The Academy of Economic Studies, Bucharest

Faculty of Business Administration

Student Scientific Communication Session
Investing in peoples skills
Coordinating rofessor ! "arta Suciu Authors ! #ecu Cristina $oredana
"ina Ivanovici %orgovan Teodora
%eorgescu Ale&andru
"aior 'alentin
"anolescu $acramioara
1


TEAM PRESENTATION
(ame! #ecu Cristina)$oredana
Age! *+
,niversity! A-S-E . Bucuresti
Faculty! Business Administration in English
/ear! I
Contri0ution to the pro1ect! Investments in human
skills seen through graphic and survey
(ame! %eorgescu Ale&andru
Age! 23
,niversity! A-S-E . Bucuresti
Faculty! Business Administration in English
/ear! I
Contri0ution to the pro1ect!Innovations
(ame! %orgovan Teodora
2
Age! *+
,niversity! A-S-E . Bucuresti
Faculty! Business Administration in English
/ear! I
Contri0ution to the pro1ect! "ethods of investing in peoples skills 4 Conclusion
(ame! "aior)Bodescu 'alentin
Age! *+
,niversity! A-S-E . Bucuresti
Faculty! Business Administration in English
/ear! I
Contri0ution to the pro1ect! Case Study
(ame! "anolescu $acramioara
Age! *+
,niversity! A-S-E . Bucuresti
Faculty! Business Administration in English
/ear! I
Contri0ution to the pro1ect! Introduction 4 eoples skills as human capital
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INTRODUCTION
The person 5ith the 0est operational or technical skills 5as al5ays the one 5ho moved most
6uickly up an organi7ation8s ladder of success, in the past- Strong technical e&pertise is no longer
the sole key to success 5ith increasing fre6uency in today8s 5orkplace- A leader8s a0ility to
effectively interact 5ith people is of e6ual or even more importance- Current research
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demonstrates that various skills linked under the general title of 9people skills9 play an
increasingly important role at the very highest levels of an organi7ation-
#ifferences in technical competencies are of negligi0le importance- The higher the rank
of a person considered to 0e a star performer, the more people skills emerge as the reason for his
or her effectiveness as a leader and as a strong performer-
According to :ordan Evans, co)author of 9$ove 8Em or $ose 8Em! %etting %ood eople to
Stay,9 people don8t 6uit companies, they 6uit 0osses- %enerally, those 0osses lack people skills,
5hich can determine an employee to 6uit-
The individual 8s relationship 5ith management is often directly linked to employee drive
and commitment-
OBJECTIVES
Improved earnings, enhanced productivity, healthier profits, reduced costs and 5astage, and
greater customer satisfaction- These are 1ust a fe5 of the 0enefits that investors in peoples skills
can 0ring to the economy of a country-
INVESTMENT IN HUMAN SKILLS SEEN THROUGH GRAPHIC AND SURVEY
Skills matter for individuals and for economies 0ecause skills have an increasing impact on
la0our market outcomes and social participation and 0ecause failure to ensure a good skills
match has 0oth short) term conse6uences and longer)term effects on economic gro5th and
e6uality of opportunities-
In order to success 5ith converting skills into 1o0s and gro5th depends on 5hether 5e invest in
them! 5e kno5 5hat those skills are that drive economic outcomes and then the right mi& of
skills is 0eing taught and learned in effective, e6uita0le and efficient 5ay-

Fig- roducing an effective skill mi&
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According to %ary S- Beckers classic study of the conse6uences of investing in a persons
kno5ledge and skills ;<uman Capital! A Theoretical and Empirical Analysis, 5ith a Special
=eference to Education>, the investment in an individual s education and training is similar to
0usiness investments in e6uipment- The human capital approach also allo5s for determining the
costs and returns from college and high school education-
Investing in human skills is a good action plan considering that no5adays all the employers look
for employees that have graduated a college and have diplomas that certify they have different
6ualifications- ?hat is more, employees are offered the possi0ility to participate in different
trainings in order to develop their skills-

Starting from a myth that is 5ell kno5n ;$eaders are made, not 0orn> the group conducted a
survey among people from different ages in order to see if they 0elieve that a person does not
need to invest in developing his@her skills 0ut they are generally 0orn predisposed to 0ecoming
5hat they 5ant in life directly-
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?hile making the case study 5e started from a simple myth that 5e compared 5ith our case
;$eaders are 0orn, not made>- In our case the leaders represent the people 5ho no5adays have a
1o0, they 0ecame the persons that they al5ays dreamt! doctors, la5yers, 1udges etc- ,sing the
