People processes fail to keep pace with changing business environment...

That's the word from The Conference Board after sharing insights from their "The State of Human Capital 2012" report. A joint effort between The Conference Board and McKinsey & Company, Human Capital (HC) professionals continue to be stymied by the environment and that is leading to frustration in the ranks. After a multitude of studies since McKinsey & Company's groundbreaking article "The War for Talent" that have shared the same insights as previous studies...we appear to find ourselves no closer than we were 10, 5 or even 1 year ago.

While the report does provide context on this state of our profession, it still takes the "glass half full" approach when looking at the opportunities available to the profession to continue to make impacts on the business first and the profession second. Those opportunities are:

1. Anticipate and plan for the HC of tomorrow: Workplace demographics changes and the "virtual" workplace are reshaping work today and will continue in to the future.

2. Secure a steady, reliable pipeline for skilled workers - and tomorrow's leaders: The acknowledgement that the war for talent continues and will only increase in the future.

3 Develop strategies to re-energize employees' attitudes toward what they do and what the organization stands for: Research continues to point to engaged employees being more productive. While it is considered "soft data" in many respects by senior executives and leaders, it is still an area to focus attention on in the future.

4. Ensure that HC becomes more agile: The business environment speed of change requires HC to be increasingly agile and adaptable. That does not mean faster at transactional activities, but those things that drive business impact.

All is not bleak and apocalyptic, though December 21st is right around the corner. It does require HC leaders to be more forward leaning. If you don't have those skills...find someone on your team who is...your survival may depend on it.

Cheers,
Keith

J. Keith Dunbar is a Global Talent Management Leader and Doctoral candidate at the University of Pennsylvania's Chief Learning Officer (CLO) program...Creator of Talent, Leadership Capability, and Culture Change...He can be found connecting and sharing knowledge on Google+, Twitter and LinkedIn.

Twitter: JKeithDunbar
LinkedIn: J. Keith Dunbar
Google+: J. Keith Dunbar
Blog: DNA of Human Capital

The opinions or views expressed here are mine alone and do not represent the views of the SAIC.

Why You Want Your Organization On This List

Greetings,

Fortune magazine just released its 2011 “100 Best Companies to Work For in America” list. You will see the list of companies with great perks, great work atmospheres and job satisfaction, yet we still strive to understand the “So What? Factor.” What does it mean to be on the list? Outside of more resumes that will require screening because some people want to take advantage of the wine bars or Botox injections…does it really matter about the list?

First we have to take a look at the underpinnings of how companies make the list…Fortune magazine states the following and you can read it here…

“Most of a company's score (two-thirds) is based on the results of the Institute's Trust Index survey, which is sent to a random sample of employees from each company. The survey asks questions related to their attitudes about management's credibility, job satisfaction, and camaraderie.

The other third of the scoring is based on the company's responses to the Institute's Culture Audit, which includes detailed questions about pay and benefit programs, and a series of open-ended questions about hiring practices, internal communication, training, recognition programs, and diversity efforts.”

So it would appear that this revolves around an organization’s leadership, employee engagement, and employee value proposition that drive talent attraction and commitment. To a rational person, these are important factors to consider unless you are Paul Hebert of the blog Incentive Intelligence and the edgy Fistful of Talent posse. He writes in a recent blog titled “You Don’t Need to Measure Employee Engagement” that while we continue to measure elements of employee engagement…we may not need to so. He does reference that there is plenty of research that shows that employee engagement is a probable driver of business performance, but he does raise concerns about causality and correlation.

