Strategic Human Capital: Preserving a Vital National Asset

Abstract

Conclusions * Relatively little attention has been devoted to understanding and explaining the value that human capital brings to industrial productivity in both the private and public sectors to the strategic political, economic, and political objectives of national security. * Manpower reductions in the Department of Defense and in the defense industry are focused on making personnel strengths match shrinking budgets. These reductions neither account for the strategic value of human capital nor for the possible consequences of its depletion and the resulting dispersal and loss of strategic knowledge, skills and experience. * Strategic human capital--and its probable dispersal and loss--is critical to defense industry production capability because it takes a long time to develop, embodies perishable skills, is not easily substitutable, and cannot be passively mothballed like physical capital. * Trained, skilled, experienced employees are being lost to the defense establishment by current requirements. Rather than relinquishing these valuable assets to job market forces they should be strategically re-employed in industries that can best make use of their specialized training and experience. Downsizing and Human Capital Americans have witnessed large-scale downsizing in the public and private sectors since the late 1980's. Work rolls have been slashed largely based on the need to reduce operating costs in the face of a more competitive global environment for industries and shrinking operating budgets for government agencies. But these downsizing strategies have been flawed. Corporate and government policymakers have reduced operating costs associated with infrastructure and manpower, but they have overlooked the effects these actions will have on the availability of strategic human capital. In short, think of strategic human capital as the skills, training and work experience aggregated across employees within public institutions and private industries that are instrumental to the achievement of national security objectives. Human Capital . . . The Lifeblood of Defense From the beginning of the Cold War, the United States has maintained a credible military force. The U.S. defense establishment has been composed of a collective of uniformed and civilian human capital that successfully responded to the unique demands of equipping, sustaining, and operating the components of military security. These workers can be classified as strategic human capital their numbers and capabilities are not trivial. Just over 3.5 million civilians were employed in a variety of occupations, by the private sector, in support of defense related projects in 1987, and one million civilians worked directly for DOD. This strategic human capital consisted of aerospace engineers, shipyard workers, and munitions technicians who designed, built or maintained defense technology and equipment. The pool of DODOs strategic human capital also included the managers and administrative personnel who successfully planned and achieved objectives within the organizations that comprised the military-industrial complex. The downsizing of DOD will cause hundreds of thousands of trained, experienced workers to leave the defense establishment and scatter to unknown job destinations. An Unprecedented Exodus of Skilled Personnel is Underway The jettisoning of experienced DOD employees into the civilian labor market has steadily increased since the end of the Cold War. In 1988, these actions were amplified by the first round of base closures and realignments recommended by the Base Alignment and Closure Commission (BRAC). The first round recommendations resulted in the loss of 11,900 civilian jobs. Three years later, DOD downsizing and the 1991 BRAC's recommendations resulted in the loss of 27,900 civilian jobs. These totals escalated during the 1993 BRAC recommendations, resulting in 42,300 civilian jobs. …