Last year, The Human Capital Institute in Washington, D.C., awarded its prestigious HCSTM Award of Excellence to The Sundt Companies Inc. of Tempe, Ariz. The 117-year old, employee-owned construction company was selected because of its development and execution of a comprehensive set of talent management initiatives.
Specifically, Sundt created a human capital management system, which says Richard Condit, Sundt’s chief administrative officer, “sounds fancy,” but it was basically about identifying critical talent projects, implementing enterprise-wide talent practices and creating an integrated, cross-functional team to oversee it all.
Why did Sundt feel the need to do all this? As Conduit notes, “getting the people side of the business right is the single most important sustainable advantage we have as a company.”
The Human Capital Institute, which is a little over four years old, was founded by a group of human resource professionals, who observed that soon after the turn of the millennium, a number of chief executives were beginning to require human resource departments to devise strategies dealing with corporate human capital, but there was nowhere for these HR professionals to turn for guidance.
“HR had always been more about efficiencies and process,” says Allan Schweyer, president, executive director and a co-founder of HCI. “It was more about transactions and administration and not about strategy. But the world had changed.”
Going back about 35 years ago, the value of a publicly traded company was calculated by looking at assets, factories, equipment and money in the bank. Today, value is sometimes more about the intangibles, including brands, corporate relationships, innovations and people.
“The old industrial model was very good when people were, in some regards, not that important,” says Schweyer, “but now that people are much more important, things like retention and employee engagement have become problems. We are still trying to manage people as though they are working in a factory, when we need to be managing people with creativity. We really need to throw away most of the industrial-era mindset and replace it with one that is capable of leveraging the most you can out of the people and talent in the organization.”
Most human resource (or in corporate lingo, human capital) specialists generally agree there are some best practices in regard to developing, retaining and enhancing the talent within the organization. From an organizational level, the first step to better tap a company’s human capital is actually very theoretical: Aligning corporate objectives with employee goals.
“When you have a large number of people working for you, obviously you want them focused to achieve the vision of the organization without them being distracted or going off in different directions, notes Riaz Khadem, president of Infotrac Inc., an Atlanta-based management consulting firm, and co-author of Total Alignment: Integrating Vision, Strategy and Execution for Extraordinary Business Success.
“When you have a large workforce of independent thinkers,” says Khadem, “in truth, it is a challenge to get them unified and heading toward a common goal.”
Khadem suggests a step-by-step approach so each person in the organization makes “maximum contributions” to push the corporate vision. For example, at almost every company, senior executives get together and craft a corporate vision statement of some type. Oddly, this is where everything falls apart because there is no mechanism to translate that corporate vision into a practical process.
As Sundt’s Condit observes, “a lot of people talk the game. There always a lot of rhetoric, but most companies don’t execute.”
To make a corporate vision personal for employees means first quantifying that vision, that is identifying indicators and figuring some way to measure those indicators. Second, corporations need to develop a strategy—and again with quantifiable indicators. And third, figure out who in the organization should be accountable for each of the indicators.
“If you cannot measure it, you cannot improve it,” concurs Christopher Faust, executive vice president of global strategy for Softscape Inc., a Wayland, Mass., “people management” technology and services firm.
“It is very important to assign accountability to the right levels of the organization,” says Khadem. Where companies fail in regards to vision and/or maximizing human capital, he adds, is not aligning vision and strategy, not identifying measurable results at all levels of the business and not finding employees with the highest competency to achieve the strategy or vision.
There are a number of ways companies end-up misaligned. Some firms create a human capital strategy than fail to coordinate it with the corporate business strategy, so each is going in a different, independent direction.
“We counsel clients to define the business strategy, whether it is market leadership, operational excellence or innovation, and then align the human capital to whichever objective is chosen,” says Chad Fry, a senior manager with BearingPoint, a McLean, Va.-based management and technology consulting firm.
