5. Human Capital Requires Equity, Diversity & Inclusion

Human Capital Required Equity, Diversity & Inclusion

Goldin (2014) refers to human capital as, “the stock of skills that the labour force possesses.”13 A year ago, the stock of skills changed almost overnight, as workers and leaders had to pivot to avoid catastrophic loss, brought on by the pandemic. The flow of skills is not, nor has it ever been, stagnant. Skills and education are responsive, aligned in many ways with innovations that create competitive advantage and spark growth in dying industries. As industries diversify, the talent who hold the required knowledge and skill, also changes. Historically, human capital has focused on two major components; education and training. Those who had the means to acquire education and training prospered, those who did not were left behind. Yet, the pandemic unequivocally revealed that skills and knowledge are not solely tied to formal education, but more importantly tied to resilience, determination, and capability.14 In fact, one might argue that the more important third component of human capital (that was historically omitted yet now must be acknowledged) is health, both physical and mental health. While many will nod their heads and agree to these components, and the importance of human capital for recovery and growth, readers may be questioning how the definition of human capital intersects with the requirement for equity, diversity, and inclusion. To bring this together, let us turn to neuroscience.

Human Capital

Neuroscience reveals two components that will fundamentally change the way people think about belonging and wellbeing. While many are now conscious of the importance of including employees, one must not mistake inclusion with belonging. Inclusion simply denotes an invitation. Belonging publicly demonstrates to everyone, internally and externally, who is valued for their importance and perspective.15 Belonging is the missing fundamental factor, the cog if you will, in the projections that convert equity, diversity, and inclusion into usable organizational development methodology that produces returns on investment. First, behavioural neuroscience shows that belonging is a basic human need that drives performance and enhances wellbeing (physically, mentally, and emotionally). However, on the other side of belonging, neuroscience registers the pain of social exclusion, rejection, or ostracism and it is as real as stubbing one’s toe or cutting one’s finger.16 When talent, experiences exclusion, rejection, or ostracism, it triggers a lack of psychological safety and ignites the nervous system into survival mode.17 The concept of belonging from a neuroscience perspective thereby substantiates the initiatives for equity, diversity and inclusion allowing culture to become a positive driving force. Instead of asking, “Is belonging real?”, the better question is, “How does belonging become real?” Organizations need to consider that the psychological pain associated with exclusion, rejection and ostracism is experienced the same way as physical pain in the brain.18 Racism discrimination has also been linked to poor health studies in both the United States and United Kingdom.19 Recognizing these correlations as they pertain to the wellbeing of talent are important as they could have a significant impact on the future of work. These findings also further establish the urgency for developing a belonging-first culture.

Belonging is the missing fundamental factor, the cog if you will, in the projections that convert equity, diversity, and inclusion into usable organizational development methodology that produces returns on investment.

Secondly, behavioural neuroscience reveals that in order for a framework to become substantially understood and utilized, collective intentionality must exist. Collective intentionality demonstrates that a group of people agree that a concept exists and a word transcends into having mental inference and meaning. Currently, equity, diversity, and inclusion are seen as important, however, their mental inference and meaning have yet to be adequately defined for strategic advancement and organizational application20. For human capital to fully be realized in our “new normal” and for leaders to truly build the next generation of workers and succession plan effectively, equity, diversity, and inclusion is imperative and so is the framework that provides mental inference and meaning. Feldman Barrett (2017) provides the example that, one can look at a hammer or ice pick and categorize them as “tools” and then shift perspective to categorize them as “murder weapons”. Imposing functions, thereby inventing reality, is possible because of language. Figure 1. Collective Intentionality provides a visual depiction of this. Language provides context and mental concepts, always backed by collective intentionality.21 Herein lies the problem. Collective intentionality to date has labeled equity, diversity, and inclusion a human resource problem that requires “attention”. More importantly though, the collective has addressed equity, diversity, and inclusion passively, seeing it as a public relations element and recording it by simply acknowledging existence. Collective intentionality has yet to adopt the notion that equity, diversity, and inclusion is a requirement for actualizing human capital and capitalizing on its intangible assets. In fact, research shows that human capital will fall short of its potential without the inclusion of diverse thought, occurring through principles of belonging.22 While there are many reasons the majority have yet to become acquainted with its potential, at the core lies the disconnection of its impact on health; both physical and mental. Recall that in an earlier paragraph there was a nod to health as the third component of human capital. The workforce, generated by human capital, has been socialized to dress, act, think, and communicate in manners deemed appropriate by their predecessors. Moreover, differences are historically labeled as “bad”. Diversity, and the acceptance of differences, have yet to cross the threshold into collective intentionality as good, needed, and supporting of health and wellbeing, components that maximize human capital. Neuroscience shows however, that they are directly correlated, and when belonging is felt, wellbeing increases.23 Similar to when occupational safety measures became basic regulations, requiring education and training to reduce risk and the frequency of occurrence24, diversity sits on the threshold now, lacking true internal data and real incentives for optimization simply because collective intentionality has yet to realize its importance. While many scramble to perform diversity audits, many have not considered what follows. Yet, because leaders want to build confidence about the future, the commitment to discovering a new path to growth is ripe, one focused on creating value through people and organization. What happened in the past with the regulation of occupational safety is what lies ahead for equity, diversity, and inclusion. Those who lived through the transformation of occupational safety regulations will recall the years of iinitial resistance.25 However, many will also remember that those who leveraged the incentive and put strategic planning in place reaped gains and  advantages that allowed certain organizations to pull ahead of their competition.26

Collective Intentionality

Shared intention allows organizations to act together intentionally, creating collective goals, vision, and mission. When collective intentionality uses words without understanding their context, they lose their impact because they lack mental inference. While equity, diversity, and inclusion are seen as important, their mental inference and meaning have yet to be adequately defined for strategic advancement and organizational application.

These blindfolded individuals try to describe an elephant without context, understanding, and mental inference. As ESG strategies are developed to tackle equity, diversity, and inclusion, a similar occurrence is happening due to a lack of real understanding and grounded mental inference.

Based on Diversity Best Practices (2019), initiatives can improve the quality of an organization’s workforce and be the catalyst for a better return on investment (ROI) in human capital. The Sodexo Corporation is an example noting that for every $1 it has invested in mentoring, belonging, and succession planning it has seen a return of $19, according to Dr. Rohini Anand, the company’s senior vice president and global chief diversity officer.27 While many are still looking to create a solid strategy that delivers ROI, what is certain is that equity, diversity, and inclusion are gaining momentum and are being forced further due to environmental demands. Directives are at the precipice of collective intentionality, and once achieved, the industry will find remarkable things begin to happen.

Lesson Content
Scroll to Top