European Management Journal Vol. 21, No. 1, pp.
1–10, 2003
Pergamon
doi:10.1016/S0263-2373(02)00149-4
Managing Personal
Human Capital:
New Ethos for the
‘Volunteer’ Employee
LYNDA GRATTON, London Business School
SUMANTRA GHOSHAL, London Business School
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 indi-
vidual’s intellectual, social and emotional capitals,
this article suggests some new ethos that such ‘vol-
unteer’ employees need to adopt as they take
greater personal responsibility for both developing
and deploying their personal human capital.
 2003 Elsevier Science Ltd. All rights reserved.
Keywords: Human capital, Volunteer employees,
Career success, Employing organizations,
Employees
Introduction
We are witnesses to some sweeping changes in the
nature of the relationship between individuals and
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, in the nature of labor markets and
in the talents and aspirations of individuals. The
present temporary reversal notwithstanding, changes
in the demographics of most countries have placed
young talent at a premium across the globe, and with
this ‘war for talent’ has come the opportunity for the
new generation to shape the way they work. 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
European Management Journal Vol. 21, No. 1, pp. 1–10, February 2003
 2003 Elsevier Science Ltd. All rights reserved.
Printed in Great Britain
0263-2373/03 $30.00 + 0.00
industry. The new entrants prefer working in teams,
demand an exciting and stimulating work environ-
ment and, most importantly, value autonomy in
career. Many have seen their parents sacrifice their
personal needs to meet company requirements. They
have vicariously experienced the tragedies of the
‘organizational man’ (Whyte, 1956) and are determ-
ined not to fall victim to the forces of depersonaliz-
ation in the traditional model of individual-organiza-
tion relationship.
These changes in the relationship between the
employer and the employee echo a broader revol-
ution which is reshaping social institutions all around
us. At the heart of this revolution lie the democratiz-
ing forces that push for modernity. The concept of
democracy is built around some foundational prin-
ciples: the creation of circumstances in which people
can express their potentialities and their diverse qual-
ities; protection from the arbitrary use of authority
and power; involvement of people in determining the
conditions of their association; and expansion of
opportunity to develop available resources.1 These
forces of democratization are transforming individ-
uals’ relationships at all levels — with other individ-
uals, with organizations, and with broader collectives
such as the State. In this sense, 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, for example,
from investing in life-time relationships to ‘serial
monogamy’ characterized by a series of close
relationships governed by the expectation that these
relationships need to be made to work, yet will inevi-
tably not last.3 These changes also follow closely the
1
PERSONAL HUMAN CAPITAL
implications that Deepak Lal has traced of the rise of
individualism on the social structure and economic
functioning of nations.4
The concept that links these various elements of
democratization is the primacy of individuals and
their capacity to behave with autonomy, i.e. their
capacity to be self-reflective and self-determining ‘to
deliberate, judge, choose and act upon possible
courses of action’ (Held, 1986, p. 270). At the same
time there has been an enormous flourishing of var-
iety in the models of working: work part-time or full-
time; work for a large company or a small start-up;
work as a freelance or as a member of the core; build
a company or work for a company. The aspect of the
ongoing transformation from an industrial to a post-
industrial 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. Success today can come from a much
more diverse set of occupations than in the past —
with much less predictability ex-ante. With the broad-
ening of the routes to economic prosperity, there has
been the inevitable broadening of social respectability
too. In other words, together with the growing sense
of autonomy among individuals, there is also a grow-
ing variety of work opportunities for people to
choose from.
How have companies responded to these broad
changes? For many the mantra of ‘employability’
provided a useful over-arching philosophy to downs-
ize in the face of renewed competitive pressure and
the need for greater flexibility of skills. They could
and would no longer promise lifetime employment,
but their side of the deal was to support the individ-
ual employee to build his or her human capital. In
reality it has proved to be enormously difficult to
deliver this deal in an institutional form.5 So, in many
cases, company investment in job-related training has
decreased rather than increased, and the opport-
unities for broadening beyond current job roles have
narrowed rather than widened. Bad news perhaps,
but we believe these trends are a harbinger of what
is to come and an important ‘wake up’ call to
employees.
In previous generations the conventional practice
was for the employee to play the part of the innocent
with the employer as the sophisticate. The relation-
ship today is reversed; the innocent plays the sophis-
ticate. This places responsibility for development of
the self squarely in the hands of the possessor, in the
individual’s ‘rights of self-expression’. It is increas-
ingly individuals who control their development,
their careers and their destinies, not the organizations
that employ them. This does not mean that people
continuously change jobs — some do, and some
don’t. But they take charge of their careers, which
essentially means that they actively manage the pro-
cesses of developing and deploying their own
2 European Management Journal Vol. 21, No. 1, pp. 1–10, February 2003
resources. In essence, the traditional paternalistic
model of employment is being replaced by a ‘volun-
teer’ model, in which the interests of both the indi-
vidual and the organization have to be met and com-
mitment to work, which once could perhaps be
assumed, has now to be negotiated and bargained
for. At least for managerial and professional careers,
this is the growing trend all over the world.
