Have Organizations Over Invested Capital in Technology But A Lot Less On Labour?


YES! Hands down.

Economic success crucially relies on human capital. Yes? Yet why are organisations obscenely over investing more on hard infrastructure and under-invest in human capital in the last decade? Do you believe that investment in human capital such as knowledge, skills, competencies and mindsets will allow people to contribute to their personal and social well being of your organization? If yes, your only choice is to invest in human capital education.

People with better education tend to enjoy higher economic incomes – a benefit that is also reflected in your improved organization profits and competitiveness. But their impact goes beyond profitability alone. Raising human capital raises health levels, community involvement, developing others in needs and workforce mobility.

In many organisations that are dependant on the “old economy” such as oil and gas, transportation, plantation, agriculture, mining, hotels and manufacturing (to name a few), whereby statistically 1 in 4 workforces is 50 years old and above, 2 in 4 workforces is in their mid-30s and the rest are early 20s. Although there’s perceived strong experiences in the organization retained by the senior workforce, often the senior workforce are unable or have poor ability to articulate their experiences educationally.

On the other hand, the younger workforce despite their youthfulness and ability to adapt better to technology, they are struggling to know the how-to of the work entailed. This mixed multigenerational talent is not unique, it is oblivious to many organizations. They need a proper adult education to help this transition. With the pressure of change, it is even more challenging.

Adult education in the work environment is slowly diminishing. Employees are expected to fully grasp the know-how right on the first day you announced a change or transformation agenda. It is what your human capital knows and does that will shape your organization’s future. Discounting adult workforce education is a surefire way to bring down your business.

With an educated adult workforce, your business will not just be maintained but also creating new opportunities from changes that are happening now. In the crisis situation, your only goal shouldn’t be crying wolf on what has been lost, but rather what can you do next quickly to get out of this mess and storm. To do this, you need your human capital in total commitment rowing in the same direction with at least some serious knowledge how to row, effectively together – the coherence premium.

Now let’s talk about numbers.

According to the research firm Gartner, companies are spending around an estimated $3.4 trillion in technology in 2020. With large capital and every new technology funding, there will be new ways of solving existing business problems. At the same time, there are also new opportunities to innovate as it allows business groups to collaborate around better and produces more inventive outcomes.

Capital and technology investments play a crucial role in organizational performance and development. By looking at their possibility of enabling business modernization, it is unquestionable to why those investments were aimed and prioritized by the managers.

Further research on workplace training industry and market size, the amount of spending in 2019 is around $400 billion. It is that small. Ok, part of the technology spending is for online learning which is valued currently at $300 billion, so that makes a total of $700 billion.

A ground to less labour investment is it was viewed with distrust and fear by the employers. Labour investment was queried for a few reasons. Here are some of them:

  • Trained then left!

    Some organizations perceive weak returns because they fear well-trained employees will be hired away by other firms – they leave!

  • High recruitment cost.

    Organizations might invest in labour recruitment early on to attract talent, but they find it increasingly difficult to retain staff – recruitment these days are done as on-going, not on demand. On the other hand, the organization cannot stop them from leaving and taking that value to another firm.

  • Talent development is expensive.

    Training and development is expensive and hard to quantify individually. As humans are emotional yo-yo creatures! Is costly and some estimates show organizations recover only modest parts of their investment.

  • The good ones leave too!

    After investing in labour, the exit of high performers and employees with hard-to-replace skills will erode the diversity of the company’s talented workforce, and turnover rates will lead to higher replacement costs. So what is left? The sheepish loyalist but untrained and underdeveloped workforce including unsound and ignorance management tin (I mean team). Pun intended! #wink

    The pandemic has forced us whether individuals, entrepreneurs and organisations to look at our previous practices and consider the much-needed change. We can’t be relying on old thinking and expect new results from this situation. Now is the crucial time and basis for work redesign. It will not come back again – maybe for another 5-10 years.

    In the latest report by the World Economic Forum (WEF) from a survey conducted to 514 global employers in August 2020, as many as 63% of the employers have taken action – planning and considering reselling their employees to support another function. Another 57% of employers have taken action – planning and considering shifting the employees to focus on work demand and finally around 48% already going on streamline work to increase productivity through automation.

    By taking advantage of the unprecedented crisis, an organization can redesign their business with the constraints of today’s business environment in mind, they are able to unlock more sustainable business models that are cost-effective, with retrained human capital and more tangibles in asset value. This is how organizations hit two birds with one stone of investment.

    Yes, you can.


    This article was written by Khairul, Executive Innovation Coach

    Khairul was recently featured as #7 Design Thinking Influencer at Thinkers360.  

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