Lower-value human capital

Bill Winters, the CEO of global bank Standard Chartered, explained that his organization was cutting 7,000 jobs. “It’s not cost-cutting,” he said. “It’s replacing in some cases lower-value human capital with the financial capital and ​the investment capital we’re putting in.” Winters suggested AI was driving some of the efficiencies he was seeking.

Saying the quiet part out loud

Of course the idea of “lower-value human capital” is offensive. The idea that some people have greater value than others is a disgusting concept. That’s why Winters’ statement created such an enormous backlash.

But let’s be honest. Our problem is that he said out loud what the manager of every large organization is thinking.

Regardless of their lip service to the value of their corporate “team,” every CEO sees their workforce as an expensive but necessary component in creating whatever value they purport to create.

Every CEO knows that some staff contribute more relative to their salaries, and some contribute less. Every CEO would like to replace the people who they perceive are not pulling their weight.

Every CEO believes that the people at the bottom — those whose skills are generic and easily replaced, like customer-service people and retail workers — are a mass of undifferentiated cost. Every CEO, in his or her secret inner thoughts, thinks of such human beings as low-value human capital. Every CEO, given the chance to replace such costly people with automation, plans to do so. That’s why there are far fewer factory workers now and every retail store has a self-checkout kiosk. AI is just another step in this trend.

Every time you hear of a layoff, executives are thinking of the people getting let go as “lower-value human capital.”

Bill Winters said it out loud. His image is paying the price.

You’ll never hear another senior executive utter this phrase in a public setting.

But don’t delude yourself. They’re thinking it. Because that’s how big business works.