Post on 24-Dec-2014
description
Human Capital: Value Creation and Risk
AAAAA+AA- AAA+AA-BBB+
An introduction to Organization Maturity Ratings
Stuart WoollardCEO OMR Group & Council member, Maturity Institute
How much does human capital matter?
Understanding how human capital drives value & risk:
The paradox is that by not pursuing profitability to the exclusion of all else, the Great Engine companies in their Golden Age would achieve enormous increases in value...whereas, by single-mindedly pursuing profit...these same companies and their successors actually created less genuine, lasting wealth; indeed, they would often destroy it.
(The Puritan Gift, Kenneth & William Hopper)
Value motive – short, long term; narrow or broad based?
“
”
Profit is critical for a healthy organisation but [societal] value is much broader, cleaner and sustainable
The Measurement Challenge: how people link to Value
• OMR assesses the extent to which an organization is designed around the goal of maximizing its value, while controlling risk, with respect to all its human capital.
• Value relates to the organization itself (i.e. productivity, quality, revenue, cost) and value generated by the organization in a societal context (e.g. economic, well-being, environmental).
• Human capital relates to an organization’s people and all people connected with the development, production and supply of an organization’s goods and services.
Maturity ratings & Value
8
Measuring or rating maturity:
“Art is about learning to see and to observe. And the sciences are about seeing and observing.” – Ed Catmull, Pixar
The Ten ‘Pillars’
OMR
Stage 2Good ProfessionalPractice
Stage 3Effective Management
Stage 4Human Capital becomes integral to business operations
Stage 5Transition: operationalto strategic focus
Stage 1PersonnelAdministration
Board & Executives resistant/unaware of people & human capital value up
to this point
Stage 6Organisation becomes a whole system
Stage 0No ConsciousPeopleManagement
Maturity spectrum:OMR ‘AAA’ Scale
©Paul Kearns/OMR 2013
LONG TERM - STABILITYSHORT TERM –
UNSTABLE
A+
to
AA
-
AA
A
BB
B
to A
BB
B-
BB
+
BB
C B
Maturity predicts value creation & destruction
Maturity drives higher value, lower risk & ‘good’ outcomes
“social, economic, environmental, and ethical factors directly affect business strategy—for example, how companies attract and retain employees, how they manage the risks and create opportunities from climate change, a company’s culture, corporate-governance standards, stakeholder-engagement strategies, philanthropy, reputation, and brand management.” – David Blood 2007
Maturity in practice: value outcomes
Early indicators:
Exec expectations of human capital & value now aligned
Organization now adopting a new language around HCM
10 Pillars embedded into assessment of planned HC activities
Maturity is new framework for decision making
Senior execs now lead on HC initiatives
HR team now business focused rather than "best practice”
Thank youwww.omratings.com
Stuart.woollard@omratings.com+44 [0] 7940585661