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European Management Journal Vol. 21, No. 1, pp. 1-10, 2003 © 2003 Elsevier Science Ltd. All rights reserved. Printed in Great Britain



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Managing Personal Human Capital:

New Ethos for the 'Volunteer' Employee
LYNDA GRATTON, London Business School SUMANTRA GHOSHAL, London Business Schoo

The relationship between individual employees and their employing organizations is undergoing fundamental changes. Increasingly, the employee is less a malleable resource for the company and more a mobile investor of his or her own

human capital. Defining human capital as the composite of an individual's intellectual, social and emotional capitals, this article suggests some new ethos that such 'volunteer' employees need to adopt as they take greater personal responsibility for both

European Management Journal Vol. 21, No. 1, pp. 1-10, February 2003

employees. from investing in lifetime relationships to 'serial monogamy' characterized by a series of close relationships governed by the expectation that these relationships need to be made to work. The concept of democracy is built around some foundational principles: the creation of circumstances in which people can express their potentialities and their diverse qualities. 21. pp. PERSONAL HUMAN CAPITAL All rights reserved. These changes in the relationship between the employer and the employee echo a broader revolution which is reshaping social institutions all around us. © 2003 Elsevier Science Ltd. demand an exciting and stimulating work environment and. Keywords: Human capital. At the same time the 'generational markers' of those entering the workforce are very different from those of the 'baby boomers' who are currently running industry. yet will inevitably not last. most importantly. 1. The present temporary reversal notwithstanding. organizations. The geneses of these changes lie not in the managerial rhetoric to empower the workforce: they have occurred as a response to fundamental changes in society.developing and deploying their personal human capital. and with this 'war for talent' has come the opportunity for the new generation to shape the way they work. 1-10. in the nature of labor markets and in the talents and aspirations of individuals. They have vicariously experienced the tragedies of the 'organizational man' (Whyte. At the heart of this revolution lie the democratizing forces that push for modernity. with organizations. Many have seen their parents sacrifice their personal needs to meet company requirements. value autonomy in career. for example. February 2003 .3 These changes also follow closely the 2 European Management Journal Vol. involvement of people in determining the conditions of their association.1 These forces of democratization are transforming individuals' relationships at all levels — with other individuals. and with broader collectives such as the State. The new entrants prefer working in teams. In this sense. and expansion of opportunity to develop available resources. No. 1956) and are determined not to fall victim to the forces of depersonaliz. protection from the arbitrary use of authority and power. the changes we are witnessing in the employment relationship are very similar to the changes Anthony Giddens has described in the nature of human intimacy and in the institution of marriage2 — the shift. Employees Volunteer Employing Introduction We are witnesses to some sweeping changes in the nature of the relationship between individuals and organizations. changes in the demographics of most countries have placed young talent at a premium across the globe.ation in the traditional model of individual-organization relationship. Career success.

how does the individual construct a work life of meaning? The emerging 'volunteer' model of employment relationship requires the creation of a whole new language of development. What things do people have that are productive resources? What is it about people that translates into value for themselves and the organizations of which they are part? We believe European Management Journal Vol. and the opportunities for broadening beyond current job roles have narrowed rather than widened. a productive resource — and the adjective is human. but we believe these trends are a harbinger of what is to come and an important 'wake up' call to employees. With the broadening of the routes to economic prosperity. i. This does not mean that people continuously change jobs — some do. In previous generations the conventional practice was for the employee to play the part of the innocent with the employer as the sophisticate. So given both autonomy and variety. 21.PERSONAL HUMAN CAPITAL implications that Deepak Lal has traced of the rise of individualism on the social structure and economic functioning of nations. 270).4 The concept that links these various elements of democratization is the primacy of individuals and their capacity to behave with autonomy. judge. which once could perhaps be assumed.5 So. How have companies responded to these broad changes? For many the mantra of 'employability' provided a useful over-arching philosophy to downsize in the face of renewed competitive pressure and the need for greater flexibility of skills. that have nothing to do with human capital. the traditional paternalistic model of employment is being replaced by a 'volunteer' model. build a company or work for a company. this is the growing trend all over the world. No. In considering the notion of resources we have used the term 'human capital'. choose and act upon possible courses of action' (Held. They could and would no longer promise lifetime employment. Bad news perhaps. has now to be negotiated and bargained for. not the organizations that employ them. which essentially means that they actively manage the processes of developing and deploying their own resources. work for a large company or a small start-up. in the individual's 'rights of selfexpression'. the innocent plays the sophisticate. together with the growing sense of autonomy among individuals. In essence. there is also a growing variety of work opportunities for people to choose from. and some don't. but their side of the deal was to support the individual employee to build his or her human capital. In this article we examine what individuals can do for themselves to construct novel ethics of day-today work life while simultaneously building and leveraging their personal resources. 1986.e. people have. February 2003 3 . are and do many things. This refers to things people have. In other words. The relationship today is reversed. including many wonderful things. 1. The operating word here is capital — i. The aspect of the ongoing transformation from an industrial to a postindustrial society that perhaps deserves the greatest celebration is the blossoming of this variety and the accompanying liberation of the individual from the iron cages of both organizational and occupational hierarchies. their careers and their destinies. But. But they take charge of their careers.e. At the same time there has been an enormous flourishing of variety in the models of working: work part-time or fulltime. p. Success today can come from a much more diverse set of occupations than in the past — with much less predictability ex-ante. their capacity to be self-reflective and self-determining 'to deliberate. 1-10. in which the interests of both the individual and the organization have to be met and commitment to work. work as a freelance or as a member of the core. At least for managerial and professional careers. Much of the historical discourse about development has been around what the organization can do for the individual. pp. company investment in job-related training has decreased rather than increased. It is increasingly individuals who control their development. This places responsibility for development of the self squarely in the hands of the possessor. there has been the inevitable broadening of social respectability too. In reality it has proved to be enormously difficult to deliver this deal in an institutional form. in many cases. The Three Capital Elements of Human The notion of individuals participating in the democratization of work implies they have sufficient resources to participate in an autonomous way.

