Managing Human Capital - Harvard Business School MBA Program

Managing Human Capital

Course Number 2060

Senior Lecturer Paul D. McKinnon
Fall; Q1Q2; 3 credits
28 Sessions


Managing Human Capital has been specifically designed to teach practical skills for the student who seeks to manage others and his or her own career with optimal effectiveness. Students who believe they will need to effectively manage other people to produce increased value should take this course.  In the initial stages of the course, we will cover best practices in the design of processes like recruiting, performance-evaluation, succession planning, and compensation systems; how to develop people, manage workforce reductions, and have difficult conversations; and how to manage organization, team, and individual change.  In the latter part of the course, students will learn how to develop as a professional, navigate the transition to general manager, and evaluate career and life choices effectively.

The instructor believes that the management of human assets has the potential to be the source of competitive advantage in high performance organizations. Due to rapidly changing demographics, technologies, mergers, alliances, and increased global competition, the processes of managing human capital are becoming more central to effective organization practices and outcomes.

The course takes the point of view of the general manager (not just the human resource practitioner) attempting to leverage the human resources of the organization in ways that create not only revenues, profits, and growth, but also create a unique place to work, create unique products and services, and create employees and customers who are apostles of the enterprise (Heskett, Schlesinger, and Sasser, 1997).

The goal of the course is to influence future general managers to have a point of view about the ways to achieve high performance by way of organizational effectiveness through people. We want future general managers to be clear about how people are motivated, and how assumptions drive the kind of processes, structures and strategies they create. The desired outcome is to have students' assumptions questioned, and to create high expectations of self and others not only within the class but also within the organizations students will join after HBS.

This course is based upon three themes: (1) as the general manager, how do you think about leveraging your people in strategic and systematic ways; (2) what specifically needs to transpire in order to act on those beliefs, assumptions, policies, and levers to achieve competitive advantage of human assets; and (3) what are the specific skills required for a general manager to operate those levers to achieve the desired results.

Who Should Take the Course?

  • If you want a greater repertoire of practical skills to manage others and yourself
  • If you've ever questioned your ability to influence others
  • If you question whether you can change the behavior of others and yourself
  • If you get in your own way due to your own insecurities and internal doubts
  • If you question how to create effective human capital processes like compensation, performance management, promotion, recruiting systems
  • If you frequently avoid and put off important conversations
  • If you want greater clarity on how to manage your own career and life

Topics Covered in the Course

  • Creating overall dynamic human capital systems
  • Achieving internal and external alignment
  • Understanding the economics of effective human-capital processes
  • Focusing on how human resource systems influence customer service
  • Creating effective organizational levers:
  • How can you create an optimal recruiting system?
  • What are the key elements of a performance management/evaluation process?
  • How do you reduce the labor force in an organization in the most helpful and responsible way?
  • What are the optimal processes to socialize new professionals into the organization?
  • What is a career-development plan, and how does it work over time?
  • How do incentives and measurement systems influence organizational outcomes?
  • What are best organizational practices relating to work/life balance?
  • How to achieve organizational change through the human dimension
  • How to have important conversations
  • How to manage your own human capital, your own journey, your own technical competence, your ability to lead and influence others, and your awareness of the challenges of your own integrated life.

In the long term, we would hope students remember this course because:

  • Their assumptions were questioned
  • They learned how to create processes to question those assumptions
  • They learned what really works in managing organizational human capital
  • They learned what really works in managing their own human capital
  • They created high expectations for self and others

Administrative and Other Matters


Fifty percent (50%) of your evaluation for the course will be based on your class participation.  An additional fifty percent (50%) of your grade will be based on a final project.

Class Participation

Because this is a case-based class, each student is required to be an active participant in case discussions. Your participation grade will reflect my assessment of your total contribution to the learning environment. This includes not only the frequency of your contributions in class, but also their quality.  Quality includes, among other things:  (1) sound, rigorous, insightful diagnosis (e.g., sharpening of key issues, depth and relevance of analysis); (2) ability to draw on course materials and your own experience productively; (3) ability to advance or sharpen in-class discussion and debate, willingness to take risky or unpopular points of view, use of logic, precision, and evidence in making arguments; (4) professionalism of your conduct (attendance, punctuality, preparedness, and showing respect to all section members and their class contributions).  Unexcused absences and lack of preparation will count heavily against your grade.
In evaluating class participation, I will endeavor to reward contributions that:  (1) get the discussion off to a productive start; (2) shape the discussion through the introduction or use of concepts and frameworks; (3) provide enlightening quantitative analysis; (4) help change direction when appropriate; and (5) summarize others’ comments, all in a concise manner with avoidance of repetition, digressions, and “cheap shots.”

Course Project

Students are asked to complete, either individually, or in groups, a final project for the course. The purpose of the final project is to provide students in the course with an opportunity to explore some of the themes introduced in our case discussions through research, field work, creative speculation, and analysis. Our goal as instructors is simply to help students find projects about which they are passionate, in which they are extremely interested, and from which they will derive value for their own personal development and future careers. If you are able to settle upon such a topic - assuming a relevance to the course - then you should plan to pursue it.
In the course, we are dealing with a wide variety of businesses that share a common set of economic and managerial challenges. For example, every case we will discuss deals with specific human capital challenges that face organizations and leaders within them. Nearly every case raises questions about the allocation and leveraging of talent. The project may follow a variety of formats, including the following:

  • Create a human capital plan for an organization based on the frameworks/concepts presented in class, with the usual elements of a formal plan, such as feasibility study, industry background, proposed target markets, product/service definition, pricing, promotion, channel structure, and financials.
  • Write a case on an organization with an intent to highlight: talent management challenges; decision focus; compare and contrast issues; quantitative analysis, with analysis of the particular management issue(s) or problem(s) facing the company.
  • Consult or advise an organization or manager, provide organizational problem solving that would shape strategic goals, develop solutions for specific functional problems for a company with particular focus on talent.

Note: Papers must focus on a specific issue, some analysis, and articulate clear conclusions.

Assumptions about Organizations and the Human Dimension

  • Organizations may exist for many reasons.  Some exist primarily to create wealth.  Other systems have more “high minded” rationales for existence.  Throughout the course, the instructor and students must consider these varying objectives and the effects that organizations’ strategic intent has on the human enterprise.
  • The goal of the course is to teach students how to create “better” organizations.  While there may be different points of view about what a “good organization” is, the class will move quickly to the issues of individual motivation in the context of applying levers within the organization’s environment to enhance the organization in its totality.
  • “Human capital” is defined as the practices and policies that are relevant to creating the ground rules for a significant number of people within an organization in order to achieve common goals.
  • Human capital processes within organizations go beyond protecting the status quo. The function of human resources is to enhance and protect the culture, and to drive the organizational capabilities through human capital practices.