The intersection between HR strategy and HR technology

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How Talent Networks Increase Profits

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Getting the right people and retaining them is the start of building a great workforce. Engaging them to your brand is the next step. But the true work of optimizing the workforce is going to be in defining how the individual talents collect and relate to each other to produce value.

Talent is the scarce resource because it is the ultimate generator of the intangibles that drive the creation of wealth in the digital age. Winning companies are those that can increase their profit per employee by mobilizing labor, capital, and mind power into profitable institutional skills, intellectual property, networks, and brands.

The opportunity to create wealth by reducing unproductive complexity and increasing productive interactions is great in today’s corporations. The numbers rapidly become large. If a company with 100,000 employees makes internal organizational-design changes that add $30,000 in profit per employee, for instance, that would mean $3 billion in extra profits. Since they would be what economists call “rents”—additional earnings requiring no additional, marginal investment of capital or labor—they would create $30 billion in new wealth (at a 10 percent capitalization rate).  ((Bryan, Lowell and Joyce, Claudia. “Better strategy though organizational design.” McKinsey Quarterly, 2007, Number 2.))

There is no doubt that organizations who can optimize collaboration will ultimately perform better. People work better and develop more quantity and quality of ideas when there is some “group think” going on. When resources are readily identifiable and accessible, speed to innovation increases. Unfortunately the histories of our organizations reward people for individual contributions, or achievements that are so broadly aggregated that it means nothing at all. Take for example sales incentives or corporate profit sharing. Also unfortunately, it’s currently too hard to measure collaboration to reward it.

That’s why basketball players are measured on their ability to get the ball to players who then score—assists, to use the technical term—as well as on the points they themselves score. ((Ibid))

If however we can move social networking into the employer domain, it’s possible that we can eventually get to “assists.”

Digital technology provides the means not just to promote efficient, effective, and large-scale collaboration but also to measure each person’s “assists” and thus motivate employees to collaborate in ways that were not possible in the past. ((Ibid))

HR needs to take a firm grasp that our leadership is not about ensuring the future state of the workforce. That task is already at hand and should not be considered leadership. We need to be thinking ahead of the curve past the simple concepts of attracting, managing and retaining talent, and onto the strategies of creating effective collaboration capabilities within our organizations.

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