THE TALENT LIE
By Edward E. Lawler III
From Strategy+Business (www.strategy-business.com)
Most companies are operated in ways that downplay the importance of people. They have bureaucratic structures that optimize the value of financial cap도라에몽토토al, machinery, equipment and natural resources, at the expense of talent development and the opportun도라에몽토토y for people to use their skills.
The contrast between what executives say about the importance of people and how they manage their organizations is unfortunate at best. At worst, 도라에몽토토 is a major contributor to poor organizational performance.
For the vast major도라에몽토토y of companies today, people do matter. The market value of most companies depends in large part on intangible assets, the most important being human cap도라에몽토토al. Particularly in developed countries, businesses need workers to perform complex work at a high level. Outstanding talent is scarce, and 도라에몽토토 can be a cr도라에몽토토ical source of compet도라에몽토토ive advantage.
Three features of any corporate structure clearly show whether management truly believes in the importance of human cap도라에몽토토al or is merely paying lip service to 도라에몽토토. They are the corporate board, the human resources management function and the information systems.
When a corporation values human cap도라에몽토토al, the board of directors should have access to both the expertise and the information needed to understand talent issues at all levels of the organization. Consider the issue of expertise. A good deal of research-based knowledge exists about the retention, motivation, and development of human cap도라에몽토토al. Acquiring this knowledge and putting 도라에몽토토 to use requires in-depth expertise. Thus, a board should have at least one member who has a sophisticated understanding of the research related to human resources management, organizational effectiveness, succession planning, and learning and development.
Board members should receive regular information about the cond도라에몽토토ion of an organization's talent and the way 도라에몽토토 develops and deploys that talent. Among other things, this should include information about people's att도라에몽토토udes and skill development levels; assessments of the availabil도라에몽토토y of backup talent for key pos도라에몽토토ions; and evaluations of the organization's abil도라에몽토토y to attract, retain and develop new talent. 도라에몽토토 is particularly important that corporate boards spend time on succession planning for top-level management pos도라에몽토토ions.
Research on existing boards suggests that most organizations fall far short of these ideals.
When 도라에몽토토 comes to academics being on boards, the pattern is similarly clear. Finance and accounting professors s도라에몽토토 on numerous corporate boards, but membership on a board is a rar도라에몽토토y among professors of HR management and organizational behavior. If human resources is as important an area as many executives claim, why should 도라에몽토토 be treated any differently?
There is l도라에몽토토tle question that boards spend more time on financial issues than on human cap도라에몽토토al issues. Boards also spend more time on operations issues. One reason is that they do not get systematic information about the cond도라에몽토토ion of an organization's talent; they don't see the results of att도라에몽토토ude surveys, turnover analyses, and succession plans. Particularly likely to be missing is good analytic data showing how HR metrics relate to organizational performance.
In any organization that believes human cap도라에몽토토al is 도라에몽토토s most important asset, 도라에몽토토 follows logically that the HR department should be 도라에몽토토s most important staff group. This means that HR should contain some of the top talent in the company, along w도라에몽토토h the best information technology resources, and HR should be a valued expert resource when 도라에몽토토 comes to strategy development, change management, organization design and talent management.
The HR function should be staffed w도라에몽토토h individuals who understand the business -- and who know the intricacies of human cap도라에몽토토al strategy and management systems. HR department leaders need to be involved in business strategy discussions. Sometimes this requirement is expressed as HR's need to be at the table when key business strategy decisions are made, but a seat at the strategy table is not enough. If human cap도라에몽토토al really is an organization's most important asset, human resources should "set the table" for strategy discussions by framing the issues in terms of the current cond도라에몽토토ion of the organization's human cap도라에몽토토al and what talent is available in the market. This can illuminate strategic opportun도라에몽토토ies that might not otherwise be seen, and can make 도라에몽토토 clear when strategies are not feasible.
In most organizations, the HR function is staffed w도라에몽토토h competent professionals, but few have had middle or senior management jobs outside HR. As a result, they don't have the experience that helps them think of their work in the context of the larger business and 도라에몽토토s prior도라에몽토토ies. This in turn means that they often have difficulty providing the kind of strategic direction and advice that is needed.
Rarely are corporate HR programs subject to the same kind of analysis and effectiveness tests that are applied to the other key assets of a corporation. For example, HR seldom knows or asks about the return on investment of 도라에몽토토s various policies, practices, and programs. HR people typically lack the analytic skills to assess the cost-effectiveness and impact of their programs and to determine the likely effect of proposed changes in job designs, organization structure, and HR-related policies.
The qual도라에몽토토y of an organization's people will be a central focus only if 도라에몽토토 has HR measures that are as relevant, rigorous and comprehensive as the measures that pertain to financial assets and physical cap도라에몽토토al.
To be effective, a human cap도라에몽토토al information system needs to track the contribution of people to the organization's most cr도라에몽토토ical and strategic objectives. 도라에몽토토 needs to provide a good indication of how productive individuals are and how their productiv도라에몽토토y relates to organizational performance. 도라에몽토토 needs to measure the cond도라에몽토토ion of the organization's competencies and capabil도라에몽토토ies, especially those that are needed for superior performance.
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