So given both autonomy and variety, how does the
individual construct a work life of meaning? The
emerging ‘volunteer’ model of employment relation-
ship requires the creation of a whole new language of
development. Much of the historical discourse about
development has been around what the organization
can do for the individual. In this article we examine
what individuals can do for themselves to construct
novel ethics of day-to-day work life while simul-
taneously building and leveraging their personal
resources.
The Three Elements of Human Capital
The notion of individuals participating in the demo-
cratization of work implies they have sufficient
resources to participate in an autonomous way. In
considering the notion of resources we have used the
term ‘human capital’. This refers to things people
have. But, people have, are and do many things,
including many wonderful things, that have nothing
to do with human capital. The operating word here
is capital — i.e. a productive resource — and the
adjective is human. 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 that
there are three kinds of resources that people possess
which, collectively, constitute their individual human
capital (see Figure 1).
Figure 1 Human Capital consists of the Intellectual,
Social and Emotional Capitals of Individuals and
Organizations

The first element is intellectual capital. It refers to fun-
damental individual attributes such as cognitive
complexity and the capacity to learn, together with
the tacit and explicit knowledge, skills and expertise
an individual builds over time.
In the recent past, much management attention has
been paid to this issue of intellectual capital, and
rightly so.6 For organizations, knowledge rather than
money is increasingly the key competitive differen-
tiator — certainly in service industries like con-
sulting, investment banking, IT services and so on,
but also, increasingly, in manufacturing-based busi-
nesses like pharmaceuticals, consumer electronics,
and electrical machinery where, historically, large
asset bases and strong balance sheets had held the
key to success. This has naturally created a large pre-
mium for the intellectual capital of individuals. But,
if people with great knowledge and expertise were
all it took for achieving outstanding business per-
formance, a society of Nobel laureates would have
created the most successful global company. Knowl-
edge is an essential element of human capital, but not
all that there is to it.
The second element of human capital is social capi-
tal7 — which is about who one knows, and how well
one knows them. And, just as cognitive complexity
and learning capacity provide the underlying indi-
vidual traits on which specialized knowledge and
skills are grounded, similarly sociability and trust-
worthiness provide the anchors for developing and
maintaining a network of relationships. These
relationship networks constitute a form of capital
because they provide access to the resources mem-
bers of the network possess, or have access to. This
is why those who have studied at Tokyo University,
Oxford, Ecole Polytechnic or MIT tend to have an
advantage over others — irrespective of whether they
are smarter than the others or not, they tend to have
friends in influential positions in other organizations
to access new business opportunities and to solve
problems. This is also why Silicon Valley and other
global ‘hot spots’ yield such enormous value for indi-
vidual members of these communities. The depth
and richness of these connections and potential
points of leverage build substantial pools of knowl-
edge and opportunities for value creation and arbi-
trage.8
But specialized knowledge and a great network of
friends are not enough — to get things done, to move
into action, individuals need one more thing. That is
emotional capital.9 Like aspects of intellectual capital,
individual emotional capital is underpinned by fun-
damental traits such as self-awareness, self-esteem
and personal integrity. Individuals need self-confi-
dence, based on self-esteem, courage and resilience,
to convert their knowledge and relationships into
effective action.
These different elements of human capital (see Table
European Management Journal Vol. 21, No. 1, pp. 1–10, February 2003
PERSONAL HUMAN CAPITAL
Table 1 Elements of Human Capital of Individuals
Intellectual capital Social capital Emotional capital
Cognitive Network of Self-awareness
complexity relationships
Learning capacity Sociability Ambition and
courage
Specialized Trustworthiness Integrity
knowledge and Resilience
skills
Tacit knowledge
1) are highly inter-related; it is the combination, the
feedback-loops and connectivity which bring advan-
tage. Social capital, in the form of extensive, fluid and
reciprocal relationships with people, helps individ-
uals develop intellectual capital by accessing the
knowledge and skills that those people possess.10
Emotional capital brings the integrity and self-aware-
ness to build open and trusting relationships which
underpin the creation of social capital. The learning
propensity of intellectual capital can be a driver for
self-development, resulting in the self-awareness of
emotional capital. And within this reinforcing feed-
back loop, the self-knowledge built through open
and meaningful relationships further enhances self-
awareness and self esteem.
