Human Capital - Bad Grammar or Organizational Success?

A January HBR blog post by Roger Martin titled "Why Good Spreadsheets Make Bad Strategies" makes the case that organizations have gone too far to the quantitative side in an overwhelming need to make sense of an environment that is volatile, uncertain, complex and ambiguous (VUCA) at the expense of the qualitative nature of organizations. The great example he gives is that you can measure the number of people in the room, but you don't know whether they are happy, sad, motivated, etc.

Mr. Martin's blog elicited an interesting response from Charles H. Green, co-author of the book "The Trusted Advisor" and CEO of Trusted Advisor Associates. In his comment, Charles states the following:

"We now talk about "human capital" with the proper roles of adjective and noun reversed, largely so we can measure the impact of behavioral change."

So the question is have we as Human Capital Management (HCM) leaders done ourselves a disservice by approaching our work in such a way as to allow the measurement of behavioral change and its impact on business strategy execution? In order to position our profession as a "strategic business partner" that could affect the company's bottomline, we put our profession in terms that we thought would resonate with leadership...human resources, human capital, talent management, etc. This has created some angst as people inside and outside our profession saw this as lessening the "people" side of our business because we weren't treating them as people but as commodities of the business like cash or buildings.

Historically, organizations have treated people like resources making decisions about their application to business strategy and execution (See my earlier blog post about impact of layoffs...). John Boudrea's book titled "Beyond HR" advocates for a decision science around human capital...My experience in the Department of Defense indicates there is a chasm between the ability to enable decision advantage in human capital and the need to do it.

My perspective is that human capital decisions made based on incomplete and faulty data can be catastrophic to an organization. If decisions about necessary capabilities to execute the mission and the workforce's capacity to execute the mission are based on anecdotal and incomplete analysis of the challenges being faced then we do our organizations and our profession a disservice.

I believe there is a balance that exists and is developing to address HCM activities and solutions in quantitative and qualitative perspectives...recognizing that we as HCM leaders are striving to create individual and organizational capabilities to execute the business strategy...it takes people in our profession with the ability to see the forest and the trees as part of a larger talent ecosystem that is alive with hopes, desires, and feelings acting in a global system driven by the strategy of the organization.

Does it need a new name or a correction in grammar? I am not sure. I know we need to enable business and mission success. Whether we do that as the Chief Human Capital Officer, Chief People Officer, Chief Human Resources Officer or Chief Talent Officer should not matter and/or be transparent. What matters is enabling individual and organizational success through human capital decision advantage. Those organizations whose human capital can thrive in VUCA environments with greater agility and adaptability will be hugely successful in the future. Those who are not...well think Enron, Lehman Brothers, etc.

Talent Blinking...

So can we enable better informed talent decisions? That is the question...

George Anders in his Harvard Business Review blog this week, titled "Today's Biggest Talent-Management Challenges," shared his perspective after attending a Conference Board conference focused on talent management. During his attendance he came away with some relevant insights we have to consider...

1. We aren't sure what we're looking for.
2. Talent development is just a slogan, not a way of life.
3. We don't know how to get better.

The information and perspectives he shares would lead you to believe that we are unable to create simplified processes that enable talent decisions within our organizations. Talent decisions are so complex that we need complex processes to make them work.

Marc Effron of the New Talent Management Network thinks otherwise. Marc Effron's new HBR book "One Page Talent Management: Eliminating Complexity, Adding Value" will come out later this year. His premise is we add layers of complexity that slows the process down. And in today's hyper-competitive global economy where competitive advantage can last for seconds or minutes...as Human Capital Management (HCM) leaders we have to enable fast talent decisions.

So now you are thinking (I assume...because I did), how do we speed up talent decisions for the business. Let's take a page from Malcolm Gladwell.

Malcolm Gladwell's book "Blink" advocates where rapid cognition enables quick decisions (There are examples where it didn't work well). That theory is that people are able to make decisions in critical situations based upon sometimes very limited information. Talent decisions are both complex and critical...so how can we do it better?

One place where "Talent Blinking" is happening came from my experience in the United States Navy. I participated and saw the Navy's version of talent management and how these decisions were made in seconds, but not more than minutes...