myth 5e tried to demonstrate that in order to 0ecame 5hat you al5ays 5anted you need an
education, special trainings 5here you assimilate the needed information for your dream, for
your aim-
In conclusion, at the end of the case study 5e could see that a0ove half of the people in the
survey considered that ;$eaders are made> 5hich means an investment in human skills-
INNOVATIONS
Building organi7ational capa0ilities, such as leadership development or lean operations, is a top
priority for most companies 0ecause 0uilding such capa0ilities can help a 0usiness reach much
higher targets- <o5ever, many 0usinesses have not yet figured out ho5 to do so effectively-
The more skills a 0usiness staff has, the more innovative they can 0e- They 5ill 0e more
capa0le 5ith ne5 technology 5hich is a really crucial point in these computer driven times-
Skilled 5orkers can also 5ork more 6uickly 5ith fe5er mistakes, thus making everything in the
company 5ork more effectively- They generally re6uire less supervision, accept more
responsi0ility, are 0etter communicators, and they are 0etter at team 5orking- Training leads to
higher skills, 5ages and lo5er staff turnover-
According to a recent survey, nearly A3 percent of managers say that 0uilding organi7ational
capa0ilities such as lean operations, pro1ect or talent management is a top)three priority for their
companies- /et only a third of companies actually focus their training programs on 0uilding the
capa0ility that adds the most value to their companies 0usiness performance-
It is nota0le that the ma1ority of companies do not focus on a specific priority capa0ility for
purely competitive reasonsB most often, the reason is that the capa0ility is part of their culture-
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?hile making the case study 5e started from a simple myth that 5e compared 5ith our case
;$eaders are 0orn, not made>- In our case the leaders represent the people 5ho no5adays have a
1o0, they 0ecame the persons that they al5ays dreamt! doctors, la5yers, 1udges etc- ,sing the
myth 5e tried to demonstrate that in order to 0ecame 5hat you al5ays 5anted you need an
education, special trainings 5here you assimilate the needed information for your dream, for
your aim-
In conclusion, at the end of the case study 5e could see that a0ove half of the people in
the survey considered that ;$eaders are made> 5hich means an investment in human skills-
#espite the importance of capa0ility 0uilding on the strategic agenda, e&ecutives responses
indicate they are not very good at e&ecuting! only a0out a 6uarter think their companies training
programs are ;e&tremely> or ;very effective> in preparing various employee groups to drive
0usiness performance or improve the overall performance of their companies-
The survey results also indicate a potential e&planation! training programs are misaligned 5ith
5hat is thought to 0e the capa0ility most important to a companys 0usiness performance- Cnly
DD percent of respondents say their training and skill)development programs focus on developing
their companies most important capa0ility-
$eadership skill, for e&ample, is considered 0y the ma1ority of respondents to 0e the capa0ility
that contri0utes most to performance-This concept has as argument the fact that leadership skills
are used to improve creative economy 0y using human resources and capital in 5hich they invest
more then they do in other any other resources- /et only DE percent of respondents say they focus
on it- And only DA percent of e&ecutives consider their companies 0etter than competitors at
leadership development-
Si&teen percent of respondents in China and 23 percent in India say capa0ility 0uilding is a top
priority for their companiesFversus *3 percent overall and G percent in (orth America,
ho5ever, =espondents in China consider their companies much 0etter than their competitors in
manufacturingF0ut poorer in pro1ect management-
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METHODS OF INVESTING IN PEOPLES SKILLS
Investing in peoples skills means helping people achieve their goals, 0y developing their natural
0orn talents and more than this, it represents an investment in the future that 5ill repay itself a
great many times-
The re6uirements of each 1o0 are higher and higher and in order to get a 5ell)paid 1o0 and
0ecome 5ealthy, you must fulfill as many re6uirements as possi0le 0y having a higher level of
school e&perience and conse6uently a rich trivia ,as many 6ualifications as possi0le and the most
5anted, the practical e&perience- Each employer asks for all a0ove and they can 0e easily
achieved-
%eneral kno5ledge is 0asically the comprehension of the events taking place around us- The
more information a person has gained on general kno5ledge, the 0etter understands the 5orld-
