Achieving a Triple Win

Human Capital Management of the Employee Lifecycle

Joyce A. Thompsen

• Publisher: Routledge
• Year: 2009
• Print ISBN: 9780415548359
• eBook ISBN: 9781135997656
• Topic: Business
• Subtopic: Business General
• Index: Business

Traditionally, organizations have left human capital needs to the human resources department. However, the talent management landscape has changed. Managers have begun to recognize that attracting and employing highly talented individuals makes an enormous impact on the company's bottom line.

The 'Human Capital Cycle' model presented in Achieving a Triple Win: Human Capital Management of the Employee Lifecycle presents a more systematic and comprehensive approach to human capital management based on the author's insight into the connection between and organization's strategy and its human capital needs and plans. Focusing on the six stages of the employee lifecycle, the book emphasises the need for a more adaptive, specialised approach to HRM to achieve what the author calls the 'Triple Win' – substantial benefits for customers, employees and the business as a whole. The book includes:

• rich descriptions and examples
• details on how to plan and execute each stage
• questions and issues
• case studies

This book is a useful resource for senior leaders, decision makers, HR professionals and those responsible for talent management in the private and public sectors. Students of HRM and management would find this an enlightening supplementary reading.

Chapter 1
INTRODUCTION

AS A BUSINESS or governmental leader in a position of senior management, you might be wondering why you are reading this book. Traditionally, most organizations leave all Human Capital needs to the Human Resources department. Functions such as recruitment and selection, employee orientation, career growth, and employee departure all fall under the responsibility of a group of specialists trained to make decisions on such matters. There is a reason for this conventional wisdom: leaving all matters of personnel and talent management to a specialized team frees up the time and energy of senior management to focus on more “important” business issues. If they don’t have to commit time to Human Capital concerns, after all, they can drive strategies to improve revenue, cut expenses, increase market share, and above all, keep the customer happy.

But that’s just it. Traditional approaches are becoming more and more obsolete. Conventional wisdom doesn’t look so conventional any more. The talent management landscape has changed. If a business or governmental leader hopes to keep up, he/she must change along with it.

The reason you are reading this book is simple: Human Capital Management has become a significant business issue for most organizations. And if it hasn’t yet become an issue for your organization, it will in the very near future.

What is the reason for this shift? For one thing, many business and governmental leaders have begun to see the direct correlation between highly talented people and organizational success. The more talented people an organization employs, the more likely they are to create a cost-effective, high-quality, and appealing product or service (and to do it efficiently). Having a larger base of highly talented people is leverage—any organization that can get things done more efficiently and effectively than anyone else in the market space enjoys a direct and explicit advantage over the competition.

Time and time again, we have seen it: senior management teams that pay attention to Human Capital concerns see their organizations simply explode with measurable business success. The more they invest in attracting, employing, and maintaining highly talented people, the better the product or service, the happier the customer, the healthier the bottom line.

As you will see in the pages to come, the timing of this gradual shift in thinking is perhaps poor. In the coming years, the market for talented people will become incredibly competitive. In addition, a large cross-section of talented workers (the Baby Boomers) will soon reach the traditional age of retirement. Many businesses and governmental agencies will find themselves with more openings than they had anticipated and fewer qualified people with which to fill those openings.

Each year, the matter becomes more and more urgent. The time to expend the energy and resources it takes to implement and hone Human Capital Management practices is now. With so much on the line, this is no longer a Human Resources issue. This is a business issue that requires the attention of all members of senior management.

As a core business issue, Human Capital Management is inextricably linked with five emerging and business-driving trends, according to a 2007 study:¹

• Globalization and the need for an international workforce
• Organizational growth
• Evolving or transforming cultures
• Changes in market demands
• Retirements.

Each of these trends requires active, strategic consideration and planning by all members at the executive table. In each case, Human Capital Management is an essential ingredient in the strategic solution and its execution.

With this book, we present the Human Capital Cycle. As you will see, it is a unique approach to the problem of attracting and keeping highly talented people in that it is more adaptive than anything ever applied to the problem before. Traditional Human Capital Management practices suggest a linear approach to a non-linear problem. Not every talented employee follows the standard career path any more. Highly talented people aren’t as attracted to traditional recruitment methods as they used to be. And the task of keeping these people happy and committed to their employer is becoming more and more specialized. Like any effective business strategy, the Human Capital Cycle takes a fair amount of planning in the early stages if it is going to be effective. It might seem difficult at first, but that is another thing that separates the Human Capital Cycle from the rest of the pack: it is designed for clarity and ease of use over the long term. Make no mistake, once implemented, it will keep your Human Resources running smoother and more efficiently than it ever has before. As a result, your organization will experience substantial benefits for its customers, its employees, and its own business health—or what we call the Triple Win.

