MANAGING HUMAN CAPITAL IN
CHANGING TIMES
Edward B. Yost, PhD, SPHR
April 2014
Leading Change in Turbulent Times
Executive Education Seminar
BEM VINDO A
OHIO UNIVERSITY
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
Strategic Success Hierarchy
Industry
Firm/Company
Business Unit/Function
Position
Person
Strategic Success Chain
Strategy Execution
Competitive Advantage
Sustainability
Defining the Business Strategy
Strategy is:
The central, integrated,
externally oriented concept of
how we will achieve our
objectives. (Hambrick & Fredrickson)
Sharing our Experiences
What is your
organization’s
“STRATEGY”?
Strategic Success Hierarchy
Pharmaceuticals
Firm/Business
Business Unit/Function
Position
Person
Strategic Success Hierarchy
Pharmaceuticals
Ach’e
Business Unit/Function
Position
Person
Strategic Success Chain
Strategy Execution
Competitive Advantage
Sustainability
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?
Not just having a strategy
and competencies but
executing the strategy.
Strategic Success Chain
Strategy Execution
Competitive Advantage
Sustainability
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)
Developing Human
Capital in Changing
Times
WHAT IS HUMAN CAPITAL?
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
lugar
proprietários
clientes
público
empregados
Última
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
Developing Human
Capital in Changing
Times
MANAGING TALENT
FOR STRATEGIC SUCCESS
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
Application: Focus on a Strategic Business
Unit -Primary Pharmaceutical Industry
Enables the Value
Proposition for
Stakeholders
Strategy Execution
Production
Marketing
Research &
Development
Human Resources
Strategic Success Hierarchy
Pharmaceuticals
Ach’e
Research/Development
Position
Person
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".
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
Cast Members at Disney
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, D,
slope)
Yield Curves = Pivotal Positions
Being The
Happiest
Place on
Earth!
Providing a
Delightful Guest
Experience
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
Strategic Success Hierarchy
Pharmaceuticals
Ach’e
Research/Development
Research Scientist
Person
Yield Curve Primary Pharmaceuticals
Best Sales Rep
Worst Sales Rep
Strategy Execution
Best RS
Worst RS
Investment in Human Capital
Yield Curve Primary Pharmaceuticals
Best Sales Rep
Strategy Execution
Worst Sales Rep
Best RS
20%
Worst RS
Investment in Human Capital
Yield Curve Primary Pharmaceuticals
Best Sales Rep
Strategy Execution
Worst Sales Rep
Best RS
20%
Worst RS
Investment in Human Capital
Same Industry - Different Business
Model
Generic
Primary
•
•
•
•
High Margins
Sell to Physicians
Time to Market
New
Applications
•
•
•
•
Low Margins
Sell in Bulk
Low Cost
Manage
Distribution
Channels
Yield Curve Generic Pharmaceuticals
Best RS
Strategy Execution
Worst RS
Best
Sales
Rep
Worst
Sales Rep
20%
Investment in Human Capital
Break Time
http://vimeo.com/6958741
Level 3
#3 MICRO: Individual differentiation
and Employee engagement
Developing Human Capital
in Changing Times
MANAGING THE INDIVIDUAL
DIFFERENTIATION AND ENGAGEMENT
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
Pharmaceuticals
Ach’e
Research/Development
Research Scientist
Richard 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 cognitive
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
Organization
Culture/Purpose
Relationships
Work
Activities
Quality of
Work Life
Say
Employee
Engagement
Career
Opportunity
Organization
Leadership
Stay
Serve
Total
Compensation
Model used consistently over time to assess and
track engagement
Um Modelo de Obrigação d0 Funcionário
Organização
Cultura / Objetivo
Relacionamentos
Atividades de
Trabalho
Qualidade de
vida no
trabalho
Diz
Obrigação do
Funcionário
Oportunidade
de carreira
Organização
liderança
Fica
Serve
Total da
remuneração
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.
2.
3.
4.
5.
Do you know what is expected of
you at work?
At work do you have the
opportunity to do what you do best
every day?
In the past month have you
received recognition or praise for
doing good work?
Does your supervisor or someone
in authority seem to care about you
as a person?
At work do your opinions seem to
count?
1.
2.
3.
4.
5.
Voce sabe o que é esperado de voce
no trabalho?
No trabalho lhe é dada a
oportunidade de fazer o seu melhor
todo dia?
No mês passado você recebeu
reconhecimento ou elogios por
fazer um bom trabalho?
O seu supervisor, ou alguém a quem
se reporta, parece se importar com
voce como pessoa?
No trabalho as suas opiniões
parecem contar?
On Flip chart tally scores
5
4
3
2
1
0
Practicing & Managing Employee
Engagement
Richard and Mary:
The “Real” Story
How
Mary
sees
Mary
How
Richard
sees
Richard
How Would Mary Respond?
How Would Richard Respond?
1.
2.
3.
4.
5.
Do you know what is expected of
you at work?
At work do you have the
opportunity to do what you do best
every day?
In the past month have you
received recognition or praise for
doing good work?
Does your supervisor or someone
in authority seem to care about you
as a person?
At work do your opinions seem to
count?
1.
2.
3.
4.
5.
Voce sabe o que é esperado de voce
no trabalho?
No trabalho lhe é dada a
oportunidade de fazer o seu melhor
todo dia?
No mês passado você recebeu
reconhecimento ou elogios por
fazer um bom trabalho?
O seu supervisor, ou alguém a quem
se reporta, parece se importar com
voce como pessoa?
No trabalho as suas opiniões
parecem contar?
Richard and Mary:
Engagement Scorecard
Engagement Score
# Yes
1
2
3
4
5
Richard
Mary
Richard and Mary “Engaged???”
3 Most Important for Richard? For Mary?
1. Organization
Culture/Purpose
2. Relationships
3. Work
Activities
4. Quality of
Work Life
Say
Employee
Engagement
5. Career
Opportunity
6. Organization
Leadership
Stay
Serve
7. Total
Compensation
Quais são os três mais importantes para
Richard? Para Mary?
1. Organização
Cultura / Objetivo
2. Relacionamentos
3. Atividades
de Trabalho
4. Qualidade
de vida no
trabalho
Diz
Obrigação do
Funcionário
5. Oportunidade
de carreira
6. Organização
liderança
Fica
Serve
7. Total da
remuneração
Richard and Mary:
Differentiators for Engagement
Rated in the top 3 items
ITEM
1 Organization Culture
2 Relationships
3 Work Activities
4 Quality Work Life
5 Career Opportunity
6 Organizational Leadership
7 Total Compensation
Richard
Mary
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
Disrespect
• Positive and respectful
environments
• Serotonin, Oxytocin and
Dopamine
• Satisfaction and
willingness to perform
• 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 engage
minimal change
Half will never see
the connection
between Human
Capital and Profits
Half will engage
comprehensive
change
Its Only Common Sense!
Half will engage
minimal change
Half will never see
the connection
between Human
Capital and Profits
Half won’t stay the
course
Half will succeed
J
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
Obrigado
pela sua
atenção
amável