My experience came at the Navy Intelligence Commander Sea Screening board. At that time, there were a number of talented Commanders in Naval Intelligence, but only a few sea duty opportunities for them that would make them eligible for Captain. Hence a sea screening board to review the available talent and make selection decisions based upon each individuals cumulative performance. This board was determining who could be successful in Naval Intelligence in the future.

The week prior to the board a team of board reporters (including myself) would review the performance records and look for gaps in information. Any gaps found were passed to the individuals to get the necessary information (In the Navy, the individual is responsible for ensuring their performance and award documents are sent in for these boards...so individuals own a part of the process and that is a good thing).

The following week a group of senior Naval Intelligence officers would start reviewing these performance records of individuals. These seniors participated in the process because of several things.

1. They had a personal sense of duty to make sure the best talent was being developed.
2. They had a responsibility to the customer, in this case the operational Navy, to make sure the best talent was available to support mission execution.

Prior to the board commencing, the board chairman (in this case it was the senior Naval Intelligence officer...the Director of Naval Intelligence a two-star Admiral) gave guidance on what he thought the future looked like and what type of performance areas carried the greatest weight for people to be successful.

Once the guidance was provided, board members divided the records up and reviewed each in detail. They would make notes on records such as smiley faces, up and down arrows, etc. Once completed the board moved into "The Tank"...a decision support center to make talent decisions...

In The Tank are chairs with five buttons hidden from sight (Allowed for anonymity and no influence from other participants) that signify values of 0, 25, 50, 75, and 100. At the front of the room were three large screens where the cumulative information of an individuals performance record was flashed on the screen...for seconds. That's right seconds...talent decisions within this environment were made in "Blink" speed.

While this selection process was Naval Intelligence leadership selecting Naval Intelligence talent, the larger selection process for promotions through the U.S. Navy is the same system with Air, Surface and Submarine officers making these decisions at the same speed. This group makes decisions in many cases without knowing the individual being discussed or their background. They are able to make critical talent decisions because there is a simple, common process and analytics to back it up.

What makes this work are instantiated processes and sound analytics that allow decisions to be made quickly. For organizations to be successful and overcome the things that George Anders references as continued problems in talent management, the processes should be as simple as possible and the analytics have to be robust and understood so quick talent decisions can be made and executed.

The moral of this story are few but important...

1. Keep the talent processes simple - the process in this case was long standing. Everyone understood it and their role in executing it.
2. Definition of Talent is in each Person's Mind - the definition of talent and an individual's ability to recognize it is based upon their current and future environment, own experiences, and organization view. These things shape what we want to see in talent that is positioned for future success of organizations.
3. Create a Talent Management Culture - Easier said than done I admit, but a number of organizations are successful at this. Marc Effron's 2010 State of Talent Management study indicates that it is possible. We have to leverage where organizations have been successful and apply it to the environment at your organization.
3. Talent Blink - identifying talent and what it should do next for continued development and. Organizational success can be a relatively stable and quick process. Yes...there may need to be some lengthier discussions about some talent, but leadership can make these important decisions if properly prepared.

So food for thought...

Cheers,
Keith

Real-time Brand Management...Implications to Real-time Talent Acquisition

In John Sviokla's Harvard Business Review blog about the horrible Virgin America's flight on March 13, he discusses the power of real-time brand management. This was driven by one passenger, David Martin, the CEO of Kontain.com creating a perfect storm around the incident.

During the four hours the plane was on the tarmac in Newburgh, NY, he documented and shared it with the world. This led to Martin negotiating on behalf of the other passengers a full refund and $100 voucher (Virgin America's CEO C. David Cush originally only offered the $100 voucher).

So that is the sordid story of the flight and passengers...The interesting part is Sviokla's statement below...

"Firms may "own" their brands, but brands really live in the heads of their consumers. Companies must constantly nurture and actively manage their brands at the speed customers form opinions about them."

In a world so globally connected at mind numbing speeds, implications of these type of incidents is "real-time" and can have a major impact on the bottomline for a company if it does not act quickly to address it...just ask Toyota.