%eneral kno5ledge helps people keep update and also gives them a 0roader vie5 to perceive life-
it also has a strong influence in the academic 5orldB it enlarges ones vie5 to5ard life- The
general kno5ledge as a skill of humans in their careers is e&tremely demanded as it offers a more
profound perspective on facts and makes people more open)minded- Thats 5hy people are going
to school and focus on learning -A rich trivia means that e person is smart, clever, resourceful,
makes a good decision in a very short time and is never indecisive, hesitant as he@she kno5s
5hat he@she 5ants and 5hat he@she e&actly has to do -This is the reason 5hy employers are
al5ays looking for people 5ith high level of education-
The school e&perience is another 5ay of investing in people skills- The mission of the school
e&perience program is to contri0ute to the enhancement of education- The aim is to develop
trainees practical skills, to help students to choose a career path 5isely, gives the opportunity to
learn to 5ork 5ith others in successful and re5arding 5ays- This method is a very useful and not
so common, not to e&pensive, 0ut entirely constructive 5ay to enrich students e&perience and
sense of responsi0ility- It is a great 5ay to impress the employer though such a thing-
How can practical experience be achieved?
?ell, as a student ,the possi0ilities and the opportunities are 6uite limited, 0ut the first step is to
get involved in an (%C or in a students associationB another 5ay is to get a part)time 1o0-
Each #iploma or receipt is 5elcomed in the Curriculum 'itae or resume, and it 0rings you one
step ahead the others- The (%Cs gives one the sense of organi7ation, the sense of
responsi0ilities, the 0asic skills of leadership ,the a0ility to communicate and to sociali7e as 5ell
as the a0ility to deal 5ith different situations such as! meeting 0usiness people, giving an
international speech, participating in national or multinational de0ates, promoting international
campaigns and so on- All these, comprised in a receipt check off the very important re6uirement
of each 1o0 announcement-
The other 5ay, as mentioned a0ove is 0y getting a part)time 1o0- It certainly helps you a lot and
0esides you are also paid- These part)time 1o0s may 0e represented 0y promoting, sampling-
5orking as a 5aiter@5aitress, 0eing a representative of Avon@oriflamme, for e&ample, 5orking as
a cook at HFC or "C#C(A$#S or doing some paper5ork is some companies- ?hatever it is
and gives you a guarantee of your 5ork there, it8s inconceiva0le useful for your future career and
is definitely a cue 0all-
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As a former employee, is no 0etter off- #espite the previous e&perience din different domains,
one has to have plenty of skills and 6ualifications as 5ellB for e&ample communication and
completion a0ilities, accounting skills, foreign language certificates or IT #iploma-
Business no5adays needs very intelligent and skilled people that al5ays come up 5ith ne5
0rilliant ideas and that are really involved and good at 5hat they are doing-
Thats 5hy poor skills may influence peoples lives in a negative 5ay- They risk to stay
unemployed and have lo5 earnings, and almost non)e&istent chances to ever advance in careers-
But employers have no choice 0ut to adapt to the changing 5orkforce- They are confronted 5ith
a 0road variation in a0ility level among 1o0 applicants, confusing the traditional process of
identifying the 0est potential employees from a more homogeneous group- Applicants 5ith high
a0ility levels are likely to apply for more comple& 1o0s, such as computer programmer and
accountant- $ike5ise, applicants 5ith more modest a0ility tend to apply for less mentally
comple& 1o0s, such as general factory 5orker and data entry clerk-
A skilled 5orkforce and prosperous economy demands action from us all . employers,
individuals and %overnment-
Business is clear! the governments num0er one priority must 0e for young people to leave
school literate and numerate . so that firms can give them the skills to succeed in the 5orkplace-
But its critical to that young people to develop softer employa0ility skills Isuch as team 5orking
and pro0lem)solving, underpinned 0y a positive attitudeJ,as many companies look for these skills
5hen recruiting graduates-
PEOPLES SKILLS AS HUMAN CAPITAL
Asking people a0out 5hat capital means it is most likely to receive ans5ers such as 0ank
accounts or sharesB and they 5ould not 0e mistaking- As the capital8s definition states, 0oth 0ank
accounts and shares are forms of capital in the sense that they are assets that yield income and
other useful outputs over long periods of time-
But such forms of capital are not the only type of capital-(o5adays, if 5e take a look at
economy 5e can see that the activities such as schooling, training courses on any su01ect or