21. a society of Nobel laureates would have created the most successful 4 . IT services and so on. or have access to. and rightly so. Oxford.6 For organizations. consumer electronics. together with the tacit and explicit knowledge. constitute their human PERSONAL HUMAN CAPITALindividual capital (see Figure 1). to move into action. global company. Social and Emotional Capitals of Individuals and Organizations element is intellectual capital. in manufacturing-based businesses like pharmaceuticals. 1-10. Knowledge is an essential element of human capital. knowledge rather than money is increasingly the key competitive differentiator — certainly in service industries like consulting. In the recent past. and electrical machinery where. 1. Individuals need self-confidence. self-esteem and personal integrity. skills and expertise an individual builds over time. pp. historically.8 But specialized knowledge and a great network of friends are not enough — to get things done. similarly sociability and trustworthiness provide the anchors for developing and maintaining a network of relationships.9 Like aspects of intellectual capital. And. That is emotional capital. February 2003 intellectual capital of individuals. large asset bases and strong balance sheets had held the key to success. but not all that there is to it. But. but also. Ecole Polytechnic or MIT tend to have an advantage over others — irrespective of whether they are smarter than the others or not. and how well one knows them. based on selfEuropean Management Journal Vol. individual emotional capital is underpinned by fundamental traits such as selfawareness.that there are three kinds of resources that people possess which. collectively. It refers to fundamental individual attributes such as cognitive complexity and the capacity to learn. The depth and richness of these connections and potential points of leverage build substantial pools of knowledge and opportunities for value creation and arbitrage. just as cognitive complexity and learning capacity provide the underlying individual traits on which specialized knowledge and skills are grounded. This has naturally created a large premium for the knows. if people with great knowledge and expert ise were all it took for achieving outstanding business performance. The second element of human capital is social capital7 — which is about who one The first Figure 1 Human Capital consists of the Intellectual. increasingly. individuals need one more thing. This is why those who have studied at Tokyo University. No. This is also why Silicon Valley and other global 'hot spots' yield such enormous value for individual members of these communities. investment banking. much management attention has been paid to this issue of intellectual capital. they tend to have friends in influential positions in other organizations to access new business opportunities and to solve problems. These relationship networks constitute a form of capital because they provide access to the resources members of the network possess.