Together, emotional, social and intellectual capitals
are the basis for building strong and supportive
relationships, and for developing the courage and
grit necessary for entrepreneurship and action taking.
In turn, action leads to knowledge — people learn by
doing, by experimenting, by testing out ideas. The
reverse is also true — knowledge and skills are a pre-
requisite for effective action. A similar kind of sym-
biotic relationship exists among all the elements of
human capital. But, at the same time, they also create
tensions and contradictions. While knowledge facili-
tates action, it can also impede action. Knowing can
come in the way of doing. Relationships facilitate
action but commitments to relationships can also pre-
vent necessary but unpleasant actions.11
Managing Personal Human Capital
The challenge of competing on human capital is the
challenge of managing this interactive cycle of build-
ing and leveraging intellectual, social and emotional
capitals. This is just as true for individuals as it is
for organizations.
For individuals, the democratization of work life
requires each to take responsibility for his or her own
development, instead of passively relying on others
to manage it for them. In a fast changing world, all
the elements of human capital erode rapidly —
knowledge becomes obsolete unless it is updated,
relationships weaken unless they are continuously
3
PERSONAL HUMAN CAPITAL
refreshed, self-efficacy and courage diminish unless
exercised. 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.
In recent times, few business leaders have achieved
as much recognition and success as Andy Grove, the
Chairman of Intel. Starting his life in the United
States as a penniless emigrant from Hungary, Gro-
ve’s career is an epitome of not just professional
accomplishments but also of lasting contributions —
building a highly-admired institution and, through
it, playing a key role in the development of the digital
world. Grove’s first advice to all employees of Intel
is worthy of attention:
No matter where you work, you are not an employee. You
are in business with one employer — yourself — in compe-
tition with millions of similar businesses worldwide…
Nobody owes you a career. You own it as a sole pro-
prietor.12
Perhaps there is an element here of the Hobbesian
war of all against all but, in a competitive, knowl-
edge-based economy, this is the starting point for
managing human capital at the individual level. Each
individual must now accept the responsibility for
managing his or her personal human capital. Because
of this responsibility, participants in the new ‘volun-
teer’ model for individual-organization relationship
will increasingly have to adopt four new personal
ethos.
First, the opportunity created by the forces of auto-
nomy and variety will place a premium on individu-
ation, and, therefore, on peoples’ courage to under-
stand and be who they are. Second, to manage the
interactions between development and deployment
of human capital, there is a need for a changed mind-
set: instead of thinking of themselves as assets, to be
used by the organization, individuals must see them-
selves as investors in the company, not unlike the
investors of other forms of resources, such as finan-
cial capital. Third, to continuously develop their own
knowledge and skills, they have to open their hearts
and minds to the invigorating force of continuous
learning — an ethos that, following Jack Welch’s col-
orful term, we have labeled as ‘everyday, being the
dumbest you can be’. And, finally, with the increas-
ing value of innovation and new ideas, they have to
consciously position themselves at the intersections
of intellectual and social domains, so as to be able to
bridge diverse spheres of knowledge and other kinds
of resources.
Ethos 1: The Courage To Become Who You Are
The industrial society was built around a logic of sub-
dividing and specializing the occupations and contri-
butions of individuals. Over time, the logics of Adam
4 European Management Journal Vol. 21, No. 1, pp. 1–10, February 2003
Smith and Frederic Taylor led to clear boundaries
within occupations and specializations, as well as a
hierarchy among them. The incentives were not for
discovering one’s own talents and propensities and
becoming the best one could be, but for participating
in the highest-ranking occupation one could get
admission to. The pathologies of the ‘organization
man’ that William Whyte portrayed so brilliantly
(Whyte, 1956) was indeed broader than the subju-
gation of the individual to the needs of the organiza-
tion — it encompassed an overarching subjugation of
the individual to the socially-defined hierarchy of
occupations.
But with the transformation of the post-industrial
society has come variety and liberation from occu-
pational hierarchies. If individuals do indeed ‘volun-
teer’ then what is the basis of this volunteering, and
given the new autonomy, on what basis is meaning
constructed? Jung uses the term individuation to
describe the opportunity each individual has to reach
his or her fullest possible development, to be whole.
The vocatus for all individuals, according to him, is
to become themselves as fully as they are able; the
challenge is to find out how.13
The autonomy and variety available to the ‘volun-
teer’ bring enormous potential for joy and satisfaction
through the discovery of the vocatus. Work represents
a large occasion for creating meaning, or its denial,
and in each individual’s life journey, work inevitably
plays a central role. 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, operationalized in the Myers
Briggs Type Inventory, has brought clarity for many
people.14 The attitude of introversion and extroversion,
for example, describes whether reality is processed
by an individual as something within or something
‘out there’. Accordingly, an extroverted sensation
type is likely to be drawn to the outer world and
derive greater satisfaction from work as a project
leader. An introverted thinking type might enjoy
being an academic but would be, in all likelihood,
unhappy and unsuccessful as a salesperson.
