Strategic Human Capital Insights

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:

If you say people are your most important asset, it may be time to rethink what that really means to your organization.  How do your current human assets perform relative to your organization’s requirements for growth, competitive positioning, transformation, and business agility - the ability to deploy human assets on demand?  All these strategic business issues require complex, future-focused approaches that replace outdated, underperforming methods.

If the measure of success for every company is the realization of maximum business value based on value creation, then every human asset should be a value creator.

The Challenge:

Replace short-term, cost-center focused people strategies with a well-considered, long-term human asset management strategy.  If people are assets, they must be treated like any other organizational asset.

A start-up to growth story – the very definition of continual change

‘What got you here, will likely not get you to where you are going!’  In the world of of start ups, these words should resonate with every founder /owner / executive team. In our recent Case Study: It's Time for GrowUp to Grow Up, we discussed the changes that a tech start up, or any start up, goes through in the early stages. Change permeates every facet of a start-up organization, as it:

• develops product
• takes product to market
• hires new people beyond the original group
• adapts to the demands of bankers and financing
  

Literally, every day can represent a change that needs to be anticipated, understood and responded to. But somehow, the start up community often thinks they are exempt from the demands of change because they believe themselves to be the disrupters or agents of change, and therefore, different from other organizations. In addition, they believe that change issues are reserved for those organization that are older, bigger or more status-quo driven. They couldn’t be farther from the truth. Why? The very nature of a startup is steeped in change.

To truly embrace the new VUCA work reality, it's time to rethink all the old organizational structures, roles, and competencies. To help you rethink and re-evaluate your organization, we have compiled a checklist to see if your structures, functions, and competencies have expired in the VUCA work reality related to sales and business development.

Are we clinging to the old ways of doing things, hoping they will be relevant for the present and future work demands? Please read through our 2-part VUCA and business development checklist to understand your team or organization's strengths and potential weaknesses so you can accurately prepare to speed up your growth this year.

How do you maximize every sales effort? How do you ensure that every sales activity – starting right now – has rigorous analysis, thought, and planning behind it? The sales function is the growth engine that will make strategic initiatives a reality, or not! Business strategy is determined for the business year. You don’t have the luxury of waiting a month or quarter to start generating sales results. So, what can sales managers do to ensure that every salesperson hits the ground running with the right equipment and the right roadmap? That roadmap is the operating guide to the year ahead, and the basis of that operating guide is The Client Business Plan. Let's review the four pillars of the complex selling process.

Business Acumen can create a business synergy that can and does drive efficiency and profits.

How many employees are encouraged and/or motivated to take the time, or are guided by their manager, to learn the business beyond their own function?  With everyone so busy doing their ‘day jobs,’ that mentality is more often the exception rather than the rule.