The Exec-Ed Zone

Another day, another piece of research. The Boston Consulting Group (BCG) launched a new report at the World HR Congress in London earlier this month: Creating People Advantage: How to Address HR Challenges Worldwide Through 2015. The core theme is:

"Companies are complex social systems that require clarity of purpose, guidance, and direction. Companies that fine-tune these systems by creating what we call people advantage—the ability to gain competitive advantage
through people strategies—will race ahead of their competitors."

 They identify four elements of the new talent workforce paradigm, none are particularly inspirational or new, but together they sum up the talent challenge neatly:

 

• high value-added businesses are predominantly "knowledge businesses" these days - and that means people are not just the core asset but THE asset. As "people businesses" grow they are competing for a limited pool of talent.
• demographics of developed economies, where knowledge businesses tend to be located, are such that people are having fewer children and those children are coming to the workforce later in life than before - this means that the potential employee pool is smaller than ever before. What is more, when the baby-boomers retire over the next 10 years there is not an equal bulge in the population to replace them.
• globalisation offers opportunities - but integrating different cultures and talents into the workforce is complex
• career paths are much more chaotic than 30 years ago - people expect to not only change jobs several times through their careers but also to have flexible working hours, sabbaticals and a renewed focus on their work-life balance.

The report correctly identifies that HR's relatively lowly profile in organisations next to the likes of finance departments is its difficulty in quantifying its achievements. As the old adage goes "what gets measured, gets done" - if you cannot measure it then people are less likely to take it seriously. Money is easily measured - people success is not. The BCG authors set out a framework for heightening the HR profile and input into organisations core strategy:

 

"Senior executives need to make sure that HR and people strategy is the cornerstone of their corporate strategy. One of the most effective ways to integrate HR and strategy is through the creation of a strategic work force plan. To formulate and execute such a plan, executives should take two major steps. First, they should understand how their company’s overall strategy drives the demand for people....Second, companies should also understand the four “bridges” that connect strategy and HR: sourcing strategy, performance strategy, development strategy, and affi liation strategy....Companies need to be able to measure each of these four linkages so that top executives understand the quantitative dimensions of people issues in the same way that they grasp the fi nancial impact of their strategic decision"

This seems like a useful theory on which to develop an HR strategy - and crucially integrate it into the mindsets and existing behaviour of senior management. The problem is in identifying what metrics the HR department can usefully present. The authors' suggestion of "employee attrition, recruiting success and value-added per person" will be difficult to excite the CEO with, I imagine. The first two are more gauges of the HR department's success rather than the company's performance - and the latter is going to be hard to substantiate. The qualitative measures are no more compelling either "scores from employee surveys, assessing leadership and employee engagement".

At root, however, the principle is good - the hard work is coming up with stats that are compelling. This will take some clear-headed blue-sky thinking but I am convinced it can be done.

Read the whole executive summary at :  http://www.bcg.com/impact_expertise/publications/files/Creating_People_Advantage_ES_April_2008.pdf