Another important support mechanism for self-dis-
covery is to create a ‘feedback rich’ context. For some
people, developing this level of self-awareness is
facilitated by the organization. Many companies have
introduced 360° feedback, based on team members
and colleagues reporting on an individual’s perform-
ance and attitudes. For most, it is something that the
organization does for them. But it does not have to
be that way. At both Hewlett Packard and Intel, for
example, individuals actively seek feedback by e-
mailing their colleagues in the immediate and
extended networks, asking for information and opi-
nions about themselves. This information is not
routed via the organization, but is elicited, sythesized
and discussed by individual employees.
Analytic frames such as the Myers Briggs instrument

and tools such as receiving detailed feedback have a
role to play in developing personal awareness, but
this data can only be accessed through a reflective
mind-set where feelings and emotions are acknowl-
edged. Many individuals find this very hard to do,
and are more confident in their evaluative, thinking
mode15 To access values and preferences, however,
requires the development of the less developed feel-
ing function and the self-reflection which comes from
it. This is achieved through listening more closely to
one’s own feelings and those of others, acknowledg-
ing the feelings one has about a situation, and by cre-
ating periods of self-reflection to promote this inner
dialogue.
The reason most people develop a learned helpless-
ness in dealing with their feelings is to avoid the
doubts and discomforts feelings often create. The old
paternalistic employment contract may have created
doubts and discomforts, but these could be attributed
to the vagaries of the company. Variety brings
opportunities for developing multi-faceted lives,
autonomy brings the realization that these periods of
doubt and discomfort are inevitable. The life of the
‘volunteer’ will inevitably involve anxiety and loss:
when they stretch too far and fail; when the risks they
take leave them vulnerable and alone; when they are
forced to confront their values and aspirations… per-
iods which Jung termed the ‘swamplands of the
soul’.16 It is possible to manage this anxiety through
the defenses of denial or repression. Having the cour-
age to become who you are comes from the realiz-
ation that in each of these swampland states there is
a developmental task, and of understanding that
doubt is the necessary fuel for change, and there-
fore growth.
Ethos 2: From An Asset To An Investor
Taking the courage to become who one is demands
a reflective, conscious process of self-development. In
the old paradigm much of the role of development
was assumed by the company, with employees sim-
ply following the laid down trajectories. But as demo-
cratization of the work place grows, and with increas-
ing autonomy and variety, the old paternalisms are
no longer valid. Individuation requires a more con-
scious and continuous building of intellectual
capacity, of emotional strengths and of social net-
works. Hence, the second ethos: individuals must
move from viewing themselves as simply an asset to
the business, to becoming investors in the business.
They invest in building their personal human capital
which, in turn, they invest in the business in which
they choose to work. Investors have a particular view
of a business. If building human capital is a business,
then the same logic applies — the logic of having a
broad purpose and vision, of resource allocation, of
flexibility and adaptability.
Great businesses are built from a broad purpose and
European Management Journal Vol. 21, No. 1, pp. 1–10, February 2003
PERSONAL HUMAN CAPITAL
a deep understanding of current capabilities. The
same is true for building great personal human capi-
tal. From personal reflection comes an understanding
of goals, values and aspirations. The next challenge
is to translate these goals in terms of their human
capital requirements — what kind of knowledge and
skills will be needed, what relationship networks will
be vital, what will be the emotional demands? While
life is never so linear, without a rough plan, one can-
not cope with the unexpected exigencies and still
maintain course. Indeed, people engage in such plan-
ning routinely for their personal financial capital, but
not for their personal human capital. The challenge
of competing on human capital, above all is the chal-
lenge of counteracting that state of apathy with
regard to any individual’s most important asset.
Managing personal human capital as if it was a busi-
ness is about having absolute clarity of where to best
allocate scarce resources (personal human capital) for
short and long-term leverage. It is about choosing
among equally attractive options which may yield
different benefits. 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, emotional and social capitals. While in
many companies there is tacit knowledge about the
development potential of work options such as pro-
jects, some companies have sought to make this
knowledge more widely available. At Applied Tech-
nology, for example, new engineers rotate through a
series of five-week projects designed to give the
recruits a taste of the different parts of the business.
While working on these projects, they confidentially
share via the company’s intra-net their views on the
work and the capability of the project leaders to men-
tor and coach. This sharing deepens the engineers’
information and increases their capability to make
choices and to actively manage their personal
human capital.