So back to original question…what is the “So What Factor” of being on the list? Now enter Professor Alex Edmans, a finance professor at Wharton Business School, and his scholarly article titled “Doe the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices.” The Abstract gives the big picture of the paper and why you should read it…

“This paper analyzes the relationship between employee satisfaction and long-run stock returns. A value-weighted portfolio of the 100 Best Companies to Work For in America earned an annual four-factor alpha of 3.5% from 1984-2009, and 2.1% above industry benchmarks. The results are robust to controls for firm characteristics, different weighting methodologies and the removal of outliers. The Best Companies also exhibited significantly more positive earnings surprises and announcement returns. These findings have three main implications. First, consistent with human capital-centered theories of the firm, employee satisfaction is positively correlated with shareholder returns and need not represent managerial slack. Second, the stock market does not fully value intangibles, even when independently verified by a highly public survey on large firms.” (Yes it says three implications…I didn’t find the third relevant to this thought piece though…)

The nature of human capital capabilities on firm performance and stock price is historically difficult to quantify as a tangible aspect of stock price. For this reason, intangibles are historically not considered. But in Professor’s Edmans’ research between stock price and inclusion on the 100 Best Place to Work For…there is reason to want to be included on that list. Proactively seeking to apply and obtain recognition by placement on the list is significant from the stock price valuation and opportunity to quantify intangible areas like employee satisfaction, but it also leads to enhanced attraction and commitment of talent.

Edmans admits that while there is a correlation between employee satisfaction and stock price, he cannot make strong claims of causality because of the number of variables involved (So Paul Hebert’s warnings are valid here as well).

While there has been and continues to be an interest in measuring intangibles like human capital capabilities and their impact on organizational performance…it continues to be difficult, but also a necessity. As Arie de Geus stated…

“The ability to learn faster than your competitors may be the only sustainable competitive advantage.”

If you agree with that…our ability to create organizations that are learning organizations, employee engagement, and great places to work and measure their impact is critical. In a recent blog post on my DNA of Human Capital blog, I discussed the concept of measuring leadership capability on Initial Public Offerings (IPOs). If you are going to invest in a company…wouldn’t you want to know what the intangibles of the human capital are just like the tangibles of the financials?

Cheers,
Keith

J. Keith Dunbar is a Fearless Transformational Global Leader...Creator of Talent, Leadership Capability, and Culture Change…He can be found connecting and sharing knowledge on Twitter and LinkedIn.

Twitter: JKeithDunbar
LinkedIn: http://www.linkedin.com/in/jkeithdunbar
DNA of Human Capital: http://dna-of-humancapital.blogspot.com/

The opinions or views expressed here are mine alone and do not represent the views of the Department of Defense or the Defense Intelligence Agency.

Leadership and Organizational Performance...Lack of Linkage...

Greetings,

So imagine my surprise last week as I started my Doctorate of Education program at Wharton and the UPenn Graduate School of Education when the creator of the Executive Program in Work-Based Learning Leadership, Dr. Doug Lynch, stated that there is a lack of academic research linking leadership to organizational performance. As a lifelong learner, I was curious about this statement, so I started looking at what research is there and was amazed…

It is a common belief…maybe in this case an assumption…that effective leadership is key to organizations. Think of any number of great organizations like GE, Cisco, Google, etc. and you immediately think of great leaders. Yet, the research can’t make a connection. Most research has focused on the different leadership paradigms like differences of visionary and transactional leadership styles in organizations. For example, it has always been believed that visionary leaders played a larger role in organizations than transactional leaders…but because of research limitations the findings are not clear. One study by Fenwick Feng Jing and Gayle C. Avery of Macquarie University in Australia titled “Missing Links in Understanding the Relationship between Leadership and Organizational Performance” states the following:

“No clear picture has emerged about the relationship between leadership and organizational performance. Despite increased research into the leadership-performance relationship, many problems and gaps remain in existing studies. There is a lack of integration concerning the relationship between leadership and performance, a narrow set of variables has been used in previous studies, and context and levels have been ignored. Therefore, there is a need for clarification.”

Another key challenge in linking leadership to organizational performance is the issue of performance measures itself. The same study by Jing and Avery states:

“One problem relates to the quality of performance measurement. When selecting the measurements of performance, previous researchers have employed either financial measurements or non-financial measurements, rather than employing both kinds of measures in order to enhance the validity of the research. They have neglected the interrelationship between financial performance and customer satisfaction and employee satisfaction. This provides a narrow measurement of performance that may not have appropriately evaluated the sought-after performance effects appropriately. Thus, both financial measurements and non-financial measurements of performance are essential in order to enhance research validity.”

