Principal investigator: Viviane Pires Ribeiro
Paper Title: A systematic review of human capital and employee well-being: putting human capital back on the track
Authors: Md Shamirul Islam and Muslim Amin
Location of the Intervention: Several countries
Sample Size: 69 quantitative research articles
Main theme: Labor market
Main Variable of Interest: Human Capital
Type of Intervention: Expand the concept of human capital and worker well-being.
Methodology: Literature review
Human capital involves not only individual competence, but also includes the acquisition, use, and development of competence in a broader sense. The literature review conducted by Islam and Amin (2021) seeks to demonstrate a broader perspective on the concept of human capital and worker well-being. The results of the review suggest that various organizational theories, workplace learning, and learning organization perspectives underpin human capital and well-being relationships. The review indicates that the high-engagement work model encompasses well-being as part of human capital development.
Evaluation Context
Human capital and worker well-being, seemingly two different concepts, can be considered, on the one hand, an explicit way of recognizing the qualitative differences in people, including their qualifications, and, on the other hand, a matter of rights to the interests of employees that are frequently compromised by the external and contextual pressures of the 21st century. Thus, the value of human capital is not limited to the "stock" variables belonging to workers, but to the capacity of employees to generate economic results determined by their health status and factors related to well-being.
Despite the extensive literature on human capital and employee well-being, few studies focus on analyzing how the two are connected. The lack of a broader focus on Human Resources (HR) offers little insight into how human capital and well-being are associated. In the Strategic Human Resource Management (HRM) literature, much of the discussion centers around investment in human capital through the HRM approach. In other words, the existing literature seems to have a narrow view of human capital rather than the path by which it is formed.
Intervention Details
The review conducted by Islam and Amin (2021) seeks to demonstrate a broader perspective on the concept of human capital and employee well-being. In this sense, the authors raised the following research questions to guide the review article: (1) How has human capital been conceptualized and studied? (2) How has employee well-being been conceptualized and studied? (3) What do we know about the theoretical notions that link human capital and well-being? (4) What theoretical notion is necessary for the advancement of research on human capital and well-being?
This study makes several contributions to the literature. First, it provides a comprehensive understanding of the concept of human capital, from both an individual and organizational perspective. Second, it advances the understanding of the concept of well-being by categorizing happiness, health, and financial aspects. Third, it provides a comprehensive understanding of the existing theoretical arguments that underpin the relationship between human capital and well-being.
Methodology Details
The review followed the systematic literature search protocols of the Academic Journal Guide 2018 generated by the Chartered Association of Business Schools. The steps of the systematic quantitative approach consist mainly of (a) determining the objective of the review; (b) identifying the keywords, databases, and literature selection criteria; (c) searching the literature and evaluating the results in relation to the inclusion and exclusion criteria; (d) assessing the quality of the literature and structuring summary tables; and (e) synthesizing and reporting the results.
The review team used the following keywords: “human capital” OR “intellectual capital” OR “individual competence” OR “employee skills” AND “employee well-being” OR “employee happiness” OR “employee health” OR “employee satisfaction” OR “job engagement” OR “job stress”, etc. The authors searched for these words using the filter option in Google Scholar's advanced search.
Only articles reporting empirical results were considered. Therefore, book chapters, theoretical articles, literature reviews, book reviews, qualitative articles, and meta-analyses were excluded from the initial analysis. The initial search yielded 349 articles. Secondary screening was conducted by evaluating several criteria: studies that exclusively discussed human capital or well-being without relating one to the other were not considered; each article needed to discuss at least one aspect of human capital (e.g., competence, formal qualifications, experience, training and development, use of competence at work, etc.); and each article needed to discuss at least one aspect of worker well-being (happiness, well-being, health, and financial well-being).
Therefore, 69 empirical (quantitative) studies were selected for further review. These were published between 1999 and 2020, with 72% of the studies published between 2010 and 2020.
Results
The literature review offers a broader view of the concept of human capital and employee well-being and explains theoretical notions underlying human capital and the well-being relationship. The review also highlights that studies of human capital and well-being are based on several theories, including Social Exchange Theory (SET), Human Capital Theory (HCT), Signaling Theory (ST), Social Cognitive Theory (SCT), Conservation of Resources Theory (CORT), Job Demands and Resources (JD-R) model, Organizational Support Theory (OST), Opportunity-Motivation-Ability (AMO) theory, Job Characteristics Model (JCM), Psychological Contract Theory (PCT), and Social Learning Theory (SLT).
The review highlights some significant differences in the conceptualization and measurement of the human capital construct. Relying exclusively on traditional measures of human capital (e.g., formal qualifications, job position level, and length of experience) undermines the comprehensiveness of the construct. Islam and Amin (2021) argue that a proper assessment of human capital encompasses the type of knowledge and skills employees acquire to perform their work and involves how and from whom they obtain them. In this sense, the multidimensional competency framework (cognitive, functional, and behavioral) relevant to an individual's job/occupation provides a better representation of human capital.
The authors extend the concept of human capital beyond individual boundaries, including the acquisition, utilization, and development of skills. That is, human capital emerges from individuals but must be developed; otherwise, its value will be depleted. Much of this development depends on organizational efforts. The formal approach to skills acquisition (training and development) plays an essential role in shaping workforce skills. Furthermore, skill utilization occurs through job performance, job enrichment, and individual efforts. The learning organization structure allows for continuous individual learning and skill utilization. Skills enhancement mechanisms are interrelated and are likely to be reinforced when implemented.
Furthermore, the review highlights that the psychological well-being (happiness) and financial health of employees, in the categories of subjective and objective well-being, provide some relevant points. Subjective well-being considers that greater employee satisfaction, increased commitment, and fewer negative behaviors (e.g., stress) are the path to increased well-being. In contrast, job characteristics/qualities (e.g., the extent of autonomy at work, challenging assignments, financial benefits) can contribute to well-being because these quality indicators impact the formation of employees' psychological contract and their overall perception of work.
Lessons in Public Policy
The study conducted by Islam and Amin (2021) offers practical implications for human resource management professionals. The review discusses multidimensional aspects of human capital, which can help organizations design optimal human capital development strategies, ultimately leading to better organizational performance. Therefore, companies should pay attention to analyzing internal needs and the usefulness and applicability of each human capital development mechanism, since the evidence suggests significant differences in the application of formal training, job development, and learning organizations.
Furthermore, the review provides a better understanding of employee well-being and highlights that an organization's investment in human capital will reap the full potential of human resources if employee well-being is considered a matter of entitlement, rather than viewing well-being as a means to improve business performance. Companies need to value human capital, allowing their employees to demonstrate their potential and develop their creativity at work. The HR department and HRM professionals should facilitate a type of work culture in which employees have autonomy over work-based decisions, demonstrate responsible behaviors, and value their participation in the company.
References
ISLAM, Md Shamirul; AMIN, Muslim. A systematic review of human capital and employee well-being: putting human capital back on the track. European Journal of Training and Development, 2021.
