#AlignedValue: How to put #HumanCapital squarely on the #CEO’s Agenda // Is it time to blow up #HR? @adiman

In the July/August edition of Harvard Business Review, Adi Ignatius and the HBR editorial team challenged HR leaders to “blow up” HR and build something new.

That’s a bold assertion.  And it’s raising the eyebrows of even the most progressive HR thought leaders.  HBR’s Rethinking Human Resources SPOTLIGHT prompts forward-looking CEOs, CFOs, and CHROs to ask:

  1. Is our workforce consistently realizing its economic potential?
  2. Have we fully accounted for the importance of people in our strategy?
  3. Is HR playing a lead role on our executive leadership team?
  4. Are our HR programs achieving higher levels of corporate performance?

Opportunities borne from Overlooked Problems

HR Problem Strategic Opportunity
Labor markets are cyclical.  When talent is in short supply, HR is perceived as a valuable strategic partner.  When demand for labor is low, HR’s strategic importance tends to be diminished and HR tends to be relegated to administrative tasks. The labor market has been tightening since the end of The Great Recession.  HR Leaders should leverage current market conditions to make the case for a market neutral / countercyclical talent agenda – right now.
CEO surveys routinely cite attraction, retention, development, and deployment of human capital as high priority business problems.   Despite the urgency, CHRO’s are less likely than CFO’s to be Named Executive Officers (NEOs) and serve on the executive committee.  As a result, human capital drivers tend to take a back seat in the formulation of strategy – which neglects critical people issues and puts achievement of strategic objectives at-risk. Allocating human capital is arguably as important as allocating financial assets when constructing a market winning strategy.  It’s time for a forward-looking leadership triumvirate that emphasizes people in the strategy development process.  Referred to as “G3” – strategic collaboration between the CEO, CFO, and CHRO is the chemistry needed to solve today’s most pressing business problems.  Corporations won’t achieve higher levels of corporate performance with effectively managing your human capital.
We work in an era of never-ending stream of talent management research spurring innovation in workforce management methods and talent management technology.  Choosing the “latest and greatest” as an early adopter is not a sure-fire path to success – and mistakes can be expensive. Applying design thinking – that accounts for the big picture – is the best technique available to organizations to make smarter strategic choices.  The opportunity for HR leaders is to use design to consciously link, prioritize, and align human capital solutions with high value outcomes (HVOs).

Seizing the Opportunity

Forward-looking HR Leaders can seize these opportunities by matching solutions that unlock their workforce’s potential, sharpen their leadership’s judgement, and target high-value outcomes (HVOs) that are most relevant to their competitive dominance.  The reward?  Market leading performance that will leave competitors flat-footed.  That’s something customers, employees, and shareholders all will enjoy.

Start constructing a business case:

 (1) Assess which HR programs have outlived their useful value.

Deciding what to stop doing will free you choose what to do next.  Certain programs are keepers.  Some programs aren’t.  Use the recuperated resources from deprecated programs to fund higher-value endeavors.

(2) Develop an astute awareness of the strategic imperatives – challenges, risks, opportunities, and priorities – necessary to create market-leading performance.

If your CEO has communicated a long-range plan, that’s the perfect starting point.  Study it.  Thoroughly.  But don’t stop there – look deeper.  Competitor SEC filings, employee survey results, industry analyst reports, academic research, and peer case studies are all great sources to expand your strategic context.  Sometimes new ideas hide in the cracks of arcane and seemingly irrelevant sources.

(3) Apply design thinking to create and align HR Solutions with higher levels of corporate performance  

Design thinking is a method for practical, creative resolution of problems and creation of solutions, with the intent of an improved future result. It is a form of solution-focused thinking – starting with a goal (a better future situation) instead of solving a specific problem.

Executive committees need “G3” chemistry (CEO, CFO, and CHRO) to affect the right strategy for their business problems.  CHROs can help CEOs and CFOs solve workforce challenges by applying design thinking to:

  • Envision a future organization that realizes the full economic potential of its human capital
  • Create the “prerequisite” and “catalyst” HR Programs that achieve High-Value Outcomes (HVOs).
  • Dynamically allocate and align human capital according to changes in strategy
  • Achieve higher levels of corporate performance

Next in this Series: Putting Human Capital on the CEO’s Agenda

In a follow-up post, I’ll dive deeper into these three steps to illustrate how to apply designing thinking to create #AlignedValue.

Inspiration & Special Thanks

This article was inspired by the Codex Leicester & The Creative Mind Exhibition on display June 21 – August 30, 2015 at the Minneapolis Institute of Arts (artsmia.org) courtesy of Bill Gates.  Engineer, inventor, scientist, artist: Leonardo da Vinci embodies the ideal of an innovative mind who uses his vast intellect, powers of observation, and boundless curiosity to explore the world around him.

HBR SPOTLIGHT Contributing Authors

Harvard Business Review July/August 2015 (93, 7/8)

Why We Love to HR…and What HR Can Do About It (p. 54)

  • Peter Cappelli, George W. Taylor Professor of Management at The Wharton School and Director of Wharton’s Center for Human Resources.  Research Associate at the National Bureau of Economic Research in Cambridge, MA

 People Before Strategy: A New Role for the CHRO (p. 62)

  • Ram Charan, Renowned business advisor to Top CEOs and Boards; Author Boards That Lead: When to Take Charge, When to Partner, and When to Stay Out of the Way
  • Dominic Barton, Global Managing Director of McKinsey & Company and trustee of the Brookings Institution.
  • Dennis Carey, Vice Chairman Korn Ferry International. Mr. Carey specializes in CEO and Board Director Recruitment.

 Bright Shiny Objects and the Future of HR (p. 72)

  • John Boudreau, Professor of Management and Organization at USC Marshall School of Business; Research Director Center for Effective Organizations
  • Steve Rice, former EVP of Human Resources at Juniper Networks; currently CHRO at the Bill & Melinda Gates Foundation

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