The implications to the profession of Human Capital Management (HCM) and development are significant. If there is no academic research to directly correlate leadership styles to organizational performance, then there can be no linkage of leadership development programs to organizational performance. According to Bersin and associates 2009 High-Impact Leadership Development study, it assesses that leadership development is a $9.5 billion industry. That is a ton of cash to be spending on something and not know whether it is having the intended impact on the organization.
Of course, many organizations make use of anecdotal evidence that leadership development is having the intended impact. One private sector organization uses the number of new $1 billion businesses generated by action learning projects (ALP) during its leadership development programs. But as Bradley Hall states in his book “The New Human Capital Strategy,” our focus should not be on world-class leadership development programs, but world-class leadership capabilities. Because leadership capabilities should be driving organizational performance as we have seen…Even as I lead my organizations leadership development capabilities, I can’t tell you whether organizational performance is improving or even changing! Again…lots of assumptions and anecdotal evidence is being used across the HCM space in many respects.

I think it is important to understand the relationship, or in this case the potential lack of a relationship between leadership and organizational performance. Our organizations, and in particular, HCM leaders and their organizations should be engaging with the academic community to enable research that helps understand what we assume as a linkage between leadership and organizational performance. If we are unable to understand the linkage and the role that leadership development most obviously plays in our organizations…then we can’t leverage it to its full potential.

Nuff Said…

Cheers,
Keith

Twitter: JKeithDunbar
Linkedin: http://www.linkedin.com/in/jkeithdunbar
DNA of Human Capital: http://dna-of-humancapital.blogspot.com/

Skunk Works...Innovating from the Outside-In...

My team went through a major change initiative starting in 2006 that involved merging with ten organizations with geographic and functional responsibilities. While each conducted the same mission by collecting, analyzing and disseminating information to support leadership decision advantage, in many respects...each felt it was unique and did their mission differently. Each had learning functions that ranged in size of 1 to over 40...so this was the environment and scene my team faced in building a global learning enterprise that leveraged my organization's learning capabilities, while integrating their capabilities.

What my team came to find out that in order to integrate effectively and efficiently...we would have to change from the "Outside-In." What this meant is that in many respects, while trying to integrate and align these various learning capabilities, changing how we conducted business at the Defense Intelligence Agency (DIA) would be possible by changing how we operated with our new customers. For example, within DIA's schoolhouses we used different course evaluations with some standard questions, but in large part no common standards. One of the first initiatives with our learning integration efforts was to develop and accept a common set of evaluation questions. This move precipitated a similar discussion internally.

We accomplished this and other key initiatives by treating our effort as a Skunk Works...Made famous at the height of the Cold War, Lockheed Martin created a group that revolutionized and transformed airborne reconnaissance.

Our internal Skunk Works supported change management during the integration and alignment period. By leveraging a world-class best practice in defining a common set of skills, knowledge and capabilities for all organizations...we were able to integrate learning and align existing solutions at a quicker pace. It allowed our new customers to see that while their organizations had different responsibilities, the challenges faced, the work they did and the type of human capital capabilities needed were very similar.

The lesson for Human Capital Management (HCM) leaders, creating a team within your HCM organization that has the green light to try creative and disruptive new approaches can enable change across the HCM organization. That can lead to new efficiencies and effectiveness in meeting customer needs and in our case...accelerating major change initiatives...from the Outside-In.

Cheers,
Keith

People Skills Key to Strategy Execution? CEOs Think So...

First, I want to wish everyone a Happy Memorial Day...please take time to remember why we get these opportunities in the United States.