At the core of creating personal human capital is the
determination to take personal responsibility for
development, and a preparedness to invest personal
resources in development. This may be the financial
resources to participate in training programs. It is
more likely to be a resource trade-off between capi-
talizing on the returns from current human capital
and investing in development of new human capital.
Structured training programs have some impact on
the creation of personal human capital, but the pri-
mary impact arises from day-to-day experiences in
work: from mentors who become ‘talking partners’;
from sponsors who open new opportunities; from
stretching and challenging projects; from engaging
and stimulating colleagues who are prepared to
share their knowledge; from ‘feedback rich’ working
environments. For the determined investor the
choices are where and whom to work with.
Businesses are compelled to report on their manage-
5
PERSONAL HUMAN CAPITAL
ment or financial capital, but the capacity to create
human capital is still shrouded in mystery. The inves-
tor, therefore, has to become an acute observer and
seeker of human capital related information. 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 remuner-
ation of team leaders determined by their ability to
attract and retain talented people? What is the pro-
portion 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, people make hard decisions about the
allocation of scarce resources, making deals, negotiat-
ing and bargaining for what they believe is right.
Actively building personal human capital requires
the same up-front attitude: the attitude of keeping
options open; of developing general, portable skills
rather than company-specific skills; of having the
courage to make substantial personal investments in
knowledge acquisition; of negotiating hard for the
opportunity to build social networks. The investor
mind set is more active, more self aware, more cour-
ageous.
These are the most obvious parallels between manag-
ing personal human capital and managing a business:
the importance of purposeful choice; of making
tough decisions on the allocation of scarce resources;
and the rationality of planning and purpose. But the
analogy extends further than that.
Companies often suffer by becoming prisoners of the
past — unable to free themselves from their history,
they remain lumbering and inflexible. The ties of the
past create strategic inertia: processes and routines,
once useful, become moribund and bureaucratic;
values and norms become ossified and inappropriate.
The same often happens to people. The escape from
such ossification lies in the imaginal capacity that all
individuals possess but many do not use.
While individuals are limited by their complexes to
repeat historic response patterns, they can enlarge
their vision of the possible and learn to overcome the
constraints of the past. To be adaptive, businesses
have to confront and discard those aspects of their
heritage that are no longer appropriate. Similarly, to
develop as a person, it is sometimes necessary to
cross lines once thought too formidable. This may
entail transgressing a mentor’s will or a colleague’s
hopes and aspirations; it may mean no longer cling-
ing to impossible fantasies, or freeing oneself from
routine and, therefore, comfortable ways of behav-
ing. Each individual is constrained within the narrow
confines of a specific combination of time, place and
history. In a world of autonomy and variety, each
6 European Management Journal Vol. 21, No. 1, pp. 1–10, February 2003
individual is obliged to find his or her own way, and
crossing over sometimes confronts the need to stand
against the forces of personal history.
Ethos 3: Everyday, Be The Dumbest You Can Be
Over the last four years, the two authors have jointly
run an executive program. It is a consortium pro-
gram, consisting of six large, highly visible, global
companies. Each company sends a team of six very
senior-level general managers to the program, which
runs in short modules over a ten-month period. 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 dif-
ferent businesses, cultures and histories, as well as
each company team learning from the perspectives
and practices of the other companies. Over the ten
month period, we travel around Asia, the Americas
and Europe, visiting each company, looking at its
operations, talking to a wide range of people — all
in the hope of maximizing both individual and col-
lective learning from these experiences.
Over the four years that we have run the program,
both of us have been struck by one remarkable differ-
ence among the individual participants in how they
approach these visits. A vast majority use their criti-
cal faculties — to see what is wrong, what is not
working as well as it might, and where the company
practices are inferior to their own. At the end of the
company visit, these participants summarize their
critiques in sharp, focused ways. Their feedback is
usually both uncomfortable and useful to the man-
agers of the host units.
But there are a few — typically very few — who go
about the visits very differently. They look for what
is working, where the practices of the company are
better than their own, and what can be learnt during
the visit that can be implemented with some benefits
in their own organizations. Inevitably, they find such
areas — sometimes in very specific actions, such as
some unique aspects of the company’s quality man-
agement processes, and sometimes in much broader
aspects such as the company’s ability to create a high
energy work environment. They ask sharp questions
to ensure that they fully understand why and how
the practices work as well as they appear to do, often
going down to a level of detail that the others con-
sider to be trivial.
Members of the first group are smart. They use their
knowledge and skills to see what is missing, where
their own knowledge and expertise are superior. The
members of the second group are smarter. They
exploit the opportunity to learn and to enhance their
own human capital.