In a fast changing world. social and Table 1 Elements Emotional capital of Human Capital of Individuals emotional capitals.. European Management Journal Vol. you are not an employee.12 1) are highly inter-related. to convert their knowledge and relationships into effective action.10 Emotional capital brings the integrity and self-awareness to build open and trusting relationships which underpin the creation of social capital.. 21. through it. You own it as a sole proprietor. While knowledge facilitates action. Because of this responsibility. social and intellectual capitals are the basis for building strong and supportive relationships. PERSONAL HUMAN CAPITAL Intellectual capital Cognitive complexity Learning capacity Specialized knowledge and skills Tacit knowledge Managing Personal Human Capital These different elements of human capital (see Table Social capital Network of relationships Sociability Trustworthiness Ambition and courage Integrity Resilience The challenge of competing on human capital is the challenge of managing this interactive cycle of building and leveraging intellectual. And within this reinforcing feedback loop. resulting in the selfawareness of emotional capital. In recent times. Relationships facilitate action but commitments to relationships can also prevent necessary but unpleasant actions. Each individual has to become aware of these risks of diminution and make active choices about where to work and what to build based on that awareness. the democratization of work life requires each to take responsibility for his or her own development. this is the starting point for managing human capital at the individual level. in a competitive. The reverse is also true — knowledge and skills are a prerequisite for effective action. they also create tensions and contradictions. few business leaders have achieved as much recognition and success as Andy Grove.esteem. The learning propensity of intellectual capital can be a driver for self-development. In turn. Together. Self-awareness For individuals. relationships weaken unless they are continuously refreshed. You are in business with one employer — yourself — in competition with millions of similar businesses worldwide. the feedback-loops and connectivity which bring advantage. knowledge-based economy. all the elements of human capital erode rapidly — knowledge becomes obsolete unless it is updated. 1. participants in the new 'volunteer' model for individual-organization relationship will increasingly have to adopt four new personal ethos. But. pp.11 Perhaps there is an element here of the Hobbesian war of all against all but. 1-10. the self-knowledge built through open and meaningful relationships further enhances self. Each individual must now accept the responsibility for managing his or her personal human capital. emotional. it is the combination. Starting his life in the United States as a penniless emigrant from Hungary. by experimenting. and for developing the courage and grit necessary for entrepreneurship and action taking. Knowing can come in the way of doing. by testing out ideas. helps individuals develop intellectual capital by accessing the knowledge and skills that those people possess. Grove's first advice to all employees of Intel is worthy of attention: No matter where you work. courage and resilience. Grove's career is an epitome of not just professional accomplishments but also of lasting contributions — building a highly-admired institution and. it can also impede action. Social capital. at the same time. playing a key role in the development of the digital world. This is just as true for individuals as it is for organizations. self-efficacy and courage diminish unless exercised. Nobody owes you a career. No. action leads to knowledge — people learn by doing. February 2003 5 . the Chairman of Intel. fluid and reciprocal relationships with people. in the form of extensive. instead of passively relying on others to manage it for them. A similar kind of symbiotic relationship exists among all the elements of human capital.awareness and self esteem.

At both Hewlett Packard and Intel. as well as a hierarchy among them.13 The autonomy and variety available to the 'volunteer' bring enormous potential for joy and satisfaction through the discovery of the vocatus. has brought clarity for many people. Analytic frames such as the Myers Briggs instrument and tools such as receiving detailed feedback have a role to play in developing personal awareness. Accordingly. This information is not routed via the organization. the challenge is to find out how. describes whether reality is processed by an individual as something within or something 'out there'. sythesized and discussed by individual employees. possible development. pp. operationalized in the Myers Briggs Type Inventory. however. an extroverted sensation type is likely to be drawn to the outer world and derive greater satisfaction from work as a project leader. on what basis is meaning constructed? Jung uses the term individuation to describe the opportunity each individual has to reach his or her fullest 6 . individuals actively seek feedback by emailing their colleagues in the immediate and extended networks.First. individuals must see themselves as investors in the company. If individuals do indeed 'volunteer' then what is the basis of this volunteering. but this data can only be accessed through a reflective mind-set where feelings and emotions are acknowledged. in all likelihood. or its denial. No. thinking mode15 To access values and preferences. Third. Over time. work inevitably plays a central role. unhappy and unsuccessful as a salesperson.ation. For some people. February 2003 Ethos 1: The Courage To Become Who You Are The industrial society was built around a logic of subdividing and specializing the occupations and contributions of individuals. following Jack Welch's colorful term. is to become themselves as fully as they are able. and. 1-10. such as financial capital. for example. But with the transformation of the post-industrial society has come variety and liberation from occupational hierarchies. Second. 21. there is a need for a changed mindset: instead of thinking of themselves as assets. based on team members and colleagues reporting on an individual's performance and attitudes. and are more confident in their evaluative. to be used by the organization. The incentives were not for discovering one's own talents and propensities and becoming the best one could be. Work represents a large occasion for creating meaning. they have to open their hearts and minds to the invigorating force of continuous learning — an ethos that. they have to consciously position themselves at the intersections of intellectual and social domains. and given the new autonomy. acknowledging the feelings one has about a European Management Journal Vol. But it does not have to be that way. And. being the dumbest you can be'. This is achieved through listening more closely to one's own feelings and those of others. 1956) was indeed broader than the subjugation of the individual to the needs of the organization — it encompassed an overarching subjugation of the individual to the socially-defined hierarchy of occupations. requires the development of the less developed feeling function and the self-reflection which comes from it. the opportunity created by the forces of autonomy and variety will place a premium on PERSONAL HUMAN CAPITAL individu. Many individuals find this very hard to do. therefore. it is something that the organization does for them. for example. An introverted thinking type might enjoy being an academic but would be. asking for information and opinions about themselves. For most. on peoples' courage to understand and be who they are. the logics of Adam Smith and Frederic Taylor led to clear boundaries within occupations and specializations. to be whole. with the increasing value of innovation and new ideas. and in each individual's life journey. 1. The vocatus for all individuals. we have labeled as 'everyday. developing this level of selfawareness is facilitated by the organization. to manage the interactions between development and deployment of human capital. Another important support mechanism for selfdiscovery is to create a 'feedback rich' context.14 The attitude of introversion and extroversion. not unlike the investors of other forms of resources. The pathologies of the 'organization man' that William Whyte portrayed so brilliantly (Whyte. finally. But how can individuals access their deepest needs and values? A starting point is to have a broad frame of reference and Jung's typology of preferences. according to him. Many companies have introduced 360° feedback. so as to be able to bridge diverse spheres of knowledge and other kinds of resources. but for participating in the highest-ranking occupation one could get admission to. but is elicited. to continuously develop their own knowledge and skills.