Last week I discussed what I considered a "hidden message" in the IBM 2010 Global CEO Study - "Capitalizing on Complexity" because of the precipitous drop in CEO's view of the impact of People Skills as an external force which will have the biggest impact on their organizations. This week, I go deeper in to the study and the implications of CEO's thoughts and perspectives on strategic Human Capital Management (HCM).

While the thoughts of CEO's on the idea of creative leadership to deal with the complexity and ambiguity in their organizations got all the air play after the release of the study on 18 May, there are other parts of the study that provide a wealth of information on what your CEO is thinking that can help us shape approaches to HCM. One particular section is in the chapter discussing the reinvention of customer relationships. In the survey, IBM asked CEO's what was the most important dimension to realize their strategy in the next five years. What came out number one at 88% was "getting closer to customer." Makes sense...if you want to execute a strategy you will need to be closer to the customer to understand what is driving their most pressing challenges so you can develop solutions that help them overcome those challenges.

What came in second though is the important piece for me. With 81% of CEOs stating that People Skills are an important dimension to executing their strategy. So it presents a little dichotomy in that CEOs saw reduced importance as an external force having the biggest impact on their organizations, but they consider it the second most important to executing their strategies.

So the key opportunity for HCM leaders is having the ability to translate CEO strategy into clearly defined people knowledge and skills...something that is apparently not easy for our profession. In IBM's 2009 report titled "Getting Smart About Your Workforce: Why Analytics Matter," it surveyed Human Resource (HR) professionals. One of the key findings was the following:

"Defining the requisite knowledge, skills, and capability requirements needed for the execution of business strategy. Organizations must have a firm understanding of what skills and capabilities they have in-house, where gaps exist, and the best ways to fill those gaps through external hires or internal mobility."

The interesting piece from this study as evidenced by the graphic is HCM leaders understand the importance of identifying knowledge, skills, and capability requirements to execute business strategy...we are just not effective at it as represented by the 48% gap in importance vs. effectiveness. So when we compare data from these two studies...we find ourselves in a conundrum...

CEOs understand the importance of people skills to executing strategy as do we...but if we can't figure out a means to do it effectively we will become just another perceived resource drain on the organization.

All is not lost though. A number of organizations are really effective at defining necessary people skills to execute business strategy and develop the right sets of integrated human capital solutions. HP, Cisco, and IBM come to mind for me, as well as my own organization, the Defense Intelligence Agency (DIA). So we have organizations we can learn from and continue to show our own profession's skill in enabling business success.

In my next blog...we will go in to a Human Capital Development (HCD) model that can really start to shape your HCM ability to be effective in defining the necessary knowledge, skills and capability requirements to execute business strategy. Our profession depends on it!

Cheers,
Keith

Taking the Long View...Why "Strategic" Can't Mean One Year...

So I am a huge believer in Strategic Human Capital Management (HCM). Taking a strategic approach allows for you and your team to play a more proactive and impactful role in positioning the organization for success. Yet I am the first to admit that in today's world of volatility, uncertainty, complexity and ambiguity (VUCA)...the ability to look strategically and plan for the Human Capital Capabilities (HCC) to execute the strategy is extremely challenging.

Because of VUCA pressures, the need for agility and adaptability are forcing time compressed strategy development and execution. During the recession, it appears strategy took a backseat to managing the organization's resources on a day-to-day basis. The external environmental factors were changing so quickly that survival was critical success factor...nit strategy.

A March 2010 Harvard Business Review blog titled "Strategy on the Morph" by Walter Keichel (Author of "The Lords of Strategy: The Secret Intellectual History of the New Corporate World") really provides insight in to what was happening in respect to strategy. In the blog, this quote really points to the perspective that strategy is wounded.

You may have read one such proclamation in the Jan. 25 Wall Street Journal. "Strategy, as we knew it, is dead," argued Walt Shill, who leads Accenture's North American consulting practice. An article titled "Strategic Plans Lose Favor" goes on to quote him saying, "Corporate clients decided that increased flexibility and accelerated decision making are much more important than simply predicting the future."

