Strategic Human Capital Insights

A critical question for today’s leadership: Are your employees appreciating in value, maintaining their value, or declining in value?

Businesses consistently refer to employees as “their most valuable assets.” However, when we look at how organizations view employees, many fail to deliver on that mantra. Employee management continues to be based on models developed in the late 20th century. Along with outdated employee management models, we see Human Resources struggle to transition from organizational operations, support, and compliance to a true strategic partner role.

In that role, Human Resources must drive Human Asset Management Strategy (HAMS) to encourage leaders to shift their approach to the critical element of success - employees.

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

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.

“The best corporate strategy can fail at implementation without a human capital strategy supporting it.”

The Critical Importance of the Job Benchmark

I recently met with a client, and while we were discussing an employee performance issue, I asked a very simple question: “How is your employee performing against the benchmark?” Since many conversations on the topic of employee performance often center around an employee in isolation or comparing an employee relative to other employees, we are constantly using inherently biased and subjective information when assessing an employee.

With that backdrop, we discussed how the employee was being evaluated relative to:

• the amount the employee was being paid
• an objective assessment of how the employee was actually doing or not doing against the ideal competencies and tasks of the position – THE BENCHMARK.

Would You Rehire Your Current Team of People? 

I first asked this question to an audience when speaking at a conference of HR professionals.  I was more surprised than expected by the very noisy response from the audience.  It was like that question was the ‘elephant in the room’!  A show of hands suggested that over 60% of the audience indicated that it was questionable if their current team of senior managers would be hired again. 

That is a very ‘big’ response to a very simple, and what should be an obvious, question.  Not expecting a high degree of verbal honesty, I asked the same question of VPs when speaking at an IT Conference, and the response was in the same range.  This reaction led to a deeper dig into the topic.  I continued to ask that question of every leader and manager I met, and the reaction was the same.   These responses suggest simultaneously occurring trends that I have not experienced, to such a high degree, in my 30+ years of leadership and organization development experience.

Do you need business language data to secure your HR people development budget?

In today’s business environment:

• 65% of Chief Executives believe they lack the information they need to increase return on their investment in human capital.
• Less than 30% of what is taught is transferred to the job in a way that enhances performance and business results.

Learning and Development Questions to Consider:

• In your organisation, is the time and effort committed to people development, in reality, being transferred into work performance? 
• Is the desired learning assessed and evaluated to ensure it is applied to work performance, so a return on investment is calculated?
• Are Human Resources departments developing and designing targeted and relevant people development that will enhance HR’s position as true business partners?

The Business Case for HR Managing Human Capital to Optimize the Business of the Business: Piecing Together the Organizational Performance Puzzle

Let’s think of the three critical P’s of optimal organizational performance:

• Product
• People
• Processes

Regarding people, let’s refer to them as Human Capital (HC) because they are indeed one of your key assets.  HC is one of three parts of the performance puzzle necessary to ensure successful business outcomes.  With that operating premise, evaluate your people against the same criteria you use for your product and processes.  All three need to be operating at peak performance in order to produce accelerated, sustainable business outcomes and growth.  If any one of the three is not at maximum performance, the results of the other two will be compromised or decelerated. 

The central operating principle for PSP is the strategic organizational alignment of human capital to business outcomes. Therefore, all PSP Institute learning and development is business-driven.  The PSP Institute provides human capital development that is aligned with and responsive to organizational business needs.  Since our learning and development are targeted, results are time-efficient and performance-effective.  Our approach is:

• Targeted, highly focused, and individually relevant
• Delivered in a short, highly efficient format
• Designed with immediately actionable information to implement