in turn. The next challenge is to translate these goals in terms of their human capital requirements — what kind of knowledge and skills will be needed.situation. From personal reflection comes an understanding of goals. It is more likely to be a resource tradeoff between capitalizing on the returns from current human capital and investing in development of new human capital. and of understanding that doubt is the necessary fuel for change. It is about choosing among equally attractive options which may yield different benefits. new engineers rotate through a series of five-week projects designed to give the recruits a taste of the different parts of the business. February 2003 Ethos 2: From An Asset To An Investor Taking the courage to become who one is demands a reflective. pp. emotional and social capitals. conscious process of selfdevelopment. then the same logic applies — the logic of having a broad purpose and vision. This sharing deepens the engineers' information and increases their capability to make choices and to actively manage their personal human capital. The old paternalistic employment contract may have created doubts and discomforts. 21. No. Indeed. above all is the challenge of counteracting that state of apathy with regard to any individual's most important asset. values and aspirations. they invest in the business in which they choose to work. autonomy brings the realization that these periods of doubt and discomfort are inevitable. This may be the financial resources to participate in training programs. They invest in building their personal human capital which. 1-10. without a rough plan. Structured training programs have some impact on the creation of personal human capital. While in many companies there is tacit knowledge about the development potential of work options such as projects. In the old paradigm much of the role of development was assumed by the company. what will be the emotional demands? While life is never so linear. Having the courage to become who you are comes from the realization that in each of these swampland states there is a developmental task. when the risks they take leave them vulnerable and alone. PERSONAL HUMAN CAPITAL The reason most people develop a learned helplessness in dealing with their feelings is to avoid the doubts and discomforts feelings often create. Investors have a particular view of a business. and with increasing autonomy and variety.. and a preparedness to invest personal resources in development.16 It is possible to manage this anxiety through the defenses of denial or repression. and by creating periods of self-reflection to promote this inner dialogue. of emotional strengths and of social networks. The same is true for building great personal human capital.. 1. periods which Jung termed the 'swamplands of the soul'. If building human capital is a business. 7 . but not for their personal human capital. At the core of creating personal human capital is the determination to take personal responsibility for development. to becoming investors in the business. Great businesses are built from a broad purpose and a deep understanding of current capabilities. and therefore growth. Variety brings opportunities for developing multifaceted lives. when they are forced to confront their values and aspirations. but these could be attributed to the vagaries of the company. Hence. with employees simply following the laid down trajectories. the second ethos: individuals must move from viewing themselves as simply an asset to the business. While working on these projects. But as democratization of the work place grows. of resource allocation. they confidentially share via the company's intra-net their views on the work and the capability of the project leaders to mentor and coach. At Applied Technology. The challenge of competing on human capital. of flexibility and adaptability. Managing personal human capital as if it was a business is about having absolute clarity of where to best allocate scarce resources (personal human capital) for short and long-term leverage. people engage in such planning routinely for their personal financial capital. one cannot cope with the unexpected exigencies and still maintain course. for example. some companies have sought to make this knowledge more widely available. but the primary impact arises from day-to-day experiences European Management Journal Vol. Individuation requires a more conscious and continuous building of intellectual capacity. The life of the 'volunteer' will inevitably involve anxiety and loss: when they stretch too far and fail. the old paternalisms are no longer valid. what relationship networks will be vital. Increasingly the 'volunteer' employee will want to make an informed choice of allocation by accessing deep information about the potential of different work options for building their intellectual.