So if HCM leaders buy in to this view...we should just sit and react. We can sit and wait for our customers to come and tell us what they want and how they want it and we can deliver on it. So if you believe that...you may be in the wrong profession.

Research by the Stanford Center on Longevity released in February that taking a strategic and "long-view" in HCM will be critical. The report titles "Population Age Shifts Will Reshape Global Workforce" indicates taking the long-view will be important based upon future workforce demographics. If we don't take a proactive stance to drive customers to think strategically about HCM and impact to future capabilities required to execute the strategy...then we are really not doing our job to support the organization's continued growth and mission accomplishment.

My virtual friend, Daniel John Roddy (HCM Leader for the Institute for Business Value (IBV) at IBM Global Business Services) stated it simply in a discussion on the One HCM Global Community on LinkedIn...

"But would you really want to recommend a major investment in building out your workforce in any country without understanding the social and economic implications of its urban development and demographic trends? I don’t think so.

And what if, in taking the long view, the emerging market workforce strategy itself could become a source of sustained competitive advantage? An input to strategy formulation, rather than only a work stream of the business execution plan?

In my view, firms hoping to differentiate on their emerging market workforce strategy will need to add three additional competencies to their current workforce analytics toolbox: population demographics, cross-cultural attributes analysis, and an understanding of, and vision for, what the United Nations has termed ‘Human Development’.

So actually, I don't think the quantification attempts in relation to human capital are the problem, more at issue is the typical reactive and short-term perspective we are bringing to the task.

Maybe I have been in China too long, but I have become a big believer in the importance in taking the long view of desired outcomes, in business and in life."


Taking the long-view is a critical competency for HCM leaders...one that we will need to continue to develop in order to lead our organizations in to the future.

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

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.

Chief Learning Officer and the Chief Talent Officer - Natural Evolution or the End

I got to participate in a virtual meeting this week with two people from a leading executive recruiting firm. They shared their perspective on what firms were looking for in relation to Chief Learning Officer positions. While there were a number of interesting insights and perspectives about CLOs based upon their recruiting experience. The one that caught my attention was this one statement.

"In the last year and half, I have conducted one CLO search, but 15 Chief Talent Officer (CTO) searches."


For me, that leads to a number of questions about the profession I have chosen...

- Is the CLO still relevant?

- Is the CTO replacing the CLO?

- Is there something that CLOs are not doing that is needed?

First, I think there is still a significant role for the CLO in enabling execution of business and mission strategy. As key strategic human capital capabilities, the CLO will support those by providing business-aligned and high-impact learning solutions that enable such key capabilities as collaboration, speed, and innovation in organizations. The CLO will have to determine their role in developing these capabilities...how they leverage social networks and informal learning as other learning tools in the toolkit.

There is evidence that the CLO may need to do a better job in aligning learning to business. The current economic situation drove this home as cost-cutting became critical. But the need to do detailed planning of how to align learning resources and initiatives to business strategy has been a constant and consistent message to learning professionals. While a number of companies come to mind that are leaders in their ability to do this, like Cisco, IBM, and Bank of America, there are indications that significant room exists for improvement.

A survey report by the Masie Learning CONSORTIUM on learning governance stated:

"86% of organizations do not have an enterprise-wide plan for learning that spans the organization."

While our profession has a number of articles and conference proceedings on this topic, something prevents it from pushing forward and obtaining that position as a trusted business partner.

With this perspective in place, I don't think the CTO will replace the CLO. The CLO has their role to play supporting learning and development and the leadership development efforts at organizations. What the CTO does bring is a focus on the integrated talent management process. Developing an employee value proposition, communicating employer brand, recruiting, performance management, leadership development, succession planning, etc.

As I have discussed in my first blog post, CEOs recognize the importance of people skills in moving their organizations forward and enabling them to be successful. That requires talent. Talent that is either bought, developed or rented to execute the strategy. CEOs will continue to look for CTOs as the mechanism to position their organizations for future success. The difference between the CLO and CTO is that the CTO will focus on the integrated solution approach to developing strategic human capital capabilities. The CLO will be a part of the overall integrated solution.

