The debate between shareholder primacy and stakeholder theory concerns the legal obligations of corporate directors. Introduction A corporation is never just a machine for making money. It is a legal institution, a social system, and a vehicle for allocating power, risk, and responsibility. That is why one of the most important debates in corporate governance continues to divide scholars, executives, regulators, and investors: should corporations exist primarily to maximize shareholder value, or should they balance the interests of all the people and institutions affected by their actions? This debate is commonly framed as shareholder primacy vs. stakeholder theory. Shareholder primacy says the corporation's central obligation is to its owners, the shareholders. Stakeholder theory says the corporation owes duties to a wider circle of affected parties, including employees, customers, suppliers, creditors, communities, and sometimes society at large. This is not a purely academ...
This post explains how organisations build long-term human capital through structured development programmes rather than ad-hoc training. It covers the four stages of a development system, the difference between training and development, and the metrics that show whether either one is working. The post tests the framework against General Electric’s Crotonville leadership programme in the United States and Safaricom’s internal academies in Kenya.
By Kateule Sydney — Researcher and Writer | Last Verified: 2026-09-29 | Published by Kat-Syd Resources Hub
Human capital development runs in four stages: assess, design, deliver, measure.
Table of Contents
Human Capital Is Built, Not Hired
Gary Becker argued in Human Capital, published in 1964, that the skills and knowledge embodied in a workforce are a form of capital in the same sense as plant and equipment. Becker’s claim is that firms and individuals invest in this capital deliberately, and that the returns accrue over a working lifetime rather than a single accounting period.
Theodore Schultz extended the argument in his 1961 article “Investment in Human Capital” in the American Economic Review, and the two economists shared the 1979 Nobel Memorial Prize in Economic Sciences for the work. Their position, in plain terms, is that a firm which treats skills as a cost to be minimised will underinvest in its own future.
The three components of human capital, in Becker’s framework, are these:
- General skills — capabilities that transfer to any employer in the same industry.
- Firm-specific skills — capabilities tied to the processes, systems, and culture of one organisation.
- Knowledge assets — the documented methods, standards, and institutional memory a firm accumulates over time.
The distinction matters because the two skill types carry different economics. A firm that pays for general skills risks losing the investment to a competitor. A firm that pays for firm-specific skills captures more of the return, because the skill has less value elsewhere. This is why apprenticeship systems and internal academies cluster around firm-specific capabilities.
Training and Development Are Different Disciplines
Training is the process of building the skills an employee needs to perform the current job. Development is the process of building the skills an employee will need to perform a future job. The two are often collapsed into a single human-resources function, and the collapse is the reason most organisations underinvest in development.
Training solves a present problem. A new software rollout requires training. A safety incident requires retraining. A quality failure requires retraining. Development solves a future problem. A firm that plans to enter a new market in three years must begin developing the leadership, language, and market knowledge today, or the strategy will not be deliverable when the time comes.
Key point: training has a short payback period and a measurable output. Development has a long payback period and an output that is difficult to measure in a single quarter. When budgets tighten, training survives and development is cut, and the firm is left with a workforce that can perform today’s job and not tomorrow’s.
The two disciplines differ in four specific ways:
- Time horizon — training is measured in weeks, development in years.
- Target — training targets the current role, development targets a future role.
- Owner — training is owned by the line manager, development by the executive team.
- Funding — training is funded from the operating budget, development from the strategic investment budget.
The insight to carry forward is that a firm which funds only training is funding its present. A firm that funds development is funding its ability to change, and change is the only thing the future is guaranteed to require.
The Development System Runs in Four Stages
A development system, in the form most large organisations use, moves through four stages: assess, design, deliver, and measure. The framework is documented by the Chartered Institute of Personnel and Development (CIPD) and by the Association for Talent Development (ATD) as the standard cycle for workforce development.
The four stages are sequential, and each stage produces a specific output that the next stage consumes. A firm that begins with delivery, without assessment and design, produces training that does not change behaviour, and the failure is invisible until the next performance review.
The four stages are these:
- Assess — identify the skills the strategy will require, and measure the skills the workforce currently has.
- Design — build the programme that closes the specific gap, using the learning method best suited to the skill.
- Deliver — run the programme, with named participants, named facilitators, and a defined schedule.
- Measure — test whether the programme changed the behaviour or the outcome it was designed to change.
The measure stage is where most development programmes fail. A firm that counts attendance and course completions has measured activity, not outcome. A firm that measures promotion rate, retention of high performers, or internal fill rate for senior roles has measured whether the development system is producing the capital it was funded to produce.
Measurement Separates Development From Activity
Donald Kirkpatrick set out the standard evaluation model for training and development in 1959, and the model remains the most widely used framework in the field. Kirkpatrick argued that evaluation must proceed through four levels, and that most organisations stop at the first.
The four levels of the Kirkpatrick model are these:
- Reaction — whether participants found the programme useful and engaging.