they can enlarge their vision of the possible and learn to overcome the constraints of the past. negotiating and bargaining for what they believe is right. It is a consortium program. stretching and challenging projects. and the rationality of planning and purpose. become moribund and bureaucratic. from engaging and stimulating colleagues who are prepared to share their knowledge. of making tough decisions on the allocation of scarce resources. visiting each company. The same often happens to people. therefore. 1. but the capacity to create human capital is still shrouded in mystery. from 'feedback rich' working environments. the two authors have jointly run an executive program. to develop as a person. Similarly. The escape from such ossification lies in the imaginal capacity that all individuals possess but many do not use. Businesses are compelled to report on their management or financial capital. But the analogy extends further than that. The basic philosophy of the program is built around the concept of learning from one another — individuals learning from their peers in companies from very different businesses. values and norms become ossified and inappropriate. Over the four years that we have run the program. more self aware. These are the most obvious parallels between managing personal human capital and managing a business: the importance of purposeful choice. Ethos 3: Everyday. To be adaptive. more courageous. pp. each individual is obliged to find his or her own way. No. making deals. businesses have to confront and discard those aspects of their heritage that are no longer appropriate. they remain lumbering and inflexible. The investor. Companies often suffer by becoming prisoners of the past — unable to free themselves from their history. The investor mind set is more active. 1-10. The ties of the past create strategic inertia: processes and routines. of developing general. of negotiating hard for the opportunity to build social networks. Each company sends a team of six very senior-level general managers to the program. and crossing over sometimes confronts the need to stand against the forces of personal history. of having the courage to make substantial personal investments in knowledge acquisition. as well as each company team learning from the perspectives and practices of the other companies. While individuals are limited by their complexes to repeat historic response patterns. Be The Dumbest You Can Be Over the last four years. Over the ten month period. therefore. global work: from mentors who become 'talking partners'. or freeing oneself from routine and. place and history. once useful. 21. They need specific answers to the following questions: what is the company's history of mentoring? How much time do the leaders of the business spend on coaching activities? Are senior people willing to sponsor young people? Is any part of the remuneration of team leaders determined by their ability to attract and retain talented people? What is the proportion of exciting projects? How is membership to projects assigned? What is the knowledge base of people? How is feedback on performance given and received? Do people trust each other? What is the individual latitude of discretion? In business. looking at its operations. In a world of autonomy and variety. February 2003 8 . consisting of six large. talking to a wide range of people — all in the hope of maximizing both individual and collective learning from these experiences. This may entail transgressing a mentor's will or a colleague's hopes and aspirations. from sponsors who open new from PERSONAL HUMAN CAPITAL opportunities. highly visible. people make hard decisions about the allocation of scarce resources. For the determined investor the choices are where and whom to work with. it may mean no longer clinging to impossible fantasies. portable skills rather than company-specific skills. Each individual is constrained within the narrow confines of a specific combination of time. has to become an acute observer and seeker of human capital related information. Actively building personal human capital requires the same up-front attitude: the attitude of keeping options open. cultures and histories. A vast majority use their critical faculties — to see European Management Journal Vol. which runs in short modules over a ten-month period. it is sometimes necessary to cross lines once thought too formidable. we travel around Asia. comfortable ways of behaving. both of us have been struck by one remarkable difference among the individual participants in how they approach these visits. the Americas and Europe.

