondingly, the opposite seemed to happen, too. Introvert managers drew the best from extravert workers. Extravert or introvert, the manager’s style mattered less than whom he was leading.

As the study’s leader, Adam Grant said, “…introverted and extraverted leadership styles can be equally effective, but with different groups of employees.”

In a newer experiment, though, Grant might have slightly “tweaked” his conclusion. Trying to ascertain whether introverts or extraverts were the best salespeople, he tracked sales reps from a software company for 3 months. Least successful, the introverts earned an average of $120 an hour; slightly better, the extraverts were at $125. The best? At $155, the ambiverts, those who were at neither the introvert nor extravert extreme, earned the most.

Where does all of this leave us? It takes us to the complexities of the human capital–the accumulation of knowledge– that fuels economic growth.

Sources and Resources: Excellent for academic studies on many topics, Knowledge at Wharton was my source for Adam Grant’s study of employees and employers while this Washington Post article introduced me to ambiverts.

 

 

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