Momentum - Business to Business Online Magazine | Page 2

From The President / CEO
Steve Paterson
Investment into Human Capital, a thing of the past?
Since 2008, the beginning of the great recession, an interesting thing has happened to the remaining majority of
industries and businesses in the United States, which have not relocated overseas and around the world in our new
Global Economy, they have decreased or eliminated the human capital investment component of their businesses.
As we observe the condition of our countries economy as we return to an acceptable unemployment number and
we continue to add businesses and jobs to the economy monthly, which was the end result of the flood of money
into the market by the Federal Reserve and the U.S. Government to stabilize the banking and investment system.
The Federal government had to step in to stop an economic crash and avert a disaster of such magnitude, it could
have brought the country down. This intervention with the advent of quantitative easing and zero interest rates
for borrowing money from the Federal Reserve to the banking system did slowly start a record growth streak by
the stock market. This has resulted in the economy and businesses slowly but incrementally regaining strength. The
result now is that the larger corporations have been able to stockpile more cash in their coffers than at any other
time in memorable history.Yet, the investment in human capital to build, train and equip workforces has never been
lower? Why?
Henry Ford realized that if he was going to sell cars, they had to be at a price that his workers could afford. In
order to do that, he had to pay wages that would enable that to happen. He also realized that the skills needed
to be a quality company had to be trained. The result, he invested in training the workers in those skills to build
loyalty. He also realized that this gave workers value that other car companies would like to have, so he offered
benefits to his employees to retain them. He invested into his human capital, so his company would be stronger
than his competitor’s. The result was his employees were loyal and bought and drove Ford Motor products. Soon
other major corporations followed suite and by the 1960’s the United States became an innovator in every way and
world leader in every business sector. The American worker was the gold standard that all of the post-World War
II countries moved to emulate, especially those in Asia.
As a young man starting out in business in the early 1980’s, the companies I worked for offered unbelievable training
and education. They offered wonderful benefits and pensions to retain the best and brightest. They rewarded effort
through merit pay increases. They offered advancement by providing educational opportunities, mentorship and
certification training. Because I worked hard and the company recognized I had a future, I benefited by getting
advanced degrees and certifications at no cost to me. This education lead to promotions and career opportunities.
It also built in loyalty for me to work for them. It was a win-win situation.
The world has certainly changed since then. The majority of today’s employers are small to medium businesses, not
the industrial complex, which since the 1990’s, for the most part was shipped overseas or south of the border.Those
jobs were replaced with lower paying service jobs with less benefits or no benefits at all. The once mighty middle
class has slowly receded as the cost of living has increased, but wages have stagnated. Those corporations, which
were able to survive the various free trade acts, did so by getting cheaper labor, offering less benefits. Although
beneficial to those countries’ economies, it was a disaster to ours in so many ways as the effects trickled into other
areas of our culture.
All markets change throughout history. Those who adapt, survive and those who do not fall away. We believe
Chambers of Commerce need to take on a new role in supporting our new emerging economy made up of small to
medium businesses. These brave new small to medium companies still cannot yet afford to invest what they would
like to in their human capital. They need a bridge or collective assist in those duties. Chambers of Commerce can
provide the educational resources, training and workshops to provide business workers and owners the knowledge
and education to help their member businesses become more successful. It is our hope by doing so, that these small
to medium businesses can grow and hire more employees providing more jobs and better wages, so the worker
feels their investment into that company is being rewarded. Again a win-win situation. Your chamber of commerce
and board of directors are vested into making this a reality by modifying our business plan to become even more
of a resource to our city, business community in providing inexpensive but effective means of helping our member
businesses grow their human capital component of their business. If this is something you are interested in knowing
more about, please contact us and join the discussion on making this a reality.