but more of it is likely to take the form of trade-offs between appropriating returns from their existing knowledge and committing resources to develop new knowledge. it is based on what Don Schon has described as 'technical nationality' (Schon. As argued by Schon. context. the third learning process. Important as it is. Part of these investments may be in the form of time and money to participate in ongoing educational activities. Some individuals tend to be inherently more open to such learning than others. February 2003 9 . which he described as the 'creative leap' (Mintzberg. Much of the learning from trials and experimentation follows an inductive process. 1-10. learning organization is that 'Everyday. The processes are the learning engines through which personal human capital is continuously refreshed and created. 1. individuals need the capacity to learn through all three processes. these participants summarize their critiques in sharp. At the heart of this determined development are three core learning processes that individuals use: application. 1983). Reading. the essence of a concepts or theories. The members of the second group are smarter. At the end of the company visit. Application starts from exposure to broad. Inevitably. focused ways. but on what. induction and reflection. They look for what is working. According to GE's Jack Welch. which are then applied to a particular. They exploit the opportunity to learn and to enhance their own human capital. they will need continuous exposure to the latest ideas and concepts.what is wrong. people are the dumbest they can be'. relevant to the individual's own company or job. reflection is an alternative route to generalization premised not on scientific analysis. Members of the first group are smart. The challenge is to be open to the learning opportunities that life provides everyday'. These are also the learning processes that most people tend to be European Management Journal Vol. often going down to a level of detail that the others consider to be trivial. The volunteer ethos requires each individual to become a determined developer. is built on in-depth understanding of a particular and context-specific situation that ultimately leads to insight and intuition — an outcome that is very different from both the knowledgeacquisition and internaliz. They use their knowledge and skills to see what is missing. defining and framing problems. they find such areas — sometimes in very specific actions. to continuously learn. To become a determined learner. 1979). But there are a few — typically very few — who go about the visits very differently. where the practices of the company are better than their own. reflection. They ask sharp questions to ensure that they fully understand why and how the practices work as well as they appear to do. As he explains. Their feedback is usually both uncomfortable and useful to the managers of the host units. and enriching them through testing and feedback. and becoming part of the networks in which relevant new knowledge is created are all activities that support learning through the application process. and must be willing to invest significant personal resources to stay current in their areas of interest. and sometimes in much broader aspects such as the company's ability to create a high energy work environment. and where the company practices are PERSONAL HUMAN CAPITAL inferior to their own. taking sabbatical leaves for retraining. But it is a skill that can be improved through conscious effort. As a learning process. To learn through application. instead they shape perspectives and assist in identifying. what is not working as well as it might. as a personality trait.ation process of application and the creative generalization from diverse experiences through induction. may be best described as the development of 'wisdom'. based on tentative formulation of hypotheses. 'there is always someone who is doing something better than us. such as some unique aspects of the company's quality management processes. and what can be learnt during the visit that can be implemented with some benefits in their own organizations. where their own knowledge and expertise are superior. Insights generated through deep reflection on one situation do not reveal general 'truths'. No. is driven by the search for patterns and consistencies across different experiences — what Mintzberg has called 'detective work' — and then the generalization beyond data. such as 'core competency'. Finally. for want of a better term. pp. the second learning process. however. context specific situation. 21. Induction. application is likely to contribute a relatively small part of the total learning of the determined developer: he or she is likely to obtain greater leverage from both induction and reflection.

specialist knowledge. Bridging the worlds of science and venture capital yields new business possibilities. 1934 (reprinted in 1962)). Combination of technical and marketing knowledge creates winning new products. is so often so beneficial for both building and leveraging one's human capital. he or she is unlikely to encounter knowledge from outside a limited domain. Both can bring benefits. and while they can yield tacit knowledge. For the determined developer choosing feedback-rich. Ethos 4: Work The Boundaries About half a century ago. individuals who develop multiple weak networks have the opportunity to access a wider diversity of knowledge and therefore the possibilities of connecting these networks and their activity domains to create value through new combi. Understanding the needs of manufacturing and of customers leads to innovative logistical solutions. 21. R&D and marketing — helps build new knowledge. Strong networks have the advantage of focusing attention on a smaller group of people and. Bridging between two industries creates new opportunities as they converge.17 10 . pp. In academic terms. Bridging across two disparate groups — say. whether to put his or her resources into establishing strong ties with a small network of closely linked individuals. The same is true of relationships. on individual attributes such as creativity. intimate relationships with others. while the individual acquires greater tacit. No. On the other hand.less comfortable with. and stimulating colleagues who help create an intellectually alive and challenging environment that facilities action. While the quality and usefulness of such theories depend. This is European Management Journal Vol. These strong links are crucial to the development of deep. The combination of biology. working the boundaries. The arbitrage opportunities in these loose networks arise from the information asymmetry across the networks and the value of bringing ideas and knowledge from one to another. in particular the resource cost of maintaining networks which can fast erode.learning. The individual who bridges two disparate groups of people who are not connected among themselves gets the benefits of brokerage across them. 1-10. But building networks comes at a price. It was this insight that led him to an understanding of the process of creative destruction that lies at the heart of competitive economies (Schumpeter. or to invest available time and resources for developing networks of weak links to many.18 This is why working at the boundaries or. Joseph Schumpeter. capacity for pattern recognition and cognitive complexity. physics and chemistry creates molecular biology. typically. Skilful builders of networks are passionate about people and have the emotional capacity to create strong. a high degree of redundancy since there is so much shared common knowledge. stimulating work and knowledgeable mentors and sponsors is crucial to building personal human capital. this is called 'structural holes' — gaps in relationship networks that yield productive bridging opportunities. specialist expertise. New combinations of existing knowledge create new knowledge. But establishing and maintaining these strong exclusive networks reduce the opportunity for establishing a wider network. in doing so. February 2003 become 'thinking and talking partners'. to some extent. disparate people. rather. had a profound insight. the Austrian economist. tacit knowledge in multiple ways.nations. Progress comes from new combinations. skills and insights that neither group has. It is these networks which can bring the knowledge and excitement that propel individuals to action. the courage to engage in such theory-building endeavors can be enhanced through both practice and reinforcement from mentors who Social capital is developed through networks built upon trust and reciprocity. creating the intimacy. simply because of the dominance of application in the learning process PERSONAL HUMAN CAPITAL of formal education. 1. In short. these tight networks have fewer people and. trust and reciprocity which provide the foundation for transference and combination of rich. Here the individual is faced with an investment dilemma. Both induction and reflection require intellectual curiosity together with the courage and personal sense of autonomy to form one's own 'theories'.