While there are no studies, I suspect that these type of incidents also have an impact on "Real-time Talent Acquisition." How many people with the right knowledge and skills to help execute Virgin America's business strategy may have been thinking about joining the company and now are not? We will never know, but managing brand for talent acquisition can have similar short-term and long-term impact on an organization's growth, market share, etc.

Companies must manage their brands at the speed that talent, both inside and outside the organization, form opinions about them. CHCOs, CHROs, and CTOs must prepare to make adjustments in talent acquisition strategies at the same speed that these type of incidents occur for an organization. In the new talent war that is approaching...the ability for Human Capital Management leaders to be agile and adaptable in dealing with these types of incidents will be critical.

CFO = Value Integrator...CHCO = ?

IBM released their 2010 Global CFO Study last week. Another quality product that points to some interesting things that CHCOs, CHROs, CTOs, and CLOs should know and understand in working across organizations specific to Financial Capital and Human Capital. My perspective is this...we need to understand explicitly what is happening in the broader organizational enterprise to continue to support it and enable decision advantage in respect to human capital investment decisions.

The first thing that jumped out at me is this statement in the CFO study:

"Our research, however, also points to a bright spot – one group of Finance organizations with a particular combination of capabilities stands out from its peers. These organizations – which we call Value Integrators – are more effective in every area assessed, with significant advantages in managing enterprise risk, measuring and monitoring business performance and driving insight from information integrated across their companies and governments."

As HCM leaders, we should play a role in understanding enterprise risk in respect to human capital decisions across the global enterprise. The human capital investments required to identify, acquire, build and retain human capital pertaining to business decisions to enter new growth markets or expand mission capabilities involve human capital management (HCM) risks. For example, can we develop the human capital capabilities required to move into that area (global or functional)? We also play a role in measuring and monitoring business performance based upon the human capital investments we ask the organization to make...we should be able to make those value-add linkages. Finally driving insight from information integration is a domain for us. How do we take the myriad of human capital information and data available to provide decision advantage to our organizations in making HCM decisions?

So with CFOs as "Value Integrators," I see a similar role and opportunity for HCM leaders. To continue to learn as a profession, we need to read these type of studies and understand them and their implications to our profession. How can we learn from this to position our HCM leaders in these same organizations as a similar "Value Integrator?"

Larger Role for CFOs

The study also indicates that CFOs are playing a larger role as an advisor and decision-maker in the organization not only in their traditional areas, but also influencing other enterprise-wide decisions. If you look at the embedded graph in more detail...it lays out a number of areas where the CFO is playing this role to include:

- Enterprise Cost Reduction Management
- Selection of Key Performance Indicators
- Capital Asset Manager
- Risk Management
- Prioritization of Resource Management
- Strategic Revenue Planning
- Business Model Innovation
- Information Management Strategy

I think our profession can be the trusted advisor on HCM aspects of these areas in enabling decision advantage. While we play a direct role in some of these areas, we likely have our own HCM areas to influence enterprise-wide decisions. Some of these areas might include the following;

- Human Capital Reduction Strategy - Provide decision advantage so the right talent is maintained at the organization in high risk environments.
- Merger & Acquisition HCM Assessment - What Human Capital capability and capacity does the M&A bring?

CFO as Decision-making Hub

"Value Integrators – more than any other group – are equipped to advise at an enterprise level. They are positioned to evaluate business opportunities and risks in an end-to-end context and recommend difficult trade-offs among units, markets and business functions. A U.K. CFO explained the opportunity this way: “With the data we have and our deep understanding of the business, Finance can become the decision-making hub of the company.”

As this U.K. CFO states...the CFO should be the decision-making hub for finance decisions. Can we imply then that the CHCO should be the decision-making hub for HCM decisions? My position is YES! But to get there we have to develop sound strategic human capital business models and performance measures that allow us to tie our activities to the business.

CHCO = ?

If the CFO is the Value Integrator...what will the CHCO be to the organization? Talent Integrator? Business Enabler? I don't know...plenty of indications that a seat at the table is unlikely unless we change our HCM business model to reflect how we enable business strategy directly. This would support making the case for CHCOs to be the hub for human capital decision-making.

