Theory E in Extreme Hurts the Human Capital

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K R Sethuraman
Professor, Malaysia

Theory E in Extreme Hurts the Human Capital

🔥NEW In a mid-sized organization (450 employees) where I worked earlier for 7 years, the management staff are "penny pinchers" especially in building human capital. The staff turnover is about 40% per annum, and the organization is perennially at the bottom of the "learning curve."
The top leaders must realize that they owe as much to the welfare of the organization, as they owe to their share-holders.

  Jaap de Jonge
Editor, Netherlands
 

Theory E is in Tension with Human Capital

Well put and I agree with you Professor. Theory E is at odds with building organizational capability and any firm should reconcile both sides of the equation (economic capital and human capital). See the summary of the knowledge center for ideas on how to do that.
Certainly if you focus only (or way too much) on (short term) profitability, not investing in developing your people individually and your organizational capability at large, you're going to pay for it in the long run.
As the English say: "Penny wise, pound foolish" (~to be extremely careful about small amounts of money and not careful enough about larger amounts of money).

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