Strategic Human Capital

Strategic Human Capital (SHC) is fundamentally a “domain,” not an industry per se. It cuts across all institutions, organizations, and industries, public and private, national and international. Human capital is (a) an element and an instrument of national power, (b) a key contributor to public- and private-sector organizational performance, (c) a vital component of industrial and economic performance, (d) an important indicator of strategic competitiveness, and (e) a central element in America’s mobilization posture. Strategic human capital is the aggregation and application of workforce knowledge, skills, abilities, talents, experience, and expertise to strategic aims and concerns.

The Strategic Human Capital Industry Study (IS) could be thought of as an industry of industries that cuts across all the industries and domains constituting the Eisenhower School IS program. It focuses on (a) the various public- and private-sector stakeholders, national and international, who supply, demand, and utilize human resources in the conduct of routine and emergency national security affairs; (b) the national and international conditions and trends that affect and are affected by human resource availability and capabilities in the realm of national security, writ large; and (c) the actual supply of and demand for human resources and capabilities across sectors under routine and emergency national security conditions.

The aim of the Strategic Human Capital Industry Study has been to assess the impact of human capital in contributing to and determining U.S. and international industrial, economic, and strategic competitiveness.

Four key themes have emerged from this inquiry: individual credentialing; diversity, equity, and inclusion (DE&I); technology and data analytics; and the future of work. These themes have prompted the following policy recommendations:

• Individual Credentialing: The United States should reform Title IV federal student aid; emphasize skills-based credentials (competencies) rather than traditional academic degrees; and accelerate the time it takes to get an individual to competency through on-the-job upskilling, thereby leading to increased profitability and competitiveness.
• DE&I: The United States must close its educational achievement gap by reallocating resources to produce equal educational opportunities for all children. Education and equality must be considered matters of strategic national security importance. This will call for comprehensive, concentrated federal oversight to ensure that educational reform is elevated above individual state preferences.
• Technology and Data Analytics: Chief human capital officers (CHCO) are – or should be – central to strategic decision making in all organizations, public and private. CHCOs should use data analytics to replace repetitive managerial functions of managers, focus on outcome rather than input measures, facilitate workforce modeling and predictions, and enable truly strategic decisions leading to increased productivity, profitability, and competitiveness.
• Future of Work: Immigration reform is essential to increase the number of skilled employees in the U.S. workforce, who in turn can enhance productivity, profitability, and competitiveness. Companies must recognize the value of upskilling their employees in general and providing digital skills training in particular, especially since many, if not most, future jobs will demand digital literacy. By the same token, hybrid work environments are likely to continue in the aftermath of the Covid-19 pandemic; accordingly, for telework-compatible jobs, remote work and training will be necessary for leaders and employees. Additionally, as on-demand or “gig” work continues to expand, typical employer-provided benefits such as retirement, healthcare, and unemployment insurance must receive high-priority attention as objects of change in national policy.

Read the report →