The future of human capital management

The board has three key responsibilities:

1. Selecting the CEO (and increasingly shielding them from the risk of burn out)
2. Bringing experienced and diverse perspectives to bear on strategic planning based on real insights into competitors customers and markets
3. Making decisions that marry that vision and external knowledge with what you know about your human capital’s long-term potential to deliver

Most boards can tick off the first two, but are still put off by anything seen as intangible or ‘soft’. But this is changing, fast.

Largely off radar, HR have grasped analytical data-backed approaches and hardened up (in more ways than one). Wellbeing graduated beyond unpalatable canteen snack bars into casino style productivity perks aimed at engaging hearts and minds. After a two-front Gladwell/Groysberg reality check, the war for talent management has finally usurped all other board priorities, even over risk; although behavioural risk has stepped up in the light of spectacularly destructive board decisions. Openness, connectivity and transparency have permeated every aspect of business; distributed servant leadership flattening hierarchies into networks beyond walls (if walls are needed). Diversity is no longer confined to gender or ethnicity: background, age, personality, education and experience richness is flavour of the month from the shopfloor to the boardroom. The strategic need to hothouse engagement and ideation has put the strategic value of culture centre stage. Work/life has given over to one life, and doing the best work of your one life means being part of a much bigger and much more meaningful (and increasingly entertaining) picture. Employees have become customers; customers, employees.

Those brands - Google, Tesco, IBM, Starbucks etc – winning here are not just creating best places to think in, they are creating best places to invest in too. And post GFC, the appetite for the ‘S’ in ESG integrated one reporting is growing. AXA WF Framilington Human Capital invest in companies based on the quality of their HCM; Moody’s now factor talent management into valuations of the healthcare industry. All leading to a debate (even war) about who ‘owns’ the role of systematically assessing overseeing and through reporting mediating the rich insights HCM self-awareness affords to responsible investors and shareholders. HR are in pole position, and perhaps want and deserve it most: but CFO’s have the innate analytical skills, already ‘own’ company reports, and have the ears of investors. It is going to be an interesting – if long overdue – tussle. But that’s assuming marketing don’t sneak up on the outside.
 
Of course, if the competitive race is on to ‘rehumanise the firm’, as JC Spender puts it, the pressing question is: Are you behind, or ahead of the game? Are you even in this game at all?

Here’s a gift for you if you want to catch up or stay ahead: All four free to download editions of The Human Capital Handbook 2011 (www.humancapitalhandbook.com) are now available.

Merry Christmas, and happy reading.