According to GE’s Jack Welch, the essence of a
boundaryless, learning organization is that ‘Every-

day, people are the dumbest they can be’. As he
explains, ‘there is always someone who is doing
something better than us. The challenge is to be open
to the learning opportunities that life provides every-
day’. Some individuals tend to be inherently more
open to such learning than others, as a personality
trait. But it is a skill that can be improved through
conscious effort.
The volunteer ethos requires each individual to
become a determined developer, to continuously
learn. At the heart of this determined development
are three core learning processes that individuals use:
application, induction and reflection. The processes
are the learning engines through which personal
human capital is continuously refreshed and created.
Application starts from exposure to broad, context-
free concepts or theories, such as ‘core competency’,
which are then applied to a particular, context spe-
cific situation, relevant to the individual’s own com-
pany or job. As a learning process, it is based on what
Don Schon has described as ‘technical nationality’
(Schon, 1983). Induction, the second learning process,
is driven by the search for patterns and consistencies
across different experiences — what Mintzberg has
called ‘detective work’ — and then the generalization
beyond data, which he described as the ‘creative
leap’ (Mintzberg, 1979). Much of the learning from
trials and experimentation follows an inductive pro-
cess, based on tentative formulation of hypotheses,
and enriching them through testing and feedback.
Finally, reflection, the third learning process, is built
on in-depth understanding of a particular and con-
text-specific situation that ultimately leads to insight
and intuition — an outcome that is very different
from both the knowledge-acquisition and internaliz-
ation process of application and the creative gen-
eralization from diverse experiences through induc-
tion. Insights generated through deep reflection on
one situation do not reveal general ‘truths’; instead
they shape perspectives and assist in identifying,
defining and framing problems. As argued by Schon,
reflection is an alternative route to generalization
premised not on scientific analysis, but on what, for
want of a better term, may be best described as the
development of ‘wisdom’.
To become a determined learner, individuals need
the capacity to learn through all three processes. To
learn through application, they will need continuous
exposure to the latest ideas and concepts, and must
be willing to invest significant personal resources to
stay current in their areas of interest. Part of these
investments may be in the form of time and money
to participate in on-going educational activities, 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. Reading, taking sabbatical leaves for
retraining, and becoming part of the networks in
which relevant new knowledge is created are all
European Management Journal Vol. 21, No. 1, pp. 1–10, February 2003
PERSONAL HUMAN CAPITAL
activities that support learning through the appli-
cation process.
Important as it is, however, 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. These are also the learning processes that
most people tend to be less comfortable with, simply
because of the dominance of application in the learn-
ing process of formal education.
Both induction and reflection require intellectual
curiosity together with the courage and personal
sense of autonomy to form one’s own ‘theories’.
While the quality and usefulness of such theories
depend, to some extent, on individual attributes such
as creativity, capacity for pattern recognition and
cognitive complexity, the courage to engage in such
theory-building endeavors can be enhanced through
both practice and reinforcement from mentors who
become ‘thinking and talking partners’, and stimulat-
ing colleagues who help create an intellectually alive
and challenging environment that facilities action-
learning. For the determined developer choosing
feedback-rich, stimulating work and knowledgeable
mentors and sponsors is crucial to building personal
human capital.
Ethos 4: Work The Boundaries
About half a century ago, Joseph Schumpeter, the
Austrian economist, had a profound insight. Progress
comes from new combinations. It was this insight
that led him to an understanding of the process of
creative destruction that lies at the heart of competi-
tive economies (Schumpeter, 1934 (reprinted in
1962)).
New combinations of existing knowledge create new
knowledge. The combination of biology, physics and
chemistry creates molecular biology. Combination of
technical and marketing knowledge creates winning
new products. Understanding the needs of manufac-
turing and of customers leads to innovative logis-
tical solutions.
The same is true of relationships. The individual who
bridges two disparate groups of people who are not
connected among themselves gets the benefits of
brokerage across them. In academic terms, this is
called ‘structural holes’ — gaps in relationship net-
works that yield productive bridging opportunities.17
Social capital is developed through networks built
upon trust and reciprocity. It is these networks which
can bring the knowledge and excitement that propel
individuals to action. Skilful builders of networks are
passionate about people and have the emotional
capacity to create strong, intimate relationships with
others. But building networks comes at a price; in
7
PERSONAL HUMAN CAPITAL
particular the resource cost of maintaining networks
which can fast erode. Here the individual is faced
with an investment dilemma; whether to put his or
her resources into establishing strong ties with a
small network of closely linked individuals, or to
invest available time and resources for developing
networks of weak links to many, disparate people.