- Learning — whether participants acquired the knowledge or skill the programme was designed to teach.
- Behaviour — whether participants changed what they do on the job as a result.
- Results — whether the change in behaviour produced the business outcome the programme was funded to produce.
I will state the position plainly. A firm that measures only reaction has no evidence that the development programme produced anything. A firm that measures results has evidence it can defend, and it has the numbers it needs to argue for the next funding round.
The three additional metrics I recommend tracking alongside the four Kirkpatrick levels are these:
- Internal fill rate — the percentage of senior roles filled from inside the firm, which shows whether the development pipeline is producing successors.
- Retention of high performers — the percentage of top-quartile performers still with the firm after three years, which shows whether the development investment is being lost to competitors.
- Time to productivity — the number of months a new hire or newly promoted employee takes to reach full performance, which shows whether the development system is shortening the ramp.
The closing insight is that measurement is not an audit of the development function. It is the evidence base on which the development budget is defended, and a development programme without measurement is a programme that will be cut at the first budget cycle.
Long-Term Human Capital Requires Executive Ownership
Human capital development fails when it is owned by the human-resources function alone. The skills a firm needs in five years are determined by the strategy the firm intends to execute, and only the executive team owns the strategy. When development is delegated to human resources, it drifts towards generic programmes that no executive will defend in a budget meeting.
A firm that treats development as a strategic investment, rather than a human-resources overhead, produces results that are visible in the metrics above. A firm that treats it as an overhead produces programmes that are cancelled in the first downturn, and it enters the next cycle with a workforce that cannot execute the strategy it has committed to.
The practical implication is that the development system must be governed by the same discipline as any other strategic investment. It needs a business case, a named executive sponsor, a multi-year budget, and a set of results that the executive team reviews on the same cadence as any other investment.
The section closes with the recommendation that the executive team review the development system annually against the strategy it is meant to support. If the strategy has changed and the development system has not, the system is out of date and the workforce is not being prepared for the work the firm has committed to do.
Judgement
The case evidence establishes that human capital is built through deliberate investment over years, not through hiring at the moment of need. Becker and Schultz gave the economics, Kirkpatrick gave the measurement, and the firms that have applied both have produced workforces that can execute strategies their competitors cannot.
My position is this. Human capital development matters because a firm can buy equipment, premises, and technology in a single transaction, but it cannot buy a workforce with the specific skills it needs in a single transaction. The development system is supposed to produce four outputs: a skills map derived from the strategy, a programme designed against that map, delivery with named participants and facilitators, and measurement against the four Kirkpatrick levels. It applies whenever a firm commits to a strategy that requires capabilities it does not currently possess, which means at every expansion, every digital transformation, and every new market entry. The people responsible are the chief executive and the executive team, with the chief human-resources officer owning the design and delivery and the line managers owning the on-the-job application. The method is to translate the strategy into required skills, measure the current workforce against that requirement, design a programme that closes the specific gap, deliver it with a defined schedule and named participants, and measure the outcome at the behaviour and results levels. The advantage of this discipline is that it produces a workforce that can execute strategies the firm has not yet attempted, that it builds firm-specific skills the market cannot supply, and that it reduces the cost of external senior hiring. The limitation is that development takes years to produce results, that the returns are difficult to attribute to a single programme, and that in a downturn development is the first budget to be cut, which means the firm that cuts it re-enters the next cycle with the same capability gap it had before.
The recommendations I would give any executive, human-resources lead, or talent-development manager working with human capital development are these:
- Derive the skills map from the strategy — development that is not tied to the strategy is training dressed as investment.
- Separate training from development in the budget — two different time horizons require two different funding lines.
- Measure at the behaviour and results levels — attendance and course completions are activity, not evidence.
- Assign an executive sponsor — development owned by human resources alone will be cut at the first budget cycle.
- Review the system annually against the strategy — if the strategy has changed and the development system has not, the workforce is being prepared for the wrong future.
A firm’s human capital is only as strong as the development system it has funded, and the discipline of funding it in the years when it produces no visible return is the whole of the exercise.
References
- Becker, G. S. — Human Capital: A Theoretical and Empirical Analysis — Columbia University Press, 1964
- Schultz, T. W. — Investment in Human Capital — American Economic Review, 1961
- Chartered Institute of Personnel and Development — Learning and Development Factsheet — CIPD
- Kirkpatrick, D. L. — The Four Levels of Training Evaluation — Association for Talent Development
- Safaricom Annual Report — Workforce Training and Internal Academy Disclosure — Safaricom Investor Relations
Read Also on Kat-Syd Resources Hub
Functional Management — The Pillars — how human resources sits alongside marketing, operations, and finance in the firm.
Management Principles Series: Planning, Organizing, Staffing, Directing & Controlling — how staffing and directing fit into the wider management function.
Developing the Business Plan — Entrepreneurship and Innovation Part II — where the human capital plan feeds the operations and financial sections of the business plan.
Written by Kateule Sydney — Researcher and Writer
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