Business Success - Structure or Capability?

In the book "Organization of the Future 2" (Edited by well known leadership developers Frances Hesselbein and Marshall Goldsmith), a chapter authored by Dave Ulrich and Norm Smallwood discusses whether organizations are about structure or capabilities. The authors claim that companies like GE, Disney, Google, and Apple are known for their capabilities and not their structures for conducting business. The authors state...


"Capabilities represent what the organization is known for, what it is good at doing, and how it patterns its activities to deliver value."

This has great application to fostering new thinking on human capital development. The business challenges that organizations face now and in the future, such as speed/context/scope of change, globalization, talent shifts in the workplace, and others, will drive development of key strategic human capital capabilities to overcome these challenges. While the normal inclination in challenging economic environments, like the recession faced in 2008-2009, has been to restructure and cut costs, forward thinking companies made a commitment to establish their organizations for future success coming out of the recession. They did this by focusing on what the environment would look like, opportunities that environment would present and how it would deliver value to its customers.

Organizations like GE, Google and Disney are driving strategies to develop and enhance their competitive positions within their markets. The capabilities required for their competitive advantage are varied, but should focus in a specific area...overcoming human capital challenges to enhancing their competitive positions.

Agility and Adaptablility...

Organizations are under constant pressure to succeed in a global business environment that is fraught with uncertainty, complexity and dynamic change. Companies that are successful in this environment are able to do so because of developing strategic human capital capabilities that create agility and adaptability in the workforce.

In IBM's 2008 survey of senior HR executives, captured in the study "The DNA of the Adaptable Workforce," asked to rate their workforce's ability to adapt to change in the business environment. IBM found the following:

"While 53 percent of companies state their workforces are generally capable of adapting to change, only 14 percent say they are very capable."

Of those 14% that stated they were "very capable," these companies were top financial performers based upon available public information. So the correlation is extremely relevant in today's business environment. The capabilities to move quickly to existing or new markets with the right products or services (agility) and adjust to the speed of change in the business environment (adaptability) are key differentiators and can provide a significant competitive advantage. Instead of reacting to the business environment, organizations that are able to develop these two strategic human capital capabilities lead the business environment.

Key to enabling development of these capabilities in the workforce is a clear linkage to the business strategy, understanding of the current and future business environment, and being able to define the knowledge and skills necessary for the workforce to develop and refine the agility and adaptability capabilities.

Great Leaders First...

With 2010 now here and a new decade of opportunity ahead of us... wanted to reflect on an event in 2009 and lessons we can learn to prepare us for the new decade...

While at Elliott Masie's Learning 2009, I sat in an early Sunday session led by Nigel Paine (Former British Broadcasting Corporation CLO) to discuss the attributes of a "Learning Leader." The session had good participation with 30+, as well as guest CLOs, Larry Israelite of Liberty Mutual and Patricia Crull of Time Warner.

We were asked by Nigel to identify what made a great learning leader. A sample of those included the following:

People Skills - Collaboration, Communication, Influence, Questioning

Change Management

Business Knowledge

Executive and Political Savvy

Business Acumen

Technology Friendly - Embracer

Risk Manager

Strategic Visionary

Relationship Manager

Consultant

Curiosity

What things didn't make it to the list? No one said a learning leader needed Instructional Systems Design (ISD), learning management system (LMS), or human resource background. In fact the point was clearly made by participants that learning leaders have to be leaders first and experts in learning & development second to be successful.

The impact to developing strategic human capital capabilities is significant. If a learning leader doesn't focus on those leadership attributes that enable them to engage customers, partners and stakeholders at a strategic level to understand the business and more importantly to motivate and guide the learning organization with a vision of learning & development's role in business success...then the learning leader is likely to struggle.

So the key take away? If we are going to enable our customer's and partner's success in the future by developing strategic human capital capabilities...we have to be great leaders first...