Human capital is the key



In these days of confinement and constant bad news we all need a certain dose of positivism so as not to sink into deep pessimism. In this maelstrom of negative messages that remind us every day of the abyss that the economy is heading for, we can read hopeful opinions such as that of Finn Kydland, Nobel Prize winner in Economics and researcher at the US Federal Reserve.

In a recent interview by Spanish newspaper La Vanguardia, Kydland states that the key to a rapid recovery from this pandemic will be to maintain human capital. There has not been a natural disaster or a war that has devastated our infrastructure. Everything is still there. Our concern must focus on having financial instruments that bring liquidity to all agents in our economy so that the capacity for innovation remains intact when the pandemic subsides. 

Kydland is a great admirer of Barcelona and loves the tapas offered in its bars. He is a fervent admirer of "callos" and "patatas bravas", a fact that he uses to make a simile that helps him to argue his statement about human capital. 

Any company depends on its ability to innovate and compete. Let's imagine that the owner of a bar that makes magnificent ham croquettes has not been able to pay the salaries of his staff. The lack of liquidity forces him to fire his expert cook and some of his best waiters. Moreover, it is very likely that he will lose suppliers for the same reason. And when the owner finally reopens his bar, customers stop coming because the establishment has lost the value it gave them. 

In the end it's all about retaining the know-how. We are not only talking about the know-how that the human capital itself provides, but also about what the value chain provides: the supplier who sells you the Iberian ham to make the croquettes or the customers who appreciate those croquettes and pay for them. And as Kydland states, this same situation can be applied, for example, to a company in the aeronautics sector. It is not so different from a bar, it is simply another value chain. If the company loses its best engineers because they emigrate to Germany after confinement, then the company will be seriously affected and so will our country.

Kydland carried out a study of the Spanish economy in the period 1991-2006 together with his colleague from the Federal Reserve, Enrique Martínez-García. Kydland and Martínez-García discovered that, although the Spanish economy was apparently flourishing, in reality the productive capacity was being destroyed and deficits and public debt were accumulating due to bad management. Behind this image of bonanza that we all remember, Spain was sick, which led to a deep crisis from 2007 onwards. Now, Spain is sick with a virus, but in reality it is much healthier.
In the nineties there was money, but Kidland and Martínez-García showed that the wealth that was generated was an unsustainable bubble without value, because Spain was technologically paralyzed for fifteen years. Nothing was being manufactured that was competitive and hardly anything was being exported. Instead, this pandemic has interrupted a promising trajectory of the Spanish economy in which, in the last ten years, it has been rebuilding, innovating and exporting. 

According to Kydland, since 2009, Spain managed to innovate and export as it had not done before. This translated into a recovery of employment and the perspectives improved considerably. Spain has always surprised by its resilience and adaptability. 

The message is clear. We can do it again, but human capital is essential to improve the competitiveness of the company in the market. Let us focus on maintaining our human capital and use the economic means provided by the State to retain talent and thus ensure a return to normalcy with maximum guarantees and as quickly as possible.
One of the great tasks of every entrepreneur is to identify and retain the most talented employees, known as high potentials. They are about 5% of the employees and we must take advantage of their capacity and keep them committed.

Before the current crisis, research indicated that up to 25% of high-potential employees may be planning to leave the company in the next 12 months. Now it is even more important to retain these employees.

How can we manage high potential?

By establishing a strategy to increase the morale and commitment of our high-potential employees.

At Cedec we know very well the importance of human capital and we are in a position to provide all our experience to help our clients. Together we will determine the best HR policy providing the company with an organizational structure compatible with the planned medium and long term projection. We will cover the positions in the organization chart with the appropriate professional profiles and we will increase the productivity and efficiency of the staff.

Now is the time to act. CEDEC, since 1965 accompanying European family businesses.

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