Strategic Human Capital Insights

I’m often asked, “What’s the difference between the concept of human capital and human asset management strategy?"  When we discuss human capital, it is usually described as:

• Individuals' collective skills, knowledge, or other intangible assets can be used to create economic value for the individuals, their employers, or their community.

• A measure of the economic value of an employee's skill set. This measure builds on the basic production input of labor, where all labor is considered equal.

Most definitions of human capital still focus on skills/people as they exist in an organization today.  Human asset management strategy (HAMS) focuses on the following:

• Conducts a current assessment of people and their skills today
• Attaches a trending component to the assessment for today and tomorrow to determine appreciation or depreciation
• Develops a human capital gap analysis between today and future human capital needs
• Evaluates productivity and associated costs
• Creates an organizational impact analysis for near-term, mid-term, and long-term effects and risks

Last week, I had the pleasure of attending the launch event for Girls in Tech Phoenix. Girls in Tech, started in San Francisco in 2007, is an international organization focused on the empowerment, entrepreneurship, engagement, and education of women in technology. It has more than 50 chapters located in North America, Asia, The Middle East, Africa and South America. The Girls in Tech mission provides the following opportunities for women and girls:

• Education: Facilitating learning and skillbuilding through advanced curriculum and programming within the STEM fields
• Engagement: Utilizing the power of technology to bring women together to shape their future and democratize the world
• Empowerment: Increasing the technical and entrepreneurial capacity to inspire women to innovate, share wisdom, and have a voice within the industry

As you may know, I recently co-authored the book, “The Female Factor: A Confidence Guide for Women.” The 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.

I also want to share the work of our strategic partner, Elyse Flynn Meyer, Owner & Founder of Prism Global Marketing Solutions, also wrote a chapter for the same book that you may find beneficial. Her section of the book focuses on 6 key strategies she has found very helpful in managing her career, including ideas and personal stories specifically for early-stage women in business (1-10 years of experience). Download Your Copy of the Book Chapter.

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.

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. The operating challenges of today's human capital are at the core of a robust IT strategy.

If people are our most important asset, what does this truly mean about 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 factored into every decision we make. The question for the IT professional: Are you managing all your risks? "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 critical factors we assess is the software version we’re using. Are we on the current release? One, two, or more versions behind? Cloud-based applications have somewhat mitigated this issue and made going to and staying on the current release slightly 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 your staff and human assets as current in 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 organization's changing needs. Many leaders expect employees to work to become knowledgeable and current. 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 ensure our applications and systems are on the current version, we need to ensure the people supporting them maintain the current competencies required 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?