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Ethos Issue 5, Nov 2008
Developing Human Capital: Insights
from the Summit
Geoff Armstrong
CUSTOMERS ARE FICKLE, DISLOYAL AND IN THE DRIVING SEAT
"They want what they want, when they want it." Indeed, customers expect to be given the opportunity to buy things they have not yet identified a need for, as soon as it becomes available. In this information-intensive age of instant gratification, they expect the widest range of choices and will buy from wherever it comes, regardless of geographic or traditional sector boundaries.
Like employees, they see themselves in a relationship where they have buying power—not just as the grateful recipient of whatever product or service the organisation puts out.
Customer power, coupled with the pressure to act in a socially responsible way, and to be transparently accountable to a wider range of interests than just equity owners, has shifted irreversibly the ways that firms can act.
LEADERSHIP MUST EVOLVE
In the new world of the globalised economy, new forms of leadership are needed. The Summit surveyed many, including Dave Ulrich's notion of leadership as brand and other concepts of employer brand. Many of the chief executives who spoke emphasised on a number of features of effective leadership behaviour:
•Explicit values, frequently communicated, genuinely shared, understood and acted upon;
•"Walk the talk": leaders need to demonstrate the values themselves in all that they do and be visible to their followers;
•Authenticity and integrity are essential at all levels;
•Transparency and consistency in objective setting, performance management and reward;
•Continuous improvement of processes and focus employees on where they can add most value;
•Open communication and engagement with the widest range of views, inviting and respecting contributions, not suppressing unorthodox opinions;
•Developing people well and ensuring a strategic approach to succession;
•Leading people, not driving them, towards commonly understood goals.
Leadership development was seen as largely unsatisfactory and too haphazard. While Asian leaders and potential leaders were highly educated, often at prestigious business schools, many felt that their main learning had come from unplanned, unstructured experiences, "being thrown in at the deep end", assigned to an urgent project or overseas posting. Coaching and mentoring for leaders was not common.
On the other hand, in many Asian countries, it was felt that a more family-oriented, consensual and long-term approach to building a business was a strong base from which to develop leadership styles appropriate to the challenges ahead. While by no means universal across Asia, this was felt to be a competitive advantage worthy of further study.
CONCLUSION: TOO IMPORTANT TO BE LEFT TO CHANCE
In seeking to build a sustainable advantage through people, a number of directions have found general support at the inaugural Human Capital Summit.
Firstly, there is no "one size fits
all" solution. Indeed, competitive differentiation requires each organisation to design its culture and working practices as a deliberate strategic act, so that it stands out from its competitors with hard-to-imitate capabilities. Its human capital strategy and real life practices should align with its business strategy. Furthermore, these should contribute measurably to its delivery and to making possible more ambitious strategic intent for the future, based on the capacities so created.
Secondly, human capital strategies should enhance an organisation's overall capacity for success. They should result in measurably superior performance, as well as build agility and resilience. They should act as a magnet for talent at all levels, both in attracting and retaining high-value contributors and in inspiring them to perform highly.
Furthermore, talent is only partly a question of staffing the organisation with good people. Without effective leadership, management, development, motivation and opportunity, talented people cannot flourish.
Finally, the Summit reinforced the key notion that human capital management is too important to be left to chance. It needs to be rooted in an evidence-based decision science, many of the components of which are already known, testable and measurable. And it needs to be systematically thought through in every organisation and applied in ways that support and extend its planned business outcomes.
Geoff Armstrong, CBE, is a past President of the World Federation of Personnel Management Association (WFPMA) and a retired Director-General of the United Kingdom’s Chartered Institute of Personnel Development. He was the theme-weaver for the inaugural Human Capital Summit, held in Singapore from 22 to 24 October 2008.
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