Strategic Human Capital Insights

If a Human Capital approach is your goal, then delegation must be in your leadership toolkit.

In a previous blog, we asked the question, "Is your current leadership team up to the Human Asset Management Task?"

Quality leadership is a critical element for a robust human asset management strategy. If we agree that a critical function of the leadership role is to continually develop employees (the asset in human asset management), then employees must be a critical competency of the leadership role. Employees are your implementation squad. They make things happen or not! It's easy to talk about developing employees, but actually doing it and doing it well is another story. The barrier to developing great employees is the key leadership skill of delegation.

Delegation is the most underrated skill, which is ironic because it is not only one of the MOST IMPORTANT skills but also one of the MOST DIFFICULT and MULTIFUNCTIONAL skills that a manager must perfect. Leadership, you can't think that employees will create themselves into their own self-appreciating assets. Some will, but most will not. Why? Employees are not typically privy to the macro-organizational issues of human asset management, nor do they systematically know exactly what they need to do. Leadership and delegation is your job, not theirs.

Every human asset action has an equal and opposite human asset reaction.

At a recent Information Management forum, I presented this topic to senior IT leaders and here is a summary of the presentation topics.

Today’s IT Operating Context

According to Fortune’s Global Forum, we are now all technology companies. Companies with the best IT strategy can emerge as corporate winners. We know that the best corporate strategy can fail at implementation without a robust IT strategy supporting it. At the core of a robust IT strategy are the operating challenges of today’s human capital.

If people really are our most important asset, what does this truly mean around how we think and act? Let’s elevate the organizational narrative from Human Capital Management to the complex dynamics of Human Asset Management. It’s time to take a new approach to human asset management strategy including:

• Organizational Risk Management Assessment
  • Value Creation and Continual Transformation
  • Growth Acceleration and Competitive Advantage
• Challenges of Technology: IT – Business Alignment Model©
• Role and Competency Job Benchmarking Against the Business Strategy
• Asset-based Approach© to IT Human Capital Assessment and Gap Analysis
• Organizational Impact Assessment
• Future-focused IT Workforce / Human Asset Planning

Joanne Flynn, Managing Director and Founder of Phoenix Strategic Performance, recently co-authored the book, “The Female Factor: A Confidence Guide for Women.” Her 3-part chapter of the book entitled, “Spanning Generations as We Journey Ahead,” focuses on the issues of women in the workforce over the past 50 years, looking at what has changed, what has not, and what women can do to move their careers forward.

Managing risk is a fact of business in the 21st century. Managing risk in the Information Technology world is something that is factored into every decision we make. The question for the IT professional: Are you managing all your risk? "Sure" you answer, "I have high availability systems, I do incremental and full backups, I keep my security measures current, and I have a disaster recovery plan that I exercise annually". There is another dimension to the risk equation - the human assets that keep the IT world running. Let’s look at some of these...

Are Your Systems Supported?

When we look at the various software applications used in business today, one of the key factors we assess is the version of the software we’re using. Are we on the current release? One, two or more versions behind? Cloud-based applications have mitigated this issue to some extent and made the process of going to and staying on the current release somewhat less painful.  Have you taken a step back and looked at the people supporting those systems? Are they “current”? It’s just as critical to keep you staff, your human assets, as current in the technology as your software assets. We tend to hire people for today - with a skill set that satisfies a need at this moment in time. We are not always focused on developing those skills to keep pace with the changing needs of the organization. Many leaders have the expectation that the employee will work to become knowledgeable and current on their own. While some may, others won't. Either way, self-governed development does not ensure that the skills the organization needs will be available on demand. Just as we make sure our applications and systems are on the current version, we need to make sure the people supporting them maintain the current competencies needed for optimal performance and growth.

To actively embed a robust Human Asset Management Strategy (HAMS) process into your organization, the organizational culture must reinforce the operating construct of the HAMS approach. One of the foundational norms is a culture of relevance which is also critical to a Human Asset Management Strategy. What does that mean? 

We continually hear from our clients that they need dynamic thinkers who are intellectually curious from both a functional and enterprise perspective. They need employees who employ an integrated thinking approach regarding:

• their roles and their current and future skill / knowledge requirements (employability)
• their organization and their impact on the organization today and tomorrow
• the driving and changing forces of the outside world and that impact on their organization and their roles

The New Operating Context for a Robust Human Asset Management Strategy: The Relevance Factor

If the organization is operating in a dynamic environment, that environment must drive the role and competency benchmarks used based on the new operating paradigm. There is no room for static thinking.