Both can bring benefits. Strong networks have the
advantage of focusing attention on a smaller group
of people and, in doing so, creating the intimacy,
trust and reciprocity which provide the foundation
for transference and combination of rich, tacit knowl-
edge in multiple ways. These strong links are crucial
to the development of deep, specialist expertise. But
establishing and maintaining these strong exclusive
networks reduce the opportunity for establishing a
wider network; and while they can yield tacit knowl-
edge, these tight networks have fewer people and,
typically, a high degree of redundancy since there is
so much shared common knowledge. In short, while
the individual acquires greater tacit, specialist knowl-
edge, he or she is unlikely to encounter knowledge
from outside a limited domain.
On the other hand, 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-
nations.18 This is why working at the boundaries or,
rather, working the boundaries, is so often so ben-
eficial for both building and leveraging one’s human
capital. Bridging across two disparate groups — say,
R&D and marketing — helps build new knowledge,
skills and insights that neither group has. Bridging
between two industries creates new opportunities as
they converge. Bridging the worlds of science and
venture capital yields new business possibilities.
The arbitrage opportunities in these loose networks
arise from the information asymmetry across the net-
works and the value of bringing ideas and knowl-
edge from one to another. This is not easy, however.
It is more comfortable to stay within the bounds of
one’s own kind of people, who do similar things and
behave in similar ways. Membership of multiple net-
works involves a great deal of effort. Similarly, bridg-
ing across diverse knowledge domains is more com-
plex than maintaining one’s specialization within a
single domain. But, biographies of successful
entrepreneurs, CEO’s, authors or academics are
replete with tales of bridging in action.
The starting point for bridging and also the most dif-
ficult step is to have the courage to put oneself in
novel situations. Having been born and brought up
in Boston, the prospect of spending three years in
Tokyo is nerve wrecking, as is a move to marketing
after having built a successful career in finance.
Novel situations lead to a loss of all the comforts of
known surroundings, familiar systems and old
8 European Management Journal Vol. 21, No. 1, pp. 1–10, February 2003
associations. But, 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.
The issue here is one of investing to build social capi-
tal through combining strong ties which yield rich,
tacit knowledge while simultaneously investing in
weaker ties with disparate groups capable of build-
ing ideas through combination. The strategy of
investing and building social capital sounds instru-
mental, and in some aspects it does play back to the
concept of investing in personal human capital as if
it was a business. But while rationality and strategic
choices may identify the balance to be struck between
weak and strong ties, they do not of themselves assist
in the subsequent development of these ties or the
capacity of these ties to yield benefit.
The ‘badge sniffer’ at conference gatherings, intent
on establishing loose ties with those they consider
‘important’ is no more likely to build these relation-
ships than the individual who shuns these events.
Even loose networks require a degree of trust and
mutual reciprocity, which is leveraged through self-
esteem. Similarly, establishing close network ties
does not of itself create an opportunity to ‘vacuum
up’ tacit knowledge. Individuals can choose to give
or to withhold their knowledge and when faced with
a transactional mercenary, the likelihood is that they
will withhold. It is the capacity for empathy and inti-
macy built from emotional capital which provides
the context in which people choose to freely give and
to receive.
Fundamentally ‘working the boundaries’ may and
indeed should be conscious, but it is not trans-
actional. It comes from a deep and passionate interest
in people, from the capacity to give as well as to take.
Networking without empathy fails to build either the
intimacy which supports tacit knowledge sharing
within strong links or the broad sociability which cre-
ates arbitrage opportunities across weak links.
From Human Capital To Meaningful
Lives
In this article we have argued that fundamental
changes are occurring in the nature of the relation-
ship between individuals and the organizations of
which they are members. At the heart of these
changes lie the democratization of this relationship,
stemming in part from increased personal autonomy
and greater work variety. This democratization
places enormous emphasis on individuals’ self
awareness and courage to build and leverage their
personal human capital. But it brings with it enor-
mous promise. Autonomy and variety provide the
opportunity for people to become who they are, to

pursue their natural talents, to build meaning and to
create more emotionally satisfying lives.
It is necessary to relate this argument about peoples’
work lives to the broader context of the role work
plays in modern life. Historically, people had at least
three different spheres in their lives: the family,
work, and a third place — the pub in the U.K, com-
munity organizations in the US, the tea shops in
China or India. Gradually, this third place is becom-
ing a void because of a variety of disruptions includ-
ing geographic mobility, the breakdown of communi-
ties, and a broader set of changes in societal norms
and values that have tended to undermine its social
and psychological viability.19
The third place used to serve as a key source of both
the creation of meaning through social identity and
personal pleasure. One was known there, and one
could be who one was — away from the evaluative
and instrumental aspects of work, and from the
duties and obligations of family. Progressive elimin-
ation of the third place and the associated enlarge-
ment of the work sphere have significantly enhanced
the need for work to be both more meaningful and
more pleasurable. And for that to be the case, the gap
between work and identity has to be reduced, which
the growing variety of occupational opportunities
now makes possible.