IBM's 2010 Global Human Capital Survey will hopefully answer that question this year. Whatever the answer though, we have to be ready to act as a profession and drive ourselves to get there.

Developing Organizational Capabilities - The McKinsey Global Survey...Same Old Song...

McKinsey is a quality company that does some great research in the way of human capital and talent management. You may remember they were the first to point to a War for Talent in 2001.

Their most recent global survey focuses on Developing Organizational Capabilities and the role that training plays in this. There are a number of key points it makes and implications to strategic human capital capabilities needed to execute business or mission strategy.

“Building organizational capabilities, such as leadership development or lean operations, is a top priority for most companies. However, many of them have not yet figured out how to do so effectively…”

This opening statement in McKinsey’s Global Survey: Building Organizational Capabilities speaks volumes and is absolutely horrible news if you are an HR professional or Human Capital Developer. On one hand the study says building organizational capabilities to enhance competitive advantage is a top priority to leadership. That is great news that people realize it is a priority. However, the second part of the opening statement says to me we don’t know what we are doing. What kind of confidence building and message does that say about our profession to a CEO, C-Suite, business unit or potential customer? And let’s be clear…the people you and I work for will read the report because they trust McKinsey.

In the report there are a number of other statements that drive me to one single conclusion…we have lost our way. While the report is explicit in a number of areas, what it implies is that we don’t know what organizational human capital capabilities need development and even if we knew…we are not good at developing the organizational human capital capabilities required to create a competitive advantage or how to measure we have developed the right organizational human capital capabilities.

As I have discussed in earlier blog posts, there are a lot of great organizations with great CHROs, Chief Talent Officers and Chief Learning Officers that get it. They are successful and extremely effective in developing organizational human capital capabilities that support their organization’s continued agility and adaptability leading to competitive advantage. These are the same people that graciously give their time and talk to us at conferences and symposiums about what they did and how they did it. This hasn’t been happening recently…these have been happening assuredly for the last 10 years, but longer. And yet here we are with another study that paints us as inept at doing our job. We can’t lament that we have no “seat at the table” or we want to become a “strategic business partner.” That time is past because in the eyes of the customer, we don’t hold up our end of the bargain. If that is not the case and just our customer’s perception…then all the worse because perceptions drive decision making in a vacuum when there is no data or metrics. So ultimately we are responsible or our own plight and have no one to blame but ourselves.

This blog post from Kevin Wheeler has a lot of valuable points that are still quite valid today...Chief Talent Officer 2020...We would do good to heed his advice...

My perspective is a simple one…we hold, and have held for some time, the power to change ourselves, how our profession conducts business and the perception that is held about it. The only thing stopping us is…well…us. To be successful, we ourselves need to understand how to think strategically, be as agile and adaptable as our customers, execute flawlessly, and measure.

Making the Globally Integrated Enterprise and the Human Network a Reality

So let me be upfront…I am a big fan of the companies I am about to write about this week. I think IBM and Cisco are world leaders in their respective industry sectors and we have much to learn from them, and if applied correctly within the context of your operational environment and culture can allow your human capital organization to “leapfrog” to a new level of partnership.

I think IBM and Cisco continue to do a fantastic job of looking at the external environment, understanding what is happening and looking into the future to see what the world will look like. Without this ability they cannot position themselves for future success and transition their business as necessary to meet changing market conditions. So the real question is what makes them so successful at it? Once they define a strategy…what makes it happen? Cash is always a good thing…can do a lot with that. Technology is super…it allows the connections to happen. But at the end of the day it takes human capital to execute, human capital that has the right knowledge, skills and attributes to execute the business strategy. Without it… doesn't matter how good your strategy is…you will not get from where the business is now to where it needs to be in the future.

So if this hypothesis is true…what makes IBM and Cisco better positioned to execute their business strategy? For starters, the Human Capital elements within IBM and Cisco are world-class organization themselves. I have seen Ted Hoff, VP for Learning at IBM, several times and the things they do are a testament to the position he has as a trusted advisor supporting IBM global operations. Both human capital organizations have an ability to understand what things are important in human capital development in enabling execution of business strategy and jettisoning transactional activities that while necessary, provide limited strategic value. By focusing on the business strategy and what human capital is necessary to execute, they are able to play a more proactive role as a partner to recommend various human capital courses of action, vice being ordered to create a five-day course (We have all been there…right?).

