Edward B Yost PhD SPHR October 2013 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 ID: 672817
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Slide1
MANAGING HUMAN CAPITAL IN CHANGING TIMES
Edward B. Yost, PhD, SPHR
October 2013Slide2
BEM VINDO A
OHIO UNIVERSITYSlide3
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
c
apital architectures
– Talent pools, pivotal positions, differentiated human capital architecture that adds value
#3 MICRO:
Employee Engagement
– Crafting and leading for individual performanceSlide4
Level 1
MACRO:
Sustainability, Strategy
,
and
the
Business
M
odelSlide5
What is Strategic Success?
Delivering high value results to significant stakeholders
Financial Success
Operational Success
Customer Success
Workforce (People) SuccessSlide6
Strategic Success HierarchySlide7
Strategy
Execution
Competitive
Advantage
Sustainability
Strategic Success ChainSlide8
Defining the Business Strate
gy
Strategy is:
The central, integrated, externally oriented concept of
how
we will achieve our objectives.
(
Hambrick
& Fredrickson)
Slide9
Sharing our Experiences
What is your organization’s “STRATEGY”?Slide10
Strategic Success HierarchySlide11
Strategic Success HierarchySlide12
Strategy
Execution
Competitive
Advantage
Sustainability
Strategic Success ChainSlide13
What is “Strategic Competitive Advantage?”
Enacted or Utilized
Distinctive Competency
that:
Allows the organization to differentiate itself from competitors
Cannot be readily duplicated or imitated
Provides a positive economic benefit(s) – KPIsSlide14
3
R
oads
to
Strategy Execution & Competitive Advantage
Managers can select a path to follow
Betting on the incompetence of competitors –
blind ambition
Acquiring and utilizing the competencies of others –
merger, acquisition
Using existing resources & competencies efficiently, effectively and differently –
resource basedSlide15
The Secret Revealed!
What is the
SECRET
of obtaining a Strategic Competitive Advantage?
Not just having a strategy and competencies but
executing the strategy
.Slide16
Strategy
Execution
Competitive
Advantage
Sustainability
Strategic Success ChainSlide17
Sustainability
Pursuit of LONG TERM business success focusing on a
triple bottom line
:
Economics -
Profits
Social -
People
Environmental -
PlanetSlide18
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
Slide19
Top 5 positive ($) outcomes from sustainability initiatives for stakeholders
Improved
employee morale,
2)
M
ore efficient business
processes,
3
)
Stronger
public image,
4
)
Increased employee
loyalty,
5) Increased brand recognition.
Source: Advancing Sustainability: HR’s Role (SHRM, 2011)Slide20
What IS Human Capital?
Developing Human Capital in Changing TimesSlide21
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
2003Slide22
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 EdSlide23
Attributes of Human
Capital Markets
Various levels of value
Appreciates and depreciates
M
arkets are shifting from Closed
(balance sheet talent)
to Open System
(crowd sourcing)
Individually owned but collectively realizedSlide24
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
.Slide25
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 individualsSlide26
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 ArchitectureSlide27
Sharing our Experiences
What do organizations you know value?Slide28
Expectativas
de Todos
que
Possuem
Interesse
Direto
ou
Indireto
na
OrganizaçãoAcionistas
(
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) Slide29
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
___
Slide30
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.Slide31
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?Slide32
Importância das
partes interessadas
Stakeholder
Pesquisa
Em
primeiro
lugar
Última
proprietários
clientes
público
empregados
Slide33
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, 2008Slide34
Level 2
#2 MESO: Talent management, maximizing returns through human capital architecturesSlide35
Managing Talent
for Strategic Success
Developing Human Capital in Changing TimesSlide36
The Challenge for Managers
Human
Capital
IMPACTS
t
he Bottom
Line
To
create value
through
Human Capital requires a
fundamental change in
how it is recognized and managed in most organizations.Slide37
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
tradeoffsSlide38
Strategy Execution
Enables the Value Proposition for Stakeholders
Application: Focus on a Strategic Business Unit -
Primary
Pharmaceutical Industry
Production
Marketing
Research & Development
Human ResourcesSlide39
Strategic Success HierarchySlide40
Critical Outcomes for Strategy Execution
Research
& Development
Group in Primary Pharmaceuticals
1. New Product
Applications
2
. Reduce Time to MarketSlide41
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"
.
Slide42
Human Capital
(Pivotal
Talent Pools)
Strategy Execution
Competitive Advantage
SustainabilitySlide43
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 executionSlide44
Sharing our Experiences
How do organizations you know use segmentation?Slide45
Customer Segmentation
Does your organization segment customers?
What are these customer segments?
How are they treated differently?Slide46
Talent Segmentation
Does your organization identify specific talent pools?
What are these talent pools?
How are the management practices different for these talent pools?Slide47
The Question Is….
Why is customer segmentation more common than talent segmentation?Slide48
Drilling Down in Human Capital
Pivotal Talent Pools
Pivotal Positions
Determine the Pivotal Positions to Deliver Strategy Exec
utionSlide49
Cast Members at DisneySlide50
Sharing our Experiences
Which position, Characters or Sweepers are most pivotal?Slide51
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)Slide52
Yield Curves = Pivotal PositionsSlide53
Providing
a Delightful Guest Experience
Being The Happiest Place on Earth!Slide54
What is a Pivotal Position?