In the chapters that follow, we present data, case studies, and a high-powered Human Capital model that will drive organizational success over the long term. In order to protect trade secrets, all anecdotes presented in this book are fictionalized to some degree. The central story—that of Diane Limon and Sky International—is also fictional. It is a proxy of many major organizations who have shared data or otherwise worked with AchieveGlobal.

As a person in a position of senior management, if you apply the lessons presented in this book with vigor, your organization will see tremendous improvement in customer satisfaction, employee morale and productivity, and above all, financial success. With the Human Capital Cycle in place, you will be well on your way to experiencing the tremendous benefits of the Triple Win.

Chapter 2
BROADENING THE HUMAN CAPITAL SPECTRUM

As CHIEF EXECUTIVE OFFICER (CEO) of Sky International, the United States’ top architecture firm in terms of revenue, Diane Limon understands the importance of talented individuals. It recently occurred to her that the level of talent at her company wasn’t simply an important Human Resources (HR) issue to address; rather, she now realizes that the level of talent dictates the value of her company’s product, the perception of its customers, and the level of financial success that it enjoys.

In 1982, Sky International was a simple firm of ten architects. An executive board had been formed around Limon and Harold Stevenson, acting chief financial officer (CFO). Plans to expand the company were being set in motion.

By the mid-1990s, Sky and its brain trust had begun to re-envision the company outlook. The hiring of a talented young visionary named Norma Gaffney brought to light the niche market of upscale condominiums in trendy city neighborhoods and the surrounding suburbs. In this same year, Sky would go public, raising the stakes for its investors and placing a far heavier burden on its talent pool. Of course, the acclaim for Gaffney’s designs, coupled with the condominium boom of the late 1990s and early 2000s, would lead to a surge in growth for the firm. Sky now found work in cities in each corner of the United States, well outside its initial boundaries of the greater Cincinnati area. Satellite offices were established and hundreds of employees were hired.

Sky managed to attract the interest of perhaps the most talented architect in the United States, Steven Lions. The bold, unorthodox designs promised by Lions would open avenues to the kinds of high-art projects that Limon had always dreamed to be a part of. With Lions on board, Sky could now turn to the high-money, high-recognition world of designing artistic city centers. Thanks to this move, Limon was able to pick up her first copy of the annual Fortune 500 in which she and her company were featured. Truly, business had never been better—and the future certainly looked bright.

Prospects were good. Sales were up. Talent was high. Customer satisfaction could not have been better. So how could it be that Sky International’s financials were slipping?

HUMAN CAPITAL MANAGEMENT:
A CRITICAL BUSINESS ISSUE

When many members of senior management sit down to strategize on how to improve company figures, far too many overlook one core business issue: Human Capital. In the coming years, the business world stands to face a crisis unlike any before seen. Today, coupled with economic stressors, many organizations are experiencing the effects of an aging and restless workforce. Many have come to realize that the number of available and highly talented individuals is dwindling. Still others now recognize the substantial impact that a lack of talent can have on the bottom line.

Things have changed. Market demands have shifted. Corporate cultures continue to evolve. More companies are beginning to globalize. As these companies grow and search for a more international workforce, the market for talent has narrowed and become more competitive. Gone are the days when senior management can simply sit back and expect the HR team to guide new and talented individuals along a linear path of career development.

Given these trends, it is easy to see that Human Capital Management has become a core business issue. Data show that an organization hoping to sustain economic viability over the long term (and deliver on targeted results) depends greatly upon focused planning and management in the following two disciplines:

1. Building, deploying, and retaining highly talented performers and leadership bench strength.
2. Ensuring that the right people with the right skills are in the right place at the right time.¹

The proper maintenance of these two disciplines of talent management, more often than not, directly correlates with company success. A study conducted by McKinsey & Company found talent management to be the most significant success factor for most organizations.² The study concluded that Human Capital proved more important from a business standpoint than even strategy, research and development (R&D), or financial capital.

The research of Baruch Lev, professor of accounting at New York University, suggests that the intangible assets contribution made by Human Capital accounts for more than 50 percent of the market capitalization enjoyed by public companies in the United States. Accenture estimates that, since the year 1980, the value of intangible assets has increased from 20 percent to 70 percent against the value of S&P 500 organizations.³

Despite these facts, too many organizations continue to put their Human Capital trust in a broken or outdated system. High-powered businesses need new and high-powered Human Capital strategies. The right strategy will help any organization meet the demands of an ever evolving marketplace—and it will lead directly to the Triple Win: improved value for the customer, the organization, and its employees.

