From workforce to human capital: revolutionary changes in #employment and #recruiting. Read the research. #ChronoBank $TIME #blockchain #HR #HumanResources

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From workforce to human capital: revolutionary changes in employment and recruiting

The world is entering a phase of global change, albeit with different pace in different regions, spheres and sectors of economy. No one has any doubts that the blockchain, robotics, AI, synthetic biology, etc. will transform the production and everyday life of humans beyond recognition.

“The future is already here — it’s just not very evenly distributed.” — William Gibson

The humankind will experience many changes, not limited to the substance and character of work; the value of workers, their motivations, forms of employment and other aspects of work management and salary will also evolve.

Human as workforce

The recruiting will undergo groundbreaking changes as well. Within the traditional economy, the human is seen as workforce, an important factor of production. Its characteristics include:

It won’t be an exaggeration to say that before the 21st century, humans lived in a ‘slow’ world. The education, which in great majority of cases was obtained just once in the lifetime, defined the profession and the career trajectory of the person. It took years to acquire practical skills. Secondly, according to the World Bank data, in 1970s-1990s more than 60% of economic growth depended on the development of the production capacities, 20% were conditioned by the environmental factors and only 20% depended on workforce. The price dynamics of stocks in the traditional economy depends on revenues, while the revenues are conditioned by the technical level of the same main production capacities. In this economy, the human being remains a kind of extension of the technology assets; Thirdly, In the traditional economy, the employer was the central figure, always enjoying privilege. In an overwhelming majority of professions the number of those willing to fill a vacancy always exceeded the number of vacancies.

Economic realities defined the methods, the technologies and the ways of recruiting. Most recruiting systems in the world are still oriented towards the traditional economy, in which the worker is always in a weaker position as compared with the employer.

Human as the key of company success

Nowadays the situation is undergoing a crucial change.

In the fast paced world, the existing system of school education is no longer efficient. Knowledge and skills acquired during studying are increasingly becoming obsolete even before the graduation. The key requirements to the modern worker are the commitment to a lifelong education, necessity to change profession, and capacity to quickly master all the necessary skills. Economic growth factors also changed a lot. The intellectual and human capital is becoming the decisive production factor, responsible for up to 70% of revenue growth. Moreover, information assets, including the human capital, are the factor that defines the stock performance on the equity market. The same assets largely served the basis of the unicorn companies, the ones that have quickly reached the market capitalisation mark of $1 billion. Today the success of an increasing number of companies mostly depends on workers, on their capacity to constantly learn and acquire new skills and abilities, on their efficiency, diligence, discipline, creativity and team spirit. As the revolution is spreading, the main factor that slows down its development is the lack of high-quality professionals employed in the cutting-edge technological niches, the highest in-demand. A paradoxical situation is emerging: instead of an employer choosing a worker from a large pool of candidates, high-level professionals are increasingly often choosing one of the potential employers. ☞ For those who like cold numbers: According to the leading job portal Glassdor, the annual wages of a blockchain engineer amount to $107,000 on the US East Coast and to $130,000 in California. Tech leads and seniors who have at least two years of experience in successful blockchain projects, often received in California, with supplementary payments, up to $250,000–300,000 yearly. Britain is not far behind. According to the job portals, the average annual pay of a blockchain engineer amounted to £72,000.

It is well-known that if one tube is feeding water to the pool, another tube will discharge this water. If programmers were feeling very well last year, cofounders and investors faced a growing staff problem. According to Chronobank research, in the beginning of 2017 only 12% North American and British vacancies of blockchain programmers with full employment were not filled within one month. However, by the end of 2017, this number grew to almost 30%. Moreover, the offer of well-prepared blockchain developers is not likely to grow.

Human capital

It is quite obvious that in the blockchain economy the efficient employment and hiring cannot follow the traditional workforce pattern that sees a human being as a resource. There is a change taking place right now, before our very eyes: the workforce ceased to be the foundation of labour, remuneration and hiring, giving way to the ‘human capital’ pattern.

The concept of the human capital was developed already in the 1960s by Theodore Schultz and Gary Becker who would later be awarded a Nobel Prize in Economics.

At first, the human capital was understood simply as the aggregate of investments in human beings, increasing their work capacity such as education and professional skills. Later the understanding of the human capital within the economic science became wider and started to include proper knowledge and skills, connections, and reputation, inseparable from the workers themselves. The term “human capital” was widely used in theoretical economics but not much in business practice. The wave of attention towards it is a very recent phenomenon.

Strictly speaking, unlike financial capital, human capital is а disruptive innovation because it destroys the business, financial reporting and accounting as they traditionally operated. Currently, the international accounting standards mostly consider the human capital as a liability: salary costs, social package etc., but not an asset. On the other hand, the human capital is the crucial factor behind the performance and the capitalisation of the company. The real problem is that the human capital belongs simultaneously to the worker and the company. From the point of view of financial reporting, a number of solutions have been accumulated in several spheres, especially football, hockey, basketball and filmmaking.

To return to the topic, it can be said with certainty that today the human capital is not just the amount of money and bonuses, not just the acquisitions of options or tokens but also an opportunity to learn new professional skills, to study from industry leaders, to work on interesting projects, to acquire useful connections in the community etc.

Recruiters, employed in tech sphere, are well aware of the new dominating trend of the last three to five years: in different countries of the world, promising young programmers and developers rather than opting for better-paid positions, have been choosing the vacancies that allow to learn many new things, have an interesting job, and to acquire connections and reputation.

In any case, the reorganisation of the recruitment job on the base of the human capital requires the use of fundamentally new approaches and technologies, that would bring the positions of the applicants and employers closer to reality. Successful hiring of quality workers will depend on development and implementation of a system technology of interaction of potential workers and employers during the hiring, taking into account the new reality and using fundamentally new solutions for the motivation, management, regulation and information.

Already when preparing the project, Chronobank team has not only studied in detail the widespread practical experience of recruiting but also used the best research centres to conduct an analysis of the changing trends of employment and hiring in this quick and turbulent world. As a result, we made the decision to create a flexible structure for LaborX platform, that allows us to be efficient in all types of hiring.