12. Understand Human Capital

There is a widely held notion among many leaders and managers, and particularly in the domains of CFOs, that “human capital” is “the employees,” the physical presence of those people who companies recruit, hire, and pay. Sorry, but that’s wrong! It couldn’t be more wrong, and the mind-set that breeds that misconception is at the root of what troubles many organizations today. Executives and managers who want to be great leaders, and organizations that want to be great organizations, must understand what human capital is and develop the tools and skills to leverage it.

So then, what is human capital? It is the application of “everything about an employee” to the purposes that contribute to an organization’s success. ...

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