THE AGING OF A TALENT POOL

Diane Limon was troubled. The quarterly financial numbers she had just received were far lower than expected. There was absolutely nothing to suggest that her company should have experienced a loss in the first quarter. Given historical trends, Sky International should have enjoyed the start of another remarkably successful year. It couldn’t simply be that the company had peaked; there was still so much market share to be garnered. And in the previous year, they had unveiled their two most high-profile projects to date. There had been plenty of media buzz, plenty of positive feedback, and the sales department had reported a wave of new prospective clients.

So how was it possible that Limon was looking at her first unfavorable financial report in nearly a decade? With all the usual business aspects trending upward, only one potential contributing factor remained: the people who worked at her ever-expanding company must not have been performing at the expected level.

As Limon took a step back, the gravity of the Human Capital issue was not lost on her. Literally everything that her company did—literally every shred of success that it had ever experienced—depended entirely on the talent of her employees.

This idea was particularly harrowing when Limon realized that a significant portion of Sky International’s prospects for continued and future success rested on the shoulders of only two people: Norma Gaffney and Steven Lions, her key architects. So much depended on their continued happiness. In addition to their obvious value as the creators of the company’s highest profile products, these two brilliant minds had assembled a substantial support staff of highly talented and capable researchers, sketch artists, and marketers—all of whom were integral to the company’s ability to deliver a high-quality product on a deadline.

What if either Gaffney or Lions became disgruntled? What if they departed for another company (or worse, founded their own competing firms)? And if they left, what would happen to all of their talented support staff?

Limon now found herself worrying about thousands of employees. There was the management at each of the eight satellite offices that had been established over the years. There was the senior management team. Specifically, there was Harold Stevenson. Without his tremendous leadership and invaluable business contacts, none of the success would have been possible in the first place.

When Limon examined things from this perspective, she realized that her disappointing quarterly numbers could have been predicted. If she had paid more attention to Human Capital concerns, it all might have been avoided, as well.

If only she had noticed that Gaffney seemed restless. If only she had put more stock in the fact that Lions had never been known to be anything but flighty. What could she have prevented if she had paid more heed to the hemorrhaging of talented professionals on Gaffney and Lions’ teams?

In short, when she ran the numbers, Limon realized that many highly talented individuals had been recruited and lost in recent years. The employee turnover in each office had been alarmingly high. Stevenson’s age had become a concern, as well. At 69, he was long past the age where anyone but a workaholic would have entered retirement. And speaking of retirement, it occurred to Limon almost unexpectedly that she herself was 59.

Several terrifying questions hit her all at once:

1. How much of our success as a company depends on the level of talent we employ?
2. How will we replace all of these talented people?
3. If we don’t replace them properly, can we survive?

TALENT IS IN SHORT SUPPLY

In current times, Diane Limon would not be alone in facing these fears. Her fears would only be compounded by the existing and future trends.

• In the coming fiscal year, it is estimated that 83 percent of current employees will be conducting active searches for new employment.
• In the coming fiscal year, some estimates show that approximately 493,000 people—31 percent of the federal workforce—will become eligible for retirem...

Table of contents

• COVER PAGE
• TITLE PAGE
• COPYRIGHT PAGE
• ACKNOWLEDGMENTS
• CHAPTER 1: INTRODUCTION
• CHAPTER 2: BROADENING THE HUMAN CAPITAL SPECTRUM
• CHAPTER 3: INTRODUCTION TO THE HUMAN CAPITAL CYCLE
• CHAPTER 4: EMERGENCE OF NEW NEED/STRATEGY
• CHAPTER 5: DEFINITION OF THE HUMAN CAPITAL PLAN
• CHAPTER 6: RECRUITMENT AND SELECTION
• CHAPTER 7: EMPLOYEE ON-BOARDING AND ORIENTATION
• CHAPTER 8: DEVELOPMENT OF ONGOING CAPABILITIES OR CAREER GROWTH
• CHAPTER 9: EMPLOYEE DEPARTURE
• CHAPTER 10: OBSERVATIONS, INSIGHTS, AND REFLECTIONS
• CHAPTER 11: QUESTIONS TO CONSIDER
• NOTES
• FURTHER READING
• REFERENCES