Ethos Issue 5, Nov 2008

Developing Human Capital: Insights
from the Summit
Geoff Armstrong

The theme-weaver for the inaugural Human Capital Summit reflects on the event’s broader significance and key insights.

The inaugural Human Capital Summit has just taken place, at a time of unprecedented turmoil in world financial markets. The collapse of banking models that first appeared unassailable and the prospects of global recession have, in particular, added to the turbulence in which organisations now have to thrive, compete and prosper.

Turbulence, though, is nothing new. These recent developments merely strengthen the growing emphasis that organisations are putting on people as their primary source of sustainable competitive advantage. More specifically, they are facing the need to develop leadership and management systems that will enable them to take advantage of turbulence and turn organisational agility into a core competence.

This is a very different set of skills than those which had been required for success throughout most of the 20th century. When Western models of management—with their emphasis on mass standardisation, economies of scale, hierarchical layering of decision-making from the top and short-term focus on financial returns—were good enough, there seemed to be no reason to change or, for many developing economies, not to imitate them.

Even when firms in Japan showed that customers appreciated the products of a more engaging process—whereby employees at all levels are encouraged and expected to contribute to continuous improvement in quality, innovation and value for money—it was too easy and too common to dismiss such approaches as being culturally particular. When Toyota opened itself to international researchers and described its philosophy of lean management in great detail, few embraced the lessons fully, preferring instead to cherry-pick isolated programmes to emulate, rather than seeing it as a whole new way of working that was more suited to the way the world was moving.

As we move deeper into the global economy of the 21st century, there is a new focus on evidence-based ways of leading and managing. It needs to be unencumbered by models of the past, although, of course, learning from them.

Against that background, the Singapore Human Capital Summit uncovered and explored a diverse but converging set of pressures driving change in the human resource sector. It also looked at new approaches that organisations are taking to succeed in the emerging environment.

The following were the prevailing themes of the Summit.

GLOBALISATION IS NOT JUST ABOUT COSTUMER MARKETS
Global mobility of talent, technology, capital and ideas is a reality. Disruptive technologies are leading to new sources of competition. New entrants to a sector, unencumbered by sunk investment in plant, buildings and methods can often undermine established players with new offers that customers prefer. National protectionist barriers are decreasingly relevant; and not all countries are equally adept at building human capital strategies, infrastructure and economic policies that can attract winning organisations.

TALENT HAS ASPIRATIONS OF ITS OWN
Organisations are increasingly dependent on the discretionary contributions of the people who work for them. Succeeding generations learn from the experiences of their parents and grandparents. Educational standards and material aspirations are rising; so are the expectations people bring into the workplace. More and more employees are demanding to be treated as respected contributors of value, invested in as important assets, enabled to work in flexible ways that fit with their personal and family lives, and empowered to fulfil at least some of their own aspirations in return for their commitment to their employing organisations.

Today's employees see their employment as a negotiable and changing relationship, not as a lifelong contract. Generation Y wants more from work than a salary and a pension, and they are prepared to move frequently into another relationship that appears to suit them better.

Employers need people who are willing, skilled and equipped to use initiative, innovate and make connections without having to be told what to do. Such behaviour cannot be enforced-it has to come from engaged employees voluntarily contributing to the level of their potential.

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