Tag Archives: HR

Technology vs. Human Capital

By Adam Gellert, Founder / HR + Recruitment Consultant at Linkus Group

Technology versus Human Capital

Definitions for the term obsolete include: ‘no longer used, as something newer exists’, or ‘out of date.’ How terrifying is it for an employee to be anticipating being no longer needed in a workplace, or expired for the lack of a better word? This is in fact the reality of many workers in today’s society – whether they are members of the manufacturing, hospitality or even business services industry.

Today’s world consists of constant changes in technology. It includes product and service upgrades, replacements, and many versions of the same products that can essentially make a process easier. Can technology be compared to Human Capital? Just as there are employees who have industry expertise, there are employees who can upgrade their knowledge through training and development, leadership programs and cross training in new business areas. Employers can replace other employees who are better suited for the job – all in all to ensure that a business has the best human capital.

The reality is, that technology can do the exact same thing but in a more efficient, fast and less costly manner. This is very common in the manufacturing industry where entire jobs become obsolete as they are replaced with technologies that can produce a higher output than what employees can produce. However, it is also becoming common in the business services sector. Imagine having to analyze a data set of over 1 million documents – it would take many employees hours of work to accomplish this task. A computer program on the other hand has the ability to complete this task in a matter of minutes. Another recent trend is investment in Cloud Computing – where businesses can access information anywhere they go – small businesses will not have to worry about renting offices and actual workspaces. Why wouldn’t businesses want to invest on such technologies? Below are a list of pro’s and con’s of the use of technology in today’s average business.

 Technology vs Human Capital

Benefits of Technology:

How technology can’t replace human capital:

Paperless business – Environmentally friendly businesses

Planning and Management – Integrating new technology is not as easy as it looks – should you purchase a brand new software program as soon as it becomes available? Or should you wait and not jump on the bandwagon and take the risk of the product being obsolete soon.   Technology is fast paced – you snooze you lose, it can also be very costly
Increased productivity – Better production results from efficiency when a new technology is introduced Re-training – New technology does not necessarily mean replacing employees – but it can mean employees may need to be re-trained and educated on how to use the technologies – which brings room for errors, and costs. There is also the importance of meeting the needs of employees through job security, employee activities, etc – something that computers cannot do.
Smaller workforce – Easy to manage, reduces costs Maintenance – What if there is a glitch, system error, or the technology merely breaks down? Yes, you can upgrade a system, but this is a cost. Technology cannot be mentored or coached to become successful as an employee can be
Better communication – introducing up to date technologies allows for fluidity in communication throughout the workforce Costs – As mentioned in almost every point above, technology can be expensive. If it is used to replace employees, businesses will have to ensure that there are no redundancies in processes to avoid unwanted costs.
Stay competitive – being up to date in technologies allows businesses to stay competitive in today’s fast paced industry

Although we live in a technology driven world, there are advantages and disadvantages to the use of technology and maintaining human capital in a business. It is ultimately up to the business to decide if it has the capacity to keep up to date with constantly changing technology, or whether to invest in the good old -fashioned human capital.

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Does Minimum Wage Hikes Equal Higher Unemployment for Canadians?

Before discussing the effects of minimum wage, here’s a basic explanation of what the term actually means. “The basic labour standard that sets the lowest wage rate an employer can pay to employees who are covered by the employment legislation is known as minimum wage. The main purpose to impose minimum wage is to protect non-unionized workers in unskilled jobs today.  In Canada, Employment legislation considers it an offense for any employers to pay covered workers less than minimum wage.”

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Besides protecting Canadian employees from wage discrimination, what does the hike in minimum wages overtime mean for the Canadian employment market?  According to the Canadian Federation of Independent business (CFIB), increasing the minimum wage hurts minimum wage workers “by reducing the businesses’ capacity to hire and retain them. In fact, the CFIB predicts that a 10 per cent increase in the minimum wage would trigger up to 321,000 job losses.”1 This statement does sound daunting for the many small businesses in Ontario, however history of minimum wage hikes shows that this in fact is not true.  Between the period of 2007 and 2010, Ontario has raised its minimum wage 4 times and the unemployment rates have stayed the same, and have even decreased – except for 2009 during the economic crisis.  Other provinces in Canada such as Quebec and Alberta have had similar experiences as well during the hike of minimum wages. 

Moreover, outside of Canada there are examples of how minimum wage hikes can actually increase productivity.  Seattle had victoriously increased their minimum wage to $15, imposing the highest minimum wage in the US.   Following its path, San Francisco is intending on increasing their minimum wage to $15 as well.  What does this mean for its workers? It means workers get paid for the hard work that they put in, and are not feeling as though the rich are getting richer, and the poor are getting poorer.  This means that for example, fast food establishments that are known for high turnover will have a more stable workforce.  A major effect of raising pay checks for earners at the bottom of the wage scale is that these earners are likely to spend more of their income on local goods and service than higher-income earners. In turn, these households will increase patronage of area businesses, giving a boost to their community’s overall prosperity”2

Research conducted about minimum wage indicates how beneficial a hike in wage would be for workers. For small businesses that have to abide by the minimum wage hikes, keep in mind that this allows for retaining employees who are satisfied with their pay, and also provides a larger pool of skilled candidates looking for work – such as recent graduates.  Although these increases are not large, it is still considered a wage increase for minimum wage workers. Increasing minimum wage does not necessarily lead to higher unemployment rates, but rather it has little or no impact on unemployment – which is always a positive for the Canadian labour market.

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