authors or academics are replete with tales of bridging in action. From Human Capital To Meaningful Lives In this article we have argued that fundamental changes are occurring in the nature of the relationship between individuals and the organizations of which they are members. pp. It comes from a deep and passionate interest in people. bridging across diverse knowledge domains is more complex than maintaining one's specialization within a single domain. Similarly. Similarly. Having been born and brought up in Boston. It is the capacity for empathy and intimacy built from emotional capital which provides the context in which people choose to freely give and to receive. Membership of multiple networks involves a great deal of effort. At the heart of these changes lie the democratization of this relationship. Networking without empathy fails to build either the intimacy which supports tacit knowledge sharing within strong links or the broad sociability which creates arbitrage opportunities across weak links. But.actional. it is only from such starts — away from the comforts of 'life as usual' and into new and unfamiliar situations and surroundings — that all bridging begins. and one could be who one was — away from the evaluative and instrumental aspects of work. 21. But while rationality and strategic choices may identify the balance to be struck between weak and strong ties. as is a move to marketing after having built a successful career in finance. But. community organizations in the US. The strategy of investing and building social capital sounds instrumental. The starting point for bridging and also the most difficult step is to have the courage to put oneself in novel situations. familiar systems and old associations. It is more comfortable to stay within the bounds of one's own kind of people. to build meaning and to create more emotionally satisfying lives. Progressive elimination of the third place and the associated enlargement of the work sphere have significantly enhanced the need for European Management Journal Vol. to pursue their natural talents. which is leveraged through self. The issue here is one of investing to build social capital through combining strong ties which yield rich.not easy. It is necessary to relate this argument about peoples' work lives to the broader context of the role work plays in modern life.esteem. and a broader set of changes in societal norms and values that have tended to undermine its social and psychological viability. CEO's. intent on establishing loose ties with those they consider 'important' is no more likely to build these relationships than the individual who shuns these events. but it is not trans. But it brings with it enormous promise. however. and in some aspects it does play back to the concept of investing in personal human capital as if it was a business. from the capacity to give as well as to take. work. This democratization places enormous emphasis on individuals' self awareness and courage to build and leverage their personal human capital. February 2003 11 . One was known there. Novel situations lead to a loss of all the comforts of known surroundings. 1. The 'badge sniffer' at conference gatherings. tacit knowledge while simultaneously investing in weaker ties with disparate groups capable of building ideas through combination. Historically. No. they do not of themselves assist in the subsequent development of these ties or the capacity of these ties to yield benefit. establishing close network ties does not of itself create an opportunity to 'vacuum up' tacit knowledge. biographies of successful entrepreneurs. Autonomy and variety provide the opportunity for people to become who they are. and from the duties and obligations of family. and a third place — the pub in the U.19 The third place used to serve as a key source of both the creation of meaning through social identity and personal pleasure.K. people had at least three different spheres in their lives: the family. 1-10.Fundamentally 'working the boundaries' may and indeed should be conscious. the likelihood is that they will withhold. Gradually. stemming in part from increased personal autonomy and greater work variety. the tea shops in China or India. PERSONAL HUMAN CAPITAL who do similar things and behave in similar ways. the breakdown of communities. Individuals can choose to give or to withhold their knowledge and when faced with a transactional mercenary. the prospect of spending three years in Tokyo is nerve wrecking. this third place is becoming a void because of a variety of disruptions including geographic mobility. Even loose networks require a degree of trust and mutual reciprocity.