They are able to execute their role as strategic human capital developers because they have a process that identifies what organizational capabilities are needed to execute the business strategy, identify top performers overcoming these challenges daily in executing the business strategy and develop the necessary human capital development requirements down to the performance behaviors and knowledge, skill, attributes necessary for individuals. With human capital capabilities defined, IBM and Cisco are able to determine the current capacity of the workforce in these areas and make recommendations on where valuable and scare resources should be applied to develop the human capital capability. These recommendations can take the form of buying new talent, developing existing talent or outsourcing where talent is located.

The power this provides is amazing…As we have executed the same human capital development model within the context of my organizational environment; we have seen a compelling difference in our ability to engage our customers at a strategic level on what human capital capabilities they require to execute their mission strategies. Doing so has allowed the Defense Intelligence Agency Directorate for Human Capital to “leapfrog” 10 years of applied process in the private sector. While still early in our journey, it has started to pay dividends in having meaningful discussions with customers on their most important strategic human capital needs.

As Human Capital Leaders, we have spoken many times in the past about being strategic mission or business partners and showing the value of our efforts to the organization. Organizations like IBM and Cisco have achieved their success with a determined approach to human capital and talent development and its alignment to organizational strategy. My experience has shown that it can alter the customer relationship in a positive and meaningful way. As Human Capital Leaders...let's stop talking and start doing...it can make a difference.

Signs of Economic Heating...A New Talent War Looming?

This week there were new signs that the economy is moving in the right direction. Great news for individuals, companies and the nation.

Those signs included a rise in the short-term interest rate by the Fed, durable good orders showed an increase over the last reporting period and consumer prices continue to be flat. These signs together and statements from the Fed that growth is currently more important that inflationary issues continues to bode well for the U.S. economy.

While these events transpired this week in economic news, this blog post from the American Society for Training and Development (ASTD) shows what may be looming for companies not just in the U.S., but globally. In the blog is reference to a Halifax Chamber of Commerce brief by the Nova Scotia Labour Minister Marilyn More. During her discussion she states the labour force will shrink by 18,500 jobs in 2014 and over 40,000 Baby Boomers are expected to retire leading to a significant labour shortage in Nova Scotia.

While this is not news to the Human Capital realm, we have been expecting this for sometime now, it has just been postponed by the current economic conditions, Ms. More states:

"...38% of the current workforce is undereducated and lacks the skills to move forward in a knowledge-based economy."

What is occurring in Nova Scotia is a microcosm of the larger human capital condition across the globe and the important understanding that as the economy does turn around in the U.S. and globally that a new talent war is looming. As the economy heats up and organizations move to develop new human capital capabilities to execute the business strategy...they will need talented and skilled knowledge workers to enable their business strategy. What this report indicates is that the available labor force may not be prepared with the right knowledge, skills and experiences to support the organization's business strategy.

Understanding these dynamics now will lead to organizations being either successful Talent Keepers and Talent Acquirers or net Talent Losers. It may be too soon to say how this will pan out as job creation is slowly increasing. There is potentially pent-up frustration in the workforce in many companies. Those that would have left found fewer jobs available to move to and those that would have stayed may not be happy with how downsizing affected them directly. If those factors are in your workforce (Annual workforce engagement and climate surveys will shed light here), preparing for the implications of a new talent war now is critical.

Human Capital leaders are in a unique position. As discussed in my last blog post, there is immense cash liquidity in organizations because that allowed flexibility. Companies are poised to make key decisions on whether to buy new talent (hiring or M&A), develop talent, or rent talent. Human Capital leaders can make recommendations to support these critical decisions, but not without:

1. The requisite human capital analytics

2. Understanding of the business environment

3. Knowing the required human capital capabilities to execute the business strategy

Understanding these three critical components of the organization will allow for decision advantage when it comes to human capital. Human capital decision advantage will make you and your organization a Talent Keeper/Acquirer and not a Talent Loser as the economy continues to get on track.

Cheers,

Keith