simply lectures on 1ustice, ethical 0ehavior or fundamental values are also capital- The reason
5hy they are classified as human capital is 0ecause as any other form of capital they raise profits
or simply improve a country8s economy 0y developing a peoples skills-
Therefore, the economists refer to these forms of capital as investments in human capital- They
are called human capital 0ecause they reach the definition and characteristics of human capital as
they are the stock of competencies, kno5ledge and personality attri0utes em0odied in the a0ility
to perform la0or so as to produce economic value- <uman capital is vitally important for an
organi7ation8s success and it only increases through education, training and e&perience- As
opposed to other types of capital Ifinancial, tangi0le, physical assetsJ 5hich can 0e separated
from people, human capital Ikno5ledge, skills, health, values,J cannot 0e physically detached
from people-
<ave you ever 5ondered 5hy most employers look for skills a0ove kno5ledge in their future
employeesK
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There are several reasons for 5hich they act this 5ay, 0ut mostly is 0ecause they look to 0ring
improvements to their 0usiness and they see it as skilled people are the key to success- As society
evolved, the concept of investing in peoples skills has gro5n in peoples minds over the years
5hich led employers to finding different methods of developing their skills- (o5adays, there are
several departments 5hich are in charge 5ith developing peoples skills such as! human
resources, training department-
The most important investments in human capital are education, training and health- As many
studies sho5, in 0oth Europe and ,SA, higher education such as high school or college have a
great impact on the future income of a person- The earnings of people 5ith 0achelor or master
degree are implicitly almost al5ays a0ove average- Therefore, the more evolved from an
educational point of vie5 a country is ,the more developed economically 5ill 0ecome-
Economists Hevin "- "urphy and Finis ?elch have sho5n that the premium on getting a
college education in the *+G3s 5as a0ove AE percent- This premium continued to rise in the
*++3s, and in *++L it 5as more than LE percent- $a5yers, accountants, engineers, and many
other professionals e&perienced especially rapid advances in earnings- The earnings advantages
of undergraduates over high school graduates have greatly increased in the last years-
For a country to 0ecome more and more economically developed, the state should provide
ade6uate 6uality and 6uantity of education or other training and it 5ill eventually reach a point at
5hich any increase in capital 5ill create economic gro5th-
Because of the fact that in the ,nited States of America the college tuition 5as rising rapidly, the
percentage of people enrolling in college started to decline- <aving a perspective on ho5 higher
education is an investment in human capital helps people understand 5hy the percentage of high
school graduates 5ho continue their studies at an university fell from E* percent in *+L3 to MA
percent in *+LE-
After some students 5ere asked 5hether or not they 0elieve skills development to 0e
helpful@vital for a country8s economy one of them gave the follo5ing ans5er! 9In my opinion
skills and their permanent improvement are a sign of evolution in every domain of life-
Therefore, in a 5orld that is constantly changing, skills development is e&tremely vital as it is
directly involved in a country8s economy- The economy, com0ining elements from other sciences
and improving communication skills, psychological ones, even technological or relational skills,
5ill help the gro5th of economy-9
CASE STUDY
All organi7ations train their people, and most spend significant sums doing so- /et they generally
dont have any idea 5hether theyre getting any 0usiness value from training- Beyond teaching
ne5 employees the specifics of their 1o0s, most companies train staff in areas such as leadership,
communications, performance management, or lean operations- But they typically measure
trainings impact 0y conducting surveys of attendees or counting ho5 many employees complete
courses rather than 0y assessing 5hether those employees learned anything that improved
0usiness performance-
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This approach 5as, perhaps, accepta0le 5hen companies had money to spare- (o5, most dont-
/et more and more, organi7ations need highly capa0le employeesF+3 percent of the
respondents to a recent "cHinsey Nuarterly survey* said that 0uilding capa0ilities 5as a top)ten
priority for their organi7ations- Cnly a 6uarter, though, said that their programs are effective at
