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21 February 2024

Walking the talk with talent


By Edward E Lawler

Very few organisations walk their executives' talk when it comes to talent management. Instead, most companies are designed and operated in ways that downplay the importance of people. They have bureaucratic structures that optimise the value of financial capital, machinery, equipment and natural resources, at the expense of talent development and the opportunity for people to use their skills.

Send out the right message

When executives in a company fail to live up to their rhetoric about human capital, employees are given two messages: that the company is managing them incompetently, and that their bosses know that this suboptimal approach is wrong. As a result, executives come across both as hypocrites and as poor managers and strategists, which in turn undermines their ability to lead. Closing the gap between rhetoric and reality is not easy, but it can be done. If leaders are interested in building an organisation in which people are treated as a valuable asset, then they must focus on three features that are too often ignored: the board of directors, the human resources management function, and the information systems.

Moreover, the board should spend at least as much time on human capital issues as it does on the allocation of financial and physical capital. It is particularly important that boards spend time on succession planning for top-level management.

Nothing is more important for the future of an organisation than the type of talent it has available to fill its most senior positions. In any organisation that believes human capital is its most important asset, it follows logically that the HR department should be its most important staff group. This means that HR should contain some of the top talent in the company, along with the best information technology resources.

Experience is key

The HR function should be staffed with individuals who understand the business – and who know the intricacies of human capital strategy and management systems. It shouldn't be staffed solely with individuals who are pursuing a lifelong career in HR; it should be seen as an important stepping-stone for anyone who aspires to senior management.

HR leaders need to be involved in business strategy discussions. A seat at the strategy table is not enough; if it is an organisation's most important asset, HR should "set the table" for discussions.

Finally, organisations that value employees as their greatest asset must heed the old saying that what gets measured gets attended to. Thus, the quality of people will be a central focus only if the company has HR measures that are as relevant, rigorous and comprehensive as the measures that pertain to financial assets and physical capital.

To be effective, a human capital information system needs to track the contribution of people to the most critical and strategic objectives. It is particularly important for the HR department to have IT resources that will enable it to produce the kind of comprehensive data that can be used by leaders in making fact-based decisions about talent management.

Leaders should ask themselves how well they are living up to their talk about talent.

- Extracted from Capturing the People Advantage: Thought Leaders on Human Capital.