Not necessarily the highest paid/ranked positionNot necessarily most critical
Not necessarily the most common/number
Not necessarily the most visible
Not necessarily the most obvious
Not ever a personSlide55
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 ScientistSlide56
Strategic Success HierarchySlide57
Yield Curve Primary
Pharmaceuticals
Best Sales Rep
Worst Sales Rep
Strategy Execution
Investment in Human Capital
Best RS
Worst RS
Sales Representative
Research ScientistSlide58
Yield Curve Primary
Pharmaceuticals
Investment in Human Capital
Research Scientist
Best Sales Rep
Worst Sales Rep
Strategy Execution
Best RS
Worst RS
Sales Representative
20%Slide59
Yield Curve Primary Pharmaceuticals
Investment in Human Capital
Research Scientist
Best Sales Rep
Worst Sales Rep
Strategy Execution
Best RS
Worst RS
Sales Representative
20%Slide60
Same Industry
- Different Business Model
Primary
High Margins
Sell to Physicians
Time to Market
New Applications
Generic
Low Margins
Sell in Bulk
Low Cost
Manage Distribution ChannelsSlide61
Yield Curve Generic
Pharmaceuticals
Investment in Human Capital
Sales
Representative
Best RS
Worst RS
Strategy Execution
Best
Sales Rep
Worst Sales
Rep
Research
Scientist
20%Slide62
Break Time
http://vimeo.com/6958741Slide63
Level 3
#3 MICRO:
Individual differentiation and Employee
engagementSlide64
Managing the Individual Differentiation and Engagement
Developing Human Capital in Changing TimesSlide65
There are only three measurements that tell you nearly everything you need to know about your organization’s overall performance:
Employee engagement
Customer satisfaction
a
nd Cash flow
Jack Welch, Business Week 2006
AND - Ed says order is importantSlide66
The NEW Normal
“
Employees are our most important
asset
INVESTOR!”
Requires an Employee Value PropositionSlide67
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 personSlide68
Strategic Success HierarchySlide69
Three Challenges to Leaders
The changing
Employment Relationship
(contract)
Individual positions in the
Employment Lifecycle
Developing and supporting
Employee EngagementSlide70
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.Slide71
The Employee Lifecycle
1. Recruitment
2. Hiring
3. Onboarding
4. Training
5. Career development
6. Compensation
7. Retention
8. Promotion
9. Separation
Savitz
, 2013Slide72
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.”
GallupSlide73
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.”
DellSlide74
Three Levels of Engagement
Cognitive Engagement
– Employee beliefs about the company the leaders and the culture
Emotional Engagement
– Employee affect for the organization, leaders, colleagues
Behavioral Engagement
– the value added component of effort exerted above required minimum.Slide75
Three Key Behaviors of Engagement
Say:
Employees speak positively about the Company to coworkers,
potential coworkers, and current and future customers.
Stay:
Employees strongly desire to continue working for the Company.
Serve:
Employees exert extra effort and are dedicated to doing the best job to contribute to business success.Slide76
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.Slide77
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 behaviorsSlide78
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 employeesSlide79
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 DGMGESlide80
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, 2008Slide81
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
.Slide82
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 engagementSlide83
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 engajamentoSlide84
Sharing our Experiences
Is Your Job
E
ngaging?
Take the Gallup surveySlide85
Engagement Survey
Respond Yes or No
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?
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
?Slide86
On Flip chart tally scores
5
4
3
2
1
0Slide87
Practicing & Managing
Employee Engagement
How
M
ary sees Mary
How Richard sees Richard
Richard
and Mary
:
The “
Real”
Story Slide88
How Would Mary Respond?
How Would Richard Respond?
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?
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
?Slide89
Richard and Mary:
Engagement Scorecard
Engagement Score
#
Yes
Richard
Mary
1
2
3
4
5
Slide90
Richard and Mary “Engaged???”Slide91
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
ActivitiesSlide92
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
TrabalhoSlide93
Richard and Mary:
Differentiators for Engagement
Rated in the top 3 items
ITEM
Richard
Mary
1 Organization Culture
2 Relationships
3 Work Activities
4 Quality Work Life
5 Career Opportunity
6 Organizational
Leadership
7 Total Compensation
Slide94
Performance Feedback
Mary, What do you want to tell Richard?
Richard, What do you want to tell Mary?Slide95
“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." Slide96
“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.Slide97
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
, 2012Slide98
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 behaviorsSlide99
How Richard sees Mary
How Mary sees Richard
Your Team’s Creation PleaseSlide100
Employee Engagement –
3 Challenges for Managers
Recognize the significance of the
employment relationship
.
U
nderstand and adjust to the individual in their
employee life cycle
Design & implement systems to
fully engage the human capital
(individuals)
in the organization.Slide101
Isn’t it COMMON SENSE?
Managers know that they should create functional Human Capital Architectures
but
They have elaborate excuses why they can’tSlide102
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 ProfitSlide103
Its Only Common Sense!
Half will never see the connection between
Human Capital
and Profits
Half will engage minimal change
Half will engage
comprehensive
changeSlide104
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
JSlide105
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”Slide106
Your Assignment
When
you return to Brazil:
Identify at least one pivotal talent
pool
, and then at least one pivotal
position
in your immediate work environment
Identify at least one human capital architecture
component
that is ineffective for required performance drivers for the position
Suggest a
change
to the current process and justify it to your superiors in
“REAL”
termsSlide107
Just Do It?
Managers to succeed in the new normal must rely on a human capital architecture that defies traditional practices and conventional wisdomSlide108
Obrigado
pela
sua
atenção
amável