Harvard Business Review recently published that “Most traditional HR performance metrics – such as employee turnover rates, average time to fill open positions, and total hours of training provided – don’t predict organizational performance.” 1 Instead, they correlated organizational performance with five human capital drivers. These are:
- Leadership Practices are really the message from the top. It’s about the employer brand, the company mission, and the executive’s ability to act and execute in accordance with that vision. Without the top, the supporting organization simply fails.
- Employee Engagement is the employee’s individual and collective commitment to the organization and their work.
- Knowledge Accessibility is about the organization’s ability to cause learning sharing. It’s the cultural component of the organization that fosters increased productivity and innovation. More than simple knowledge management, it’s about active and open sharing.
- Workforce Optimization is mostly what I’d call talent management. These are the processes you’ve put in place to create the type of workforce that you want in the future. The performance plans, if effective, provide direction and momentum to your workforce needs.
- Learning Capacity is the organization’s ability to “cause” learning growth through a collaborative culture. 2
The state of HR is that most of us are aware of at least employee engagement and talent management (workforce optimization). We realize that we need to engage our employees, and continue to develop them. Unfortunately, I’m not sure we as HR practitioners know what to do with some of the other areas.
The areas that we may not be as good at are those areas that are more qualitative – these are cultural elements of our organization that are hard to express, hard to measure, and hard to modify. However, in the interest of “changing the game” I think we need to come up with ideas about how to manage these rather tenuous and ideas. Our human capital are no longer producers of products. The value of their work is much more heavily invested in knowledge and intellectual capital. As this shift in what’s valuable from our employees happens, we need to also have a new understanding of what human capital means and how to manage it.
Some would argue that talent management was the answer. It wasn’t. While talent is incredibly important, talent management exists because we understand that we need to grow our talent more organically from the inside if we want to continue to be competitive. Of course talent management has all sorts of other great outcomes like engagement and productivity, but in and of itself, talent management didn’t shift our understanding of how human capital operates, nor did it redefine our understanding of the value of human capital.
We need to find entirely new constructs for human capital with the new understanding that the actual capital is now knowledge. Too long have we “known” this but not “understood” the real meaning. If we really understood the meaning of knowledge and intellectual contributions, we’d have long since shifted from our focus on the person and their growth to the organization, and how the organization can support the person. I’ve been trying to figure this out for a long time.. what’s the next big innovation in HR? I think it’s tying all of our HR strategies to complementing the case for innovation in our knowledge economy. More on this later.