Ten years ago the search for talented individuals hit newspaper headlines. Initially this focused on the shortage of knowledge workers in the information and communication sectors. Recently the focus has shifted to include a growing shortage of business managers as nations deal with the twin impact of ageing populations and the retirement of senior managers in the baby-boomer generation.

Additionally, the last three decades has seen a revolution in organizational behaviour impacted by moves to flat organization structures, the growth of service-based economies, globalization of world trade and shrinking working populations (e.g. Japan and Germany). What this means is that there are insufficient experienced managers to enable companies to replace retiring executives as well as insufficient Human Capital to ensure economic growth. Even with all these changes many companies in Hong Kong continue to use traditional techniques for managing Human Capital.

Even Hong Kong has not escaped from these impacts with many of the world’s top consulting firms indicating that Hong Kong is failing to attract sufficient human capital to maintain its competitive position. However, this article takes a different perspective and, by using Hong Kong as an example, suggests that there is ample Human Capital in the market place and that organizations can easily adapt their methods for finding, assessing, training and retaining human resources to exploit available resources.

The Financial Impact of the Inefficient management of Human Capital
The cost of the inefficient use of human capital is immense. A conservative estimate (by this author) of the costs associated with voluntary job changing in Hong Kong was US$1.2 Billion per annum (based on a staff turnover rate of 12-14%). There are of course many other costs which arise from inefficient management of Human Capital such as wage inflation and low productivity.

Ample Human Resources to Pick From
There is substantial evidence in Hong Kong suggesting an ample supply of human capital from which employers can draw upon. Firstly, Hong Kong’s unemployment figure at the end of 2007 was 4%. Whilst this figure has dropped from a high in 2003 of 8.8% it is still well below the lowest unemployment rate of 1.1% in the late 1980s and more than twice the unemployment rate of 1.7% seen by its nearest competitor, Singapore, in 2007.

Secondly, over the last 25 years there has been a steady reduction in workforce participation rates in Hong Kong. In 1984 the participation rate was 65.5% but by 2007 it had fallen to 61.4% (which equates to 150,000 workers in today’s terms). This opposite trend was observed for workforce participation rates in Singapore and Australia in 2007 increasing to 65.1% and 65.3% respectively. For Hong Kong these reductions in workforce participation have been most notable for workers older than 45 years of age and in particular male workers.

Thirdly, Hong Kong’s under-employment rate of 2.2% at the end of 2007 whilst lower than the high observed in 2003 of 3.5%, it is still above the average under-employment rate of 1.9% during the last 25 years (equating to 11,000 workers in today’s terms).


Nurturing a Good Resource
How then can organizations improve their relationship with the large pool of available human capital available on their own doorstep? The simplest and most cost effective first step is to focus on the human capital closest to hand, their employees. If employers can reduce their staff turnover rate by a third it will dramatically improve their profitability, staff morale and operational efficiency. The most common reason why individuals leave their employer in Hong Kong is a lack of opportunity in their current organization. Employers can easily enhance the attractiveness of their organizations by providing career planning, effective succession plans and training focused on developing skills and their practical application.

Secondly, employers can tap into the large pool of unutilized resources described above. Many employers are under a misconception that older workers do not have updated skills or the willingness to meet the challenges of today’s dynamic work environment. However, in a service based economy many skills and experience such as communication and PC skills are very transportable. Unfortunately many organizations do not have the expertise to identify transferable skills, acquired knowledge or make realistic assessments of prior experience.

Thirdly, organizations can develop non-financial performance measures (Balanced Scorecard, 360o Evaluations) that provide better metrics on management and staff performance.

Lastly, Governments can also help organizations by reassessing the licensing arrangements for trades’ workers and the professions, and develop criteria to allow past work experience to be included for mature age workers wishing to enter an industry.

Conclusion
There is an ample supply of human capital available in the market place and those organizations that identify how to tap into that pool of resources will not only improve their bottom line profitability but also will ensure their long term success.