Change Environments ARE Fundamentally different from Business as Usual (BAU) Environments

Just because an employee is good at a role within a more static, business-as-usual environment, doesn’t automatically mean the employee will be good in a more dynamic role. This is a foundational flaw that assumes the world of work has not changed and, of course, all employees can adapt because they are smart and ‘just can’. One knowledge and skill set does not automatically transfer to another.

Today, as we review our organizations in response to our current changing operating environment, every employee in your organization must operate at the highest level. It is a strategic imperative to critically and objectively review your people from a Human Asset Management Strategy perspective. If you are truly thinking about creating a robust Human Asset Management Strategy, then the concept of headcount and cost-cutting in the name of rightsizing represents a polar opposite approach to viewing people as assets.


Why?

When we talk about headcount, we are looking at a static numbers game at best, and a leadership and organizational ‘cop out’ at worst. Have you ever worked for a company that reduced its headcount by 10%? We’ve all been there. Here are a few scenarios that happen in organizations when we embark on the headcount/cost-cutting game:

Scenario 1: The highly accepted but strategically flawed last in first out (LIFO) test.

We somehow justify that longevity is a rational basis to keep people. That process is most often used by people who have longevity in the organization. These people may be past their human asset ‘sell-by date’ for your company, but that is often overlooked.

Risk Impact: LIFO may be the worst way of dealing with headcount issues. The LIFO accounting concept can have long-term human asset management consequences.

Today, human capital is the new catchphrase to describe an organization's people. Over the years, the term human capital has been used to describe the people of the organization, including terms like employees, personnel, and talent. While the words we use have become more descriptive and trendy, has anything behind those terms changed over the years? Or, underneath it, do the structures, processes, and mindset about employees still reflect an old 'head count' mentality?

While the latest terminology, human capital, begins to elevate the topic of employees, we should be using the term "human assets" to align with the statement "that people are our most important asset." If we truly embrace that concept, we must turn our human resource structures upside down and think about people the same way we do the organization's other assets. Unless we embark on the Human Asset Management journey, the terms we use are empty.

In earlier blogs, I have talked about Human Asset Management regarding the following topics:

• Rethink, Renew & Refresh Your Human Asset Management Strategy
• A Fresh Approach to Human Asset Management
• Strategic HR:  The Advocate of Human Asset Management
• There's No Organizational Replacement for Quality Leadership: Is Your Current Leadership Team Up to the Human Asset Management Task?
  

Is Your Current Leadership Team Up to the Human Asset Management Task?

The topic of human capital is everywhere today, but how do organizations implement a robust human capital structure and culture, one that goes from talk to action? In our previous blogs, I discussed moving the narrative about human capital to the next level – human asset management. If we do that, we think about employees and, more importantly, managing employees like the dynamic and robust assets they can be. We must consider employees relative to peak performance and productivity, value creation, relevant and future-focused skills, and knowledge upskilling. As leaders, we need to view our employees as continually appreciating assets. This is good for both the employee and the organization.

Human asset management cannot exist organizationally without the critical function called leadership. Only leadership can focus on how employees are upskilled and ready to meet tomorrow's workforce challenges and demands.

If people are your most important asset, what's the impact of HR in your organization?   

Integral to the topic of Human Asset Management is an honest organizational evaluation of the ‘keeper of human capital’, the human resources department. If human capital is truly going to be elevated to the level of human asset management, an organization needs a highly-regarded HR department driving the strategic discussion of people. Embedded in HR’s responsibilities are:

• Human Asset Risk Management assessing if:
  • employee costs equal required productivity
  • employees are value creators, value sustainers, or value eroders
  • employee skills are:
    • appreciating and pacing with strategic initiatives
    • stagnant and maintaining current levels but not growth levels
    • depreciating and creating a negative drag on performance, productivity, and profitability
      
      
• Human Asset Complex Consequence Analysis focusing on:
  • near-term, mid-term, and long-term time horizons
  • near-term – long-term human capital bench strength resulting in business resiliency
  • near-term – long-term impact on organizational agility – the ability to deploy relevantly-skilled people, on-demand
    
    
• Human Asset Impact Analysis on:
  • Competitive Advantage
  • Market Sustainability
  • Growth Acceleration

What is Human Asset Management? If we say that people are our most important asset, we need to think about them as any other organizational asset, which is a good thing. We give considerable thought to capital equipment and perform a great deal of due diligence when we both purchase and maintain that capital equipment. Do we put that much effort into hiring and developing our human assets? Let’s compare and contrast a piece of capital equipment diligence relative to human asset management.

Here’s how companies often evaluate the decision to purchase and maintain a valued piece of capital equipment compared to how companies manage and retain human assets: