Our Task Today – Three Levels of Analysis and Human Capital #1 MACRO: Sustainability, Strategy, and the Business Model – Competent managers understand how value is created #2 MESO: Talent Management, maximizing returns through human capital architectures – Talent pools, pivotal positions, differentiated human capital architecture that adds value #3 MICRO: Employee Engagement – Crafting and leading for individual performance
Level 1 MACRO: Sustainability, Strategy, and the Business Model
What is Strategic Success? Delivering high value results to significant stakeholders Financial Success Operational Success Customer Success Workforce (People) Success
What is “Strategic Competitive Advantage?” Enacted or Utilized Distinctive Competency that: 1.Allows the organization to differentiate itself from competitors 2.Cannot be readily duplicated or imitated 3.Provides a positive economic benefit(s) – KPIs
3 Roads to Strategy Execution & Competitive Advantage Managers can select a path to follow 1.Betting on the incompetence of competitors – blind ambition 2.Acquiring and utilizing the competencies of others – merger, acquisition 3.Using existing resources & competencies efficiently, effectively and differently – resource based
The Secret Revealed! What is the SECRET of obtaining a Strategic Competitive Advantage? executing the strategy Not just having a strategy and competencies but executing the strategy.
Sustainability Pursuit of LONG TERM business success focusing on a triple bottom line: 1.Economics - Profits 2.Social - People 3.Environmental - Planet
Sustainability Defined “The commitment by an organization to balance financial performance with contributions to the quality of life of their employees, the society at large and environmentally sensitive initiatives” SHRM
Top 5 positive ($) outcomes from sustainability initiatives for stakeholders 1)Improved employee morale, 2) More efficient business processes, 3) Stronger public image, 4) Increased employee loyalty, 5) Increased brand recognition. Source: Advancing Sustainability: HR’s Role (SHRM, 2011)
WHAT IS HUMAN CAPITAL? Developing Human Capital in Changing Times
Human Capital Defined The collective sum of the attributes, life experience, knowledge, inventiveness, energy, and enthusiasm that people choose to invest in their work. Weatherly 2003
Human Capital Defined The collective sum multiplicative product of the attributes, life experience, knowledge, inventiveness, energy, and enthusiasm that people choose to invest in their work. Weatherly 2003 with a little help from Ed
Attributes of Human Capital Markets Various levels of value Appreciates and depreciates Markets are shifting from Closed (balance sheet talent) to Open System (crowd sourcing) Individually owned but collectively realized
Human Capital: The Invisible Resource It is vested in the human resources often in the form of intellectual and social capital. It is acquired, developed, utilized, and sustained through the management practices. Being invisible it is harder to duplicate.
Human Capital Value inherent in the form of individuals collectively interacting in the context of formal and informal systems Individuals are the repository for human capital Systems, process, culture and context extract the value of individuals
Human Capital Has Value “People are our most valuable asset” PROVE IT! Must be demonstrated by management practices and actions that compose the Human Capital Architecture
Sharing our Experiences What do organizations you know value?
Expectativas de Todos que Possuem Interesse Direto ou Indireto na Organização Acionistas(proprietários) desejam um retorno que consideram justo no investimento feito. Clientes desejam um alto valor agregado ao produto ou serviço que consomem, e uma manutenção(garantia) que mantenha seu valor. Empregados desejam uma relação de emprego que forneça compensações intrínsicas e extrínsicas em contrapartida às contribuiçoes que fazem. Publico espera que a organização tenha responsabilidade social e se preocupe também com o bem estar dos cidadãos (cidadania corporative)
Escolher as partes interessadas em cada par que a sua organização iria considerar como a mais importante em termos de tempo e outras atribuições de recursos. 1. Cliente ___Proprietário(acionista) ____ 2. Empregado ___Cliente ___ 3. Empregado ___ Publico ___ 4. Proprietário(Acionista) ___Empregado___ 5. Cliente ___Publico ___ 6. Proprietário(Acionista) ___ Publico ___
Instruções para o preenchimento das questões Pense em uma organização com a qual você está familiarizado. Talvez a organização que você trabalha agora. Para cada par de partes interessadas selecionar o que você sente é mais importante para a organização que você escolheu. Pense sobre os recursos dedicados ou as políticas que afetam o grupo de partes interessadas. Quando você completar você irá gravar o número de vezes que você selecionou o grupo de partes interessadas e escrever o número no espaço fornecido.
Stakeholder Importance Vamos Compartilhar - Qual dos 4 stakeholders (clientes, proprietários, público e empregados) a sua organização seria mais provável em atender: Em primeiro lugar? Última?
Importância das partes interessadas Stakeholder Pesquisa Em primeiro lugarÚltima proprietários clientes público empregados
Knowing – Doing Gap How Big is the Gap? “Only 1 in 10 of the 88,000 respondents in our Global Workforce Study agreed that their organization’s senior leaders treat employees as vital corporate assets. A larger percentage reported that their leaders act as if employees don’t matter.” Gebauer ad Lowman, 2008
Level 2 #2 MESO: Talent management, maximizing returns through human capital architectures
MANAGING TALENT FOR STRATEGIC SUCCESS Developing Human Capital in Changing Times
The Challenge for Managers Human Capital IMPACTS the Bottom Line To create value through Human Capital requires a fundamental change in how it is recognized and managed in most organizations.
What is Strategy Execution? Value Creation – Enables the Value Proposition for all stakeholders The aggregated combination of the firm’s resources applied by the strategic business units Results from managerial decisions for resource allocations and tradeoffs
Strategy Execution Enables the Value Proposition for Stakeholders Application: Focus on a Strategic Business Unit -Primary Pharmaceutical Industry Production Marketing Research & Development Human Resources
Critical Outcomes for Strategy Execution Research & Development Group in Primary Pharmaceuticals 1. New Product Applications 2. Reduce Time to Market
Talent Management Talentship requires a redefinition of the traditional service role of HR managers in organizations. This involves a managerial focus on the process of "talent segmentation" and the need to focus managerial attention on "pivotal talent pools".
Human Capital (Pivotal Talent Pools) Strategy Execution Competitive Advantage Sustainability
Talent Segmentation Talent segmentation is as vital to strategic success as customer segmentation. Talent segmentation involves identifying pivotal talent pools where human capital makes the biggest difference to strategy execution
Sharing our Experiences How do organizations you know use segmentation?
Customer Segmentation 1.Does your organization segment customers? 2.What are these customer segments? 3.How are they treated differently?
Talent Segmentation 1.Does your organization identify specific talent pools? 2.What are these talent pools? 3.How are the management practices different for these talent pools?
The Question Is…. Why is customer segmentation more common than talent segmentation?
Drilling Down in Human Capital Pivotal Talent Pools Pivotal Positions Determine the Pivotal Positions to Deliver Strategy Execution
Sharing our Experiences Which position, Characters or Sweepers are most pivotal?
Finding the Pivotal Position Yield Curve - understanding where differences in quality or quantity of talent and organization have the greatest impact on strategy execution (steepness, elasticity, , slope)
Providing a Delightful Guest Experience Being The Happiest Place on Earth!
What is a Pivotal Position? Not necessarily the highest paid/ranked position Not necessarily most critical Not necessarily the most common/number Not necessarily the most visible Not necessarily the most obvious Not ever a person
Pivotal Positions in the R & D Talent Pool of Primary Pharmaceuticals What is the Pivotal Position for executing strategy? Provides the most significant (relative to others in the pivotal talent pool – R&D) improvement in strategy execution Research Scientist
Level 3 #3 MICRO: Individual differentiation and Employee engagement
MANAGING THE INDIVIDUAL DIFFERENTIATION AND ENGAGEMENT Developing Human Capital in Changing Times
There are only three measurements that tell you nearly everything you need to know about your organization’s overall performance: 1.Employee engagement 2.Customer satisfaction 3.and Cash flow Jack Welch, Business Week 2006 AND - Ed says order is important
The NEW Normal “Employees are our most important asset INVESTOR!” Requires an Employee Value Proposition
Managing Human Capital the Person While the human capital architecture is designed to support the highest level of performance for pivotal positions it must ultimately be differentiated at the level of the person
Strategic Success Hierarchy PharmaceuticalsAch’eResearch/DevelopmentResearch ScientistRichard or Mary
Three Challenges to Leaders 1.The changing Employment Relationship (contract) 2.Individual positions in the Employment Lifecycle 3.Developing and supporting Employee Engagement
Shifting Employment Relationship The employer/employee relationship is shifting to a contractual relationship that is more a partnership than economic exchange. Larger spans of control, fewer employees delivering more output. Decline in traditional communications increase in cyber communications.
The Employee Lifecycle 1. Recruitment 2. Hiring 3. Onboarding 4. Training 5. Career development 6. Compensation 7. Retention 8. Promotion 9. Separation Savitz, 2013
Employee Engagement: Examples in Practice “Engagement describes how an employee thinks and feels about, and acts toward his or her job, the work experience and the company.” Intuit “Employee engagement is the involvement with and enthusiasm for work.” Gallup
Employee Engagement: Examples in Practice “Engagement is the extent of employees’ commitment, work effort, and desire to stay in an organization.” Caterpillar “Engagement: To compete today, companies need to win over the MINDS (rational commitment) and the HEARTS (emotional commitment) of employees in ways that lead to extraordinary effort.” Dell
Three Levels of Engagement 1.Cognitive Engagement – Employee beliefs about the company the leaders and the culture 2.Emotional Engagement – Employee affect for the organization, leaders, colleagues 3.Behavioral Engagement – the value added component of effort exerted above required minimum.
Three Key Behaviors of Engagement 1.Say: Employees speak positively about the Company to coworkers, potential coworkers, and current and future customers. 2.Stay: Employees strongly desire to continue working for the Company. 3.Serve: Employees exert extra effort and are dedicated to doing the best job to contribute to business success.
Impacts of Employee Engagement The extent to which employees are committed to something or someone in the organization, how hard they work and how long they stay as a result of that commitment. Employees with high level of engagement are 87% less likely to leave and 20% more productive.
Levels of Employee Engagement Engaged Employees (28%) – work with passion and exuberance, feel a profound connection to the organization can’t wait to contribute more – OCB organizational citizenship behaviors
Levels of Employee Engagement Not Engaged (53%) – “checked out” of the organization, effort put forth is minimal and barely acceptable, lack passion and do not identify with the organization – often the majority of employees
Levels of Employee Engagement Actively Disengaged (19%) – not just disconnect but unhappy, the behaviors are counterproductive and at times destructive, degenerates the culture and based on c ognitive dissonance Fosters TIMJ and DGMGE
Global Survey Results Only 1 in 5 Workers are delivering their full potential! The other 79%: 41% are “enrolled” - capable and ready but not inspired 30% are disenchanted 8% are disengaged Graber & Lowman, 2008
What is your organization's ratio? In world-class organizations, the ratio of engaged to actively disengaged employees is 9.57 engaged to 1 actively disengaged. In average organizations, the ratio of engaged to actively disengaged employees is 1.83 to 1.
A Model of Employee Engagement Serve Stay Say Employee Engagement Organization Culture/Purpose Total Compensation Relationships Quality of Work Life Career Opportunity Organization Leadership Work Activities Model used consistently over time to assess and track engagement
Um Modelo de Obrigação d0 Funcionário Serve Fica Diz Obrigação do Funcionário Organização Cultura / Objetivo Total da remuneração Relacionamentos Qualidade de vida no trabalho Oportunidade de carreira Organização liderança Atividades de Trabalho Modelo usado de forma consistente ao longo do tempo para avaliar e acompanhar o engajamento
Sharing our Experiences Is Your Job Engaging? Take the Gallup survey
Engagement Survey Respond Yes or No 1.Do you know what is expected of you at work? 2.At work do you have the opportunity to do what you do best every day? 3.In the past month have you received recognition or praise for doing good work? 4.Does your supervisor or someone in authority seem to care about you as a person? 5.At work do your opinions seem to count? 1.Voce sabe o que é esperado de voce no trabalho? 2.No trabalho lhe é dada a oportunidade de fazer o seu melhor todo dia? 3.No mês passado você recebeu reconhecimento ou elogios por fazer um bom trabalho? 4.O seu supervisor, ou alguém a quem se reporta, parece se importar com voce como pessoa? 5.No trabalho as suas opiniões parecem contar?
Practicing & Managing Employee Engagement How Mary sees Mary How Richard sees Richard Richard and Mary: The “Real” Story
How Would Mary Respond? How Would Richard Respond? 1.Do you know what is expected of you at work? 2.At work do you have the opportunity to do what you do best every day? 3.In the past month have you received recognition or praise for doing good work? 4.Does your supervisor or someone in authority seem to care about you as a person? 5.At work do your opinions seem to count? 1.Voce sabe o que é esperado de voce no trabalho? 2.No trabalho lhe é dada a oportunidade de fazer o seu melhor todo dia? 3.No mês passado você recebeu reconhecimento ou elogios por fazer um bom trabalho? 4.O seu supervisor, ou alguém a quem se reporta, parece se importar com voce como pessoa? 5.No trabalho as suas opiniões parecem contar?
Richard and Mary: Engagement Scorecard Engagement Score # YesRichardMary 1 2 3 4 5
3 Most Important for Richard? For Mary? Serve Stay Say Employee Engagement 1. Organization Culture/Purpose 7. Total Compensation 2. Relationships 4. Quality of Work Life 5. Career Opportunity 6. Organization Leadership 3. Work Activities
Quais são os três mais importantes para Richard? Para Mary? Serve Fica Diz Obrigação do Funcionário 1. Organização Cultura / Objetivo 7. Total da remuneração 2. Relacionamentos 4. Qualidade de vida no trabalho 5. Oportunidade de carreira 6. Organização liderança 3. Atividades de Trabalho
Richard and Mary: Differentiators for Engagement Rated in the top 3 items ITEMRichardMary 1 Organization Culture 2 Relationships 3 Work Activities 4 Quality Work Life 5 Career Opportunity 6 Organizational Leadership 7 Total Compensation
Performance Feedback Mary, What do you want to tell Richard? Richard, What do you want to tell Mary?
“BAD” Bosses Impact Engagement 40% of workers in the business world think they work for bad bosses. 39% said their managers failed to keep promises. 37% said their bosses did not give them the credit they deserved. 31% indicated their supervisor gave them "the silent treatment."
“BAD” Bosses Impact Engagement 27 % reported negative comments from their management. 24% claimed their bosses invaded their privacy. 23% stated that their supervisor blamed them or other workers to cover up personal mistakes.
A Matter of RESPECT To have sustained engagement, there has to be an environment of respect Respect impacts our emotional state and behaviors because of biological reactions Menshanko, 2012
Chemistry of Engagement Respect Positive and respectful environments Serotonin, Oxytocin and Dopamine Satisfaction and willingness to perform Disrespect Domineering, threatening, intimidating Cortisol and Adrenalin Fight or flight responses translated into workplace behaviors
How Richard sees Mary How Mary sees Richard Your Team’s Creation Please
Employee Engagement – 3 Challenges for Managers 1.Recognize the significance of the employment relationship. 2.Understand and adjust to the individual in their employee life cycle 3.Design & implement systems to fully engage the human capital (individuals) in the organization.
Isn’t it COMMON SENSE? Managers know that they should create functional Human Capital Architectures but They have elaborate excuses why they can’t
Its Only Common Sense! Half will never see the connection between Human Capital and Profits Half will embrace the potential of the connection between Human Capital and Profit
Its Only Common Sense! Half will never see the connection between Human Capital and Profits Half will engage minimal change Half will engage comprehensive change
Its Only Common Sense! Half will never see the connection between Human Capital and Profits Half will engage minimal change Half won’t stay the course Half will succeed
It is Difficult to Imitate Only about 1 in 8 even come close! Implementation of a viable human capital architecture requires deep change and a commitment to “stay the course”. It is often slow and paybacks are a long time coming Most of the requirements defy “Conventional Wisdom”
Your Assignment When you return to Brazil: A.Identify at least one pivotal talent pool, and then at least one pivotal position in your immediate work environment B.Identify at least one human capital architecture component that is ineffective for required performance drivers for the position C.Suggest a change to the current process and justify it to your superiors in “REAL” terms
Just Do It? Managers to succeed in the new normal must rely on a human capital architecture that defies traditional practices and conventional wisdom