The Concept of Personal Capital
Personal capital is a kind of human capital because it relates to capacity embodied in individuals. However, personal capital differs from standard human capital in that the human capacity involved is not the type developed by academic education or by the usual types of job related training. The personal capital capacities are fundamentally different from cognitive intelligence or intellectual knowledge. Personal capital relates to an individual’s basic personal qualities and reflects the quality of an individual’s psychological, physical, and spiritual functioning (Tomer 1996, pp. 626-627; Tomer 2001, p. 251). Further, it mirrors one’s internal biochemical balance, one’s physical health and conditioning, one’s psychological strengths and weaknesses, and one’s purpose in life. A person’s stock of personal capital is partly a product of one’s genetic inheritance, partly a result of the life-shaping events that one has encountered, and partly an outcome of one’s efforts to mature and to grow in nonintellectual ways. Thus, it is in part produced intentionally. Personal capital qualities are related to a person’s capacity to work or consume in that they underlie the more specific capacities (standard human capital and consumption capital) that a person invests in in order to be qualified for work tasks or to be able to enjoy consumer goods. Moreover, certain personal capital qualities are a prerequisite for developing successful organizational relationships (social and organizational capital) (Tomer 1999a, pp. 46-48). The existence of these personal capital capacities in its members makes it possible for economic entities to achieve more than would be possible without them.
Emotional Intelligence and Emotional Competence
A very important component of personal capital that has received much recent attention is the human capacity called emotional intelligence. Daniel Goleman (1995, 1998) in his two books, Emotional Intelligence and Working with Emotional Intelligenced , is particularly notable for defining, applying, and popularizing this concept. My use of emotional intelligence (EI) draws heavily upon his second book which focuses on the important contribution that organization members’ EI makes in the workplace.
According to Goleman (1998, p. 317),
“‘Emotional Intelligence’ refers to the capacity for recognizing our own feelings and those of others, for motivating ourselves, and for managing emotions well in ourselves and in our relationships. It describes abilities distinct from, but complementary to, academic intelligence, the purely cognitive capacities measured by IQ.”
Emotional intelligence has five elements: self-awareness, motivation, self-regulation, empathy, and adeptness in relationships (p. 24). These determine one’s potential for mastering the twenty-five emotional competencies, the more specific human capacities essential for success in the workplace. For each of the five elements of EI, there are a number of corresponding emotional competencies (pp. 24-28). For example, there are three emotional competencies associated with self-awareness: 1) emotional awareness, 2) accurate self-assessment, and 3) self-confidence. See Table 1 for the complete list of EIs and their associated emotional competencies.
In contrast to IQ (or pure cognitive capacity) which remains relatively fixed throughout one’s life, “emotional intelligence develops with age and experience from childhood to adulthood” and, through effort, can be improved at any age (John Mayer as quoted in Goleman 1998, pp. 239-240). For most people, EI grows steadily with advancing maturity, particularly as people learn 1) to become more aware of their emotions, especially distressing ones, 2) to become more empathetic with others, and 3) to handle difficult social situations and relationships. The emotional competencies based on EI involve “ingrained habits of thought, feeling and behavior” which can be learned and unlearned with effort and time (p. 243). In the process of acquiring these habitual patterns, neural connections associated with these patterns are strengthened and become the dominant path for nerve impulses.
The Emotional Competence Framework
• Emotional awareness
• Accurate self-assessment
• Achievement Drive
• Understanding others
• Developing others
• Service orientation
• Leveraging diversity
• Political awareness
• Conflict management
• Change catalyst
• Building bonds
• Collaboration and cooperation
• Team capabilities
From Daniel Goleman. Working with Emotional Intelligence . 1998, pp. 26-27.
It is important to note that different kinds of emotional competence are required by different industries, organizations, and jobs (pp. 28-29). Thus, individuals who improve their EI and emotional competence in ways that match the demands of their work situation can be expected to raise their job performance. Spending time and effort on such improvements is the essence of what successful investment in personal capital involves.