Saturday, April 10, 2010

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 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.