improving performance measura0ly, and only G percent track the programs return on investment-
The story of one social)sector group, the Boys O %irls Clu0s of America IB%CAJ, illustrates
ho5 organi7ations can make the most of their outlays for training programs 0y doing a 0etter 1o0
of understanding 5hich of them create 0usiness value, and ho5- The ans5ers are remarka0ly
straightfor5ard and have lessons for retailers, manufacturers, and a range of other organi7ations
as 5ell-
?hat the Boys O %irls Clu0s do
B%CA faced a common pro0lem! a lack of capa0ilities in a core areaFleadershipFand a lack of
funds to 0uild those capa0ilities- Further, its donors 5ere far more interested in financing
programs directly aimed at children rather than ;overhead,> such as training- That made it
imperative for B%CA to prove the performance impact of any training it undertook-
B%CA is one of the largest nonprofits in the ,nited States- It acts as an um0rella for more than
*,*33 local organi7ations and M,333 clu0 locations, 5hich provide safe places for young people
to learn and participate in athletic and life skills programs- The *,*33 local organi7ations manage
their o5n resource development, strategic planning, programming, and fund)raising-
In 233L, B%CA found itself facing an incipient shortage of leadership capa0ilities- The
organi7ation has an ongoing gro5th strategy to e&pand the num0er of clu0 locations 0ut
anticipated a 5ave of retirements among current local leaders- ,sing a capa0ility model that
appraised nearly E3 aspects of leadership, B%CA 0egan to address the pro0lem 0y undertaking a
DA3)degree assessment of every local leader- =egression analysis helped B%CA to correlate each
aspect of leadership 5ith local organi7ational performance on crucial measures such as gro5th in
mem0ership and funds raisedFmeasures that it already tracked to assess the local organi7ations
as a 5hole- Four out of the E3 aspects contri0uted disproportionately to performance! the leaders
a0ility to 0uild an effective 0oard, find and pursue effective revenue)development strategies, use
an investors mind)set to5ard programs and resource development, and lead 5ith personal
tenacity and persistence-
B%CA therefore 0uilt its training program around those four su01ects- The program involved
0oth intensive classroom 5ork and a pro1ect chosen 0y each local teamB pro1ects ranged from
implementing ne5 <= processes to deepening the impact of after)school programs- By the end
of 233+, over AE3 leaders from appro&imately 2E3 local organi7ations had 0een trained-
Because the program 5as designed to improve specific organi7ational)performance outcomes,
the process of assessing its impact 5as straightfor5ard- ?here the leaders of local organi7ations
had received training, B%CA compared their pre) and post)training results- "ore important, it
also compared the post)training results against those of a control set of organi7ations, 5hich had
similar characteristics Isuch as 0udget si7eJ 0ut 5hose leaders had not yet gone through the
training- The do5nturn in the economy, as 5ell as pree&isting economic differences among
cities, complicated efforts to assess gains in mem0ership and fund)raising on an a0solute 0asis-
?ith the use of these controlled pairs, ho5ever, B%CA 5as essentially a0le to screen out the
impact of e&ternal factors Ifor instance, unemployment or differences in local educational)
attainment ratesJ on mem0ership and fund)raising- In this 5ay, B%CA could isolate the effects of
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the training itself- Besides the 6uantitative analysis, B%CA used 6ualitative approaches, such as
surveying local 0oard mem0ers 0efore and after the training, to assess the leaders changes in
0ehavior related to 0oard leadership-
Cn average, locations 5here the leaders had 0een trained 0ested the control group on every
performance outcome measured- If all *,*33 B%CA mem0er organi7ations had matched the level
of success achieved 0y the program participants, B%CA 5ould see more than DE3,333 ne5
mem0ers and more than P*33 million in annual incremental revenueFa 2 to D percent increase
in the average locations 0udget, meaningful at a time of precarious funding- "oreover, B%CA
determined that it generated more than a fourfold return on the programs costs, including the
imputed cost of the participants time, as 5ell as travel and training e&penses
IE&hi0it *J-
BGCA then compared performance gains among participants and found that the
gains of participants in the highest quartile were three to fve times the average
(Exhibit 2! "he high performers t#picall# focused on ver# aspirational pro$ects% set
clear& quantifable goals% and too' the extra step of teaching what the#(d learned to
the rest of their organi)ations! "hose insights led BGCA to ad$ust the training
curriculum to reinforce the success factors!