Another related aspect of the on-going transform-
ation of society that most observers have taken to be
a cause for concern is the increasing sphere of win-
ner-takes-all games. Whether an athlete, a manager
or an academic, individuals are increasingly subject
to an economic regime in which the very best corner
most of the pay-off.
These forces combine to create a very different con-
text for career success — there are many more games
now, thereby providing more variety to match the
variety of human preferences and pleasures, and
each game offers large rewards for excellence and
rapidly diminishing rewards thereafter. While most
pronounced in the developed Western economies,
this new context is rapidly spreading around the
world, as a handmaiden of the evolving global mar-
ket economy.
Not only will one’s personal human capital become
more and more important in this new context, the
courage to align who one is with what one does will
become both more pleasurable and more profitable.
Aligning work with personal values, creating the
vocatus — doing what one likes — has always been
a precious human aspiration. It is increasingly
becoming also the most effective strategy for per-
sonal success. At the end of the day, this is perhaps
the most wonderful and satisfying aspect of compet-
ing on human capital — while painful because of the
need for continuous improvement of one’s own
knowledge, relationships and sense of self-efficacy,
European Management Journal Vol. 21, No. 1, pp. 1–10, February 2003
PERSONAL HUMAN CAPITAL
it aligns economic incentives with the very human
propensity for creating meaningful lives by pursuing
one’s own convictions and passions.
Notes
1. We have followed closely Held’s thoughts on democratiz-
ation. See Held (1986).
2. See Giddens (1990, 1992).
3. Peter Cappelli draws the analogy with serial monogamy
in his paper (Cappelli, 1999).
4. See Lal (1999).
5. There has been much evidence to suggest that organis-
ations have not created flexible internal labor markets or
invested in the training of short-term skills. See for
example, Pfeffer (1998). Detailed cases from seven large
organisations also highlight the gap between rhetoric and
reality. Lynda Gratton et al. (1999).
6. In 1997, three books were published all carrying the title
intellectual capital; the programme for the 1999 Annual
Meetings of the Academy of Management was dominated
by sessions and papers on this topic. Clearly, for both
managers and academics, this issue of knowledge man-
agement is now very much in the forefront of attention.
Of the vast amount of literature on this topic, we have
found the books by Quinn (1992) and Nonaka and Takeu-
chi (1995) to be the most insightful from a practical point
of view, and the articles by Spender (1996) and Grant
(1996) as useful contributions and idea reviews, from an
academic perspective.
7. The term ‘social capital’ initially appeared in the context
of community studies, highlighting the central importance
of the networks of strong, cross-cutting personal relation-
ships for the survival and functioning of city neighbour-
hoods. Since this early usage, this concept has been
applied to elucidate a wide range of social phenomena,
particularly its influence not only on the development of
human capital (see Coleman, 1988) but on economic per-
formance of companies (see Baker, 1990), geographic
regions (Putnam, 1995) and nations (Fukuyama, 1995).
8. For a rich description of the social capital networks in Sili-
con Valley, see Cohen and Fields (undated).
9. What we have termed here ‘emotional capital’ borrows
from disparate literature streams. 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 essen-
tially individual and partly innate. By emotional capital
we have broadened the concept to include integrity, to
understand the emotions of others, and to acknowledge
and be sincere about one’s own emotions (Hochschild,
1983). We also describe an action element, the capacity to
move into action through will and hope (Brockner, 1992).
For recent and relatively comprehensive reviews of the
role of emotions in organizational functioning and per-
formance, see Fineman (1993) and Quy Nguyen Huy
(1999).
10. For a detailed discussion on how social capital influences
the development of intellectual capital, see Nahapiet and
Ghoshal (1998).
11. See Donald Sull (1999), for a rich and illustrated dis-
cussion of how commitment to relationships can prevent
or delay action.
12. See Ghoshal and Bartlett (1997).
13. Jung’s concept of individuation is described by Edward
Edinger (1984). For deeper insights see Jung (1953–1979).
14. Jung first described the personality types in Psychological
Types, volume 6 (1953–1979). The Myers Briggs Type
Inventory is discussed in Briggs Myers and Myers (1980).
15. People in business-related activities tend to be thinkers
rather than feelers — see Briggs Myers andMyers (1980).
9
PERSONAL HUMAN CAPITAL
As the authors also show, women are significantly more
likely to be feeling-orientated than men.
16. See Hollis (1996).
17. See Burt (undated).
18. For an elaboration of this argument, see Granovetter
(1973).
19. Richard Pascale made this point in his unpublished
paper (1995).
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GHOSHAL, London Busi-
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Sumantra Ghoshal is Pro-
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European Management Journal Vol. 21, No. 1, pp. 1–10, February 2003