Notes 1. See Giddens (1990. individuals are increasingly subject to an economic regime in which the very best corner most of the pay-off. 1-10. thereby providing more variety to match the variety of human preferences and pleasures. We also describe an action element. There has been much evidence to suggest that organisations have not created flexible internal labor markets or invested in the training of short-term skills. Pfeffer (1998). a manager or an academic. For recent and relatively comprehensive reviews of the role of emotions in organizational functioning and performance.For a detailed discussion on how social capital influences the development of intellectual capital. European Management Journal Vol. By emotional capital we have broadened the concept to include integrity. pp. Clearly. as a handmaiden of the evolving global market economy. see Fineman (1993) and Quy Nguyen Huy (1999). See for to be both more meaningful and more pleasurable. three books were published all carrying the title intellectual capital. 1992). this new context is rapidly spreading around the world. 3. Another related aspect of the on-going transformation of society that most observers have taken to be a cause for concern is the increasing sphere of winner-takes-all games. Of the vast amount of literature on this topic. 1983). 6. 1990). this is perhaps the most wonderful and satisfying aspect of competing on human capital — while painful because of the need for continuous improvement of one's own knowledge. geographic regions (Putnam. At the end of the day. 4. (1999). 7. We have followed closely Held's democratization. 2. 9. to understand the emotions of others. which the growing variety of occupational opportunities now makes possible. 1995) and nations (Fukuyama. particularly its influence not only on the development of human capital (see Coleman. 1999). thoughts on 10. The term 'social capital' initially appeared in the context of community studies. we have found the books by Quinn (1992) and Nonaka and Takeu. In 1997. this issue of knowledge management is now very much in the forefront of attention. Whether an athlete. Since this early usage. February 2003 12 . it aligns economic incentives with the very human propensity for creating meaningful lives by pursuing one's own convictions and passions. 1988) but on economic performance of companies (see Baker. Not only will one's personal human capital become more and more important in this new context. Aligning work with personal values. 1. the programme for the 1999 Annual Meetings of the Academy of Management was dominated by sessions and papers on this topic. 11. No.See Donald Sull (1999). the gap work and PERSONAL HUMAN CAPITAL between identity has to be reduced. and to acknowledge and be sincere about one's own emotions (Hochschild. for both managers and academics. It is increasingly becoming also the most effective strategy for personal success. and the articles by Spender (1996) and Grant (1996) as useful contributions and idea reviews. What we have termed here 'emotional capital' borrows from disparate literature streams. from an academic perspective. 5. While most pronounced in the developed Western economies. Detailed cases from seven large organisations also highlight the gap between rhetoric and reality. this concept has been applied to elucidate a wide range of social phenomena. the capacity to move into action through will and hope (Brockner. See Lal (1999). 8. see Nahapiet and Ghoshal (1998). highlighting the central importance of the networks of strong.chi (1995) to be the most insightful from a practical point of view. Peter Cappelli draws the analogy with serial monogamy in his paper (Cappelli. See Held (1986). cross-cutting personal relationships for the survival and functioning of city neighbourhoods. At the individual level the notion of emotional intelligence has been described by Goleman (1995) and earlier by Salovery and Mayer (1980) and loosely defined as the ability to monitor one's own and others' feelings and emotions. It is described as essentially individual and partly innate. 1992). see Cohen and Fields (undated). For a rich description of the social capital networks in Silicon Valley. These forces combine to create a very different context for career success — there are many more games now. relationships and sense of self-efficacy. Lynda Gratton et al. the courage to align who one is with what one does will become both more pleasurable and more profitable. 1995). And for that to be the case. creating the vocatus — doing what one likes — has always been a precious human aspiration. and each game offers large rewards for excellence and rapidly diminishing rewards thereafter. 21. for a rich and illustrated discussion of how commitment to relationships can prevent or delay action.

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Founding Dean of the Indian School of Business. award-winning book is Managing Radical Change. his rease. and Member of the Committee of Overseers of Harvard Business School. London Business School. Sussex Place. Email: lgratton@london. London NW1 4SA. London NW1 4SA.arch centres on strategic. Sussex Place. Her research interests focus on strategic HRM and business alignment. A recent book is Living Strategy: Putting People at the Heart of Corporate Purpose (FT Prentice-Hall. Hyderabad. She is Director of the Leading Edge Research Consortium and heads the Executive Lynda Gratton is Associate Professor of Organizational Behaviour at London Business Sumantra Ghoshal is Professor of Strategic and International Business Management at London Business School. SUMANTRA GHOSHAL. His most recent. London Business School.LYNDA GRATTON. UK. Email: sghoshal@london. UK. 'Human Resource Strategy in Transforming Organizations'. organizational and managerial issues confronting large. Regent's Park. A prolific and award-winning author. Regent's Park. global companies. 2001). .