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

Layoffs, Cash and Strategic Human Capital...The Connection

There are a number of things happening that seem disconnected, but when you dig a little deeper have impact on our profession and the role and responsibility we should play in any economic upswing.

The first is the article from Newsweek titled "Lay Off the Layoffs." Written by Jeffrey Pfeffer, he contends that the normal approach when an economic downturn occurs is corporate leadership reduces headcount. He uses the example of the airline industry after September 11, 2001 terrorist attacks, which laid off tens of thousands. One who didn't was Southwest Airlines. An airline with a larger market capitalization than the other domestic airlines combined according to Pfeffer. The former head of Human Resources at Southwest makes the statement:

"If people are your most important asset, why would you get rid of them?"

Pfeffer's thesis, backed by research, is that layoffs hurt the company and the economy. There are the obvious costs to employees who are laid off, but the research also indicates that there are impacts to the company in higher costs because of severance pay, unemployment taxes, and reduced productivity to name a few. And if the bottomline is the end goal by protecting it with layoffs...the research indicates it doesn't work.

Combine this information with a blog post and more detailed column in CLO Magazine by Dr. Michael E. Echols of the Human Capital Lab at Bellevue University. In both he references a Wall Street Journal report that companies have more cash assets on hand than in the previous 40 years. At a CLO Magazine Breakfast Club event I attended that Dr. Echols presented at in late 2009, he put a number to that cash reserve comment...$14 trillion. That's right...companies are sitting on trillions in cash assets. Dr. Echols view is that companies since 2008 have reduced infrastructure, headcount and services to develop these large cash reserves because it provided flexibility to deal with the current economic situation...it provided liquidity.

Dr. Echols makes the case that talent and learning leaders need to play a more proactive role in advocating for the investment of these cash assets in the one thing that can create competitive advantage...human capital. That we need to champion for the right investments in leadership, business-critical skills and develop new strategic human capital capabilities and capacity.

Now...to make this kind of engagement with the CHRO, CFO and CEO successful, it will take planning and data. My perspective is that you have to understand the business strategy, what the environmentals are looking like related to globalization and change and determine what strategic human capital capabilities the business needs to execute its strategy. Defining these capabilities and then determining the current workforce capacity to execute those capabilities will provide you the information to influence key decisions on resource allocations like increasing headcount by buying critical talent from the talent pool, developing new capabilities in the current workforce or renting talent through outsourcing.

While I work in the public sector at the Defense Intelligence Agency (DIA), the concept is the same. At DIA, we have a mission that is about providing the right intelligence that enables decision advantage for our customer...the men and women that serve our country in the Armed Forces. Within that mission are a number of challenges that we have to overcome by identifying the key strategic human capital capabilities related to collection of information, analysis of information and planning based upon the intelligence process. We have executed in the last year a Human Capital Development (HCD) model that enables making informed resource recommendations.

If you are interested in hearing how DIA has executed this HCD model, I encourage you to take advantage of a American Society for Training and Development (ASTD) Benchmarking Forum webinar on Tuesday 16 February where we will share our story in more detail.

The Future of Analytics in Defining Capabilities

This past week, SuccessFactors, a business execution software company, acquired Inform, a leader in HR, Talent Analytics, and Workforce Planning. In the same week, Accenture released a report (http://bit.ly/cfZmWZ) based upon a survey of senior managers at blue chip organizations that stated:

"Weak analytics capabilities - ranging from siloed data, outdated technology and lack of analytic talent - are preventing organizations from gaining valuable insight that could lead to better business results..."

The importance of analytics, especially to human capital and talent decision making, is increasing. Successful organizations that are able to react with agility and adaptability in the future work environment will be those that know the strategic human capital capabilities to execute business strategy and know the capacity of the workforce to execute that business strategy. Organizations that can do this require a model to help identify capabilities and capacity and a workforce analytics capability that can analyze and create decision advantage from workforce data. When these two are combined, they form a powerful means to provide competitive advantage in a complex and changing global environment.

While many organizations utilize analytics capabilities to improve decision making in finance, sales, marketing, supply chain and operations, utilization of analytics in human capital and talent continues to lag. The same Accenture survey indicated that HR analytics investment would increase by 16%...putting it dead last in the survey.

IBM's 2009 report titled "Getting Smart About Your Workforce: Why Analytics Matter" indicated three overarching themes:

1. In today's difficult economic environment, workforce analytics play an increasingly important role in addressing strategic human capital challenges.

2. Workforce analytics enable HR organizations to take a more proactive role in driving business strategy.

3. The implementation of workforce analytics continues to be hindered by both technical and skill related issues.

In a global environment where the one true competitive advantage is an engaged workforce that drives knowledge creation and innovation, a workforce analytics capability to enable strategic human capital capabilities and capacity identification. This enables making informed decisions on what capabilities to buy, build or rent and the necessary resources to enable organizational success.