The “Human Capital Resource (HCR) pipeline” is an organizational capacity that involves the internal, external, horizontal, and vertical flow of human capital resources in and out of an organization. The goal of an HCR pipeline is to insure that the appropriate quality and quantity of HCRs are in place for the ongoing functioning of organizations. In turn, managing the HCR pipeline is the organizational capability to acquire, develop, and align individual or unit-level capacities to match unit-relevant purposes as they arise. It is necessary for organizations to think of managing the HCR pipeline as an ongoing process which involves the horizontal alignment, or congruence, of several human resources (HR) functions. This includes Staffing, through attraction, Selection, and Attrition. Once talent is in place, then it must be developed through Performance Appraisal, Succession Planning, and Training. It is also essential to align that talent with the organization’s objectives. This involves continuously matching talent with the appropriate role, including focusing on Internal Mobility, Fit, and Flexibility. Compensation also affects the HCR pipeline through Sorting (e.g., who is attracted to the pipeline) and its effects on how the HCR pipeline coordinates; however, heretofore, compensation has not been explicitly tied to the HCR pipeline. The HCR pipeline may also need to focus extra and different attention on Stars and executives or other employees who disproportionately contribute to organizational performance. The general idea of considering the HCR pipeline has been growing in importance, including the creation of a special interest group at the Strategic Management Society, and two journal special issues dedicated to the topic. Therefore, the concept of the HCR pipeline is an extension of this literature that highlights the dynamic nature of HCR that has thus far been looked at in a static lens.
Human Capital and the Human Capital Resource
The human capital resource (HCR) is defined as the “individual or unit-level capacities based on individual KSAOs [knowledge, skills, abilities, and other characteristics] that are accessible for unit-relevant purposes” (Ployhart, et al. 2014, p. 374). Such pipelines necessarily begin with individual-level human capital, which is an attribute of individuals (see Becker 1964), composed of a person’s KSAOs. Without referring to the HCR, Hitt, et al. 2001 examined the HCR influence on law firm effectiveness. Although the evidence that the HCR can lead to organizational performance differentiation has continued to accumulate (see Crook, et al. 2011; and Nyberg, et al. 2013), the actual term, HCR, is relatively new (see Ployhart, et al. 2014), and flows from the recognition that the aggregation of talent (i.e., the emergence of KSAOs in a collective construct) is rarely a simple sum of individual human capital (Ployhart and Moliterno 2011). By attending to what is organizationally relevant, rather than exclusively focusing on the individual, this research draws attention to the role of humans as a competitive asset in a variety of factor and product markets, such as the labor market (a factor market) and the consumer goods market (a product market).
Becker, G. S. Human Capital. New York: Columbia University Press, 1964.
Many iterations of this book have followed this seminal work on human capital. Becker lays out arguments for how individuals can invest (e.g., increased education) to make themselves more valuable.
Crook, T. R., S. Y. Todd, J. G. Combs, D. J.Woehr, and D. J. Ketchen Jr. “Does Human Capital Matter? A Meta-Analysis of the Relationship between Human Capital and Firm Performance.” Journal of Applied Psychology 96.3 (2011): 443–456.
Meta-analyzes sixty-six studies that estimated the relationship between human capital and firm performance. Estimates a correlation between human capital measures and firm performance of 0.17, and explains that the relationship is strongest when the human capital is firm-specific and when operational (rather than financial) firm performance measures are used.
Hitt, M. A., Leonard Bierman, Katsuhiko Shimizu, and Rahul Kochhar. “Direct and Moderating Effects of Human Capital on Strategy and Performance in Professional Service Firms: A Resource-Based Perspective.” Academy of Management Journal 44.1 (2001): 13–28.
Uses law firms to show that aggregated human capital (i.e., HCR) can affect firm performance both in terms of outcomes and costs.
Lazear, E. P. “Firm-Specific Human Capital: A Skill-Weights Approach.” Journal of Political Economy 117.5 (2009): 914–940.
Argues that all human capital is general, but that combinations (or bundles) of particular human capital components and their use in heterogeneous firms are firm-specific. Generalizes the classical dichotomy of general and firm-specific human capital and aligns human capital theory with matching and Talent Management approaches.
Nyberg, A. J., T. P. Moliterno, Donald Hale Jr., and D. P. Lepak. “Resource-Based Perspectives on Unit-Level Human Capital: A Review and Integration.” Journal of Management 40.1 (2013): 316–346.
Reviews 156 articles that attempt to use human capital as a mechanism for identifying unit-level performance advantages in a resource-based theoretical framework. It shows the similarities between strategy research, particularly regarding micro-foundations, and strategic human resources research, and provides suggestions for how these two fields can move the HCR field ahead.
Ployhart, R. E., and T. P. Moliterno. “Emergence of the Human Capital Resource: A Multilevel Model.” Academy of Management Review 36.1 (2011): 127–150.
Combines research and conceptual consideration from psychology and strategy to argue that the use of the term “human capital” at both individual and collective levels leads to ambiguity and confusion across research domains. It coins the term “human capital resources” and argues that this is the emergence of an individual’s knowledge, skills, abilities, and other characteristics.
Ployhart, R. E., A. J. Nyberg, Greg Reilly, and M. A. Maltarich. “Human Capital is Dead; Long Live Human Capital Resources!” Journal of Management 40.2 (2014): 371–398.
A multidisciplinary framework that clarifies the HCR construct (structure, function, level, and combinations) in an attempt to create a common language among disciplines. The article also clarifies the difference between individual differences, KSAOs, human capital, human capital resources, and strategic human capital resources.
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