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Applying the lessons
icking the right metrics is the key to creating real value from training- "ost for)profit
organi7ations have a longer list of 6uantitative 0usiness)performance metrics than B%CA does- A
retailer pursuing 0etter customer service and sales gro5th, for e&ample, could train employees 0y
getting its managers to provide real)time coaching and to role)model 0est)practice customer)
engagement techni6ues- =ather than 1ust measuring the managers time allocation or employee)
engagement dataFas most 5ould do no5Fthe retailer should measure the impact of its
programs through hard 0usiness metrics, such as sales, 0asket si7es, and conversion rates in
critical categories or departments- Similarly, a manufacturer might try to improve its operations
0y teaching plant supervisors lean)manufacturing and coaching skills, 0ut rather than tracking
only ho5 many managers have 0een trained, it should track metrics such as do5ntime, the
overall effectiveness of e6uipment, or fill rates-
In every case, companies must continually revie5 and revise the links 0et5een skills,
performance, and training programs- Typically, to determine 5hich metrics should 0e improved,
companies assess their current performance against industry 0enchmarks or their o5n goals- $ike
retailers and manufacturers, most other companies kno5 5hat kinds of skills are tied to different
areas of performance- So a good ne&t step is to conduct an analysis of the relevant groups of
employees to identify the most important specific skills for them Ias B%CA didJ and 5hich
performance)enhancing skills they currently lack- To get a clear read on the impact of a program,
its crucial to control for the influence of e&ternal factors Ifor instance, the opening of ne5 retail
competitors in local marketsJ and of e&traordinary internal factors Isuch as a scheduled plant
shutdo5n for preventative maintenanceJ- Its also crucial to make appropriate comparisons
5ithin peer groups defined 0y pree&isting performance 0ands or market types-
CONCLUSION
With an environment of support, encouragement and reinforcement, an organization can
achieve the desired return on a considerable investment in people skills training. But executives
reall have to want it to make the right kind of investment. !here"s no magic pill#no short cut.
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$t"s like losing weight. $f ou reall want to keep the pounds off, ou have to establish new eating
and exercise habits. $f ou want lasting changes in our organization, ou have to be willing to
pa the price.%
Dennis E. Coaes

In conclusion, investing in peoples skills has one of the most important roles in a high level
organi7ation@0usiness, as its prosperity lies in its 5ork po5er, economy, and culture- And ho5
could a 0usiness develop and 0e flourishing if not through its employeesK
eople skills represents the key to the success of each organi7ation, 0ut in order to make it
flourish these skills need to 0e used effectively and these skills are 5ith regard at a good
understanding of employees themselves ,controlling their 0ehavior ,setting@reaching goals and
have a sincere attitude to others needs or feelings, accordingly-
This 5ould definitely lead to improved earning ,0igger productivity and profits and also smaller
costs as 5ell as staff motivation and their sense of achievement ,0ut also customers
satisfaction -These investments in peoples skills should 0e aimed for a long)term period and
should 0e started from the very 0eginning of the employees careers so that the firm performance
could 0e rose-
eople skills are the invisi0le part of 0usinesss development and for this reason ,these should an
increase in investing this skills-

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