TITLE: eg. Marketing

Subtitle/Description: Eg. Online Marketing

Faculty Name: eg. Godfrey Parkin

Date: 22/06/2011

Presented by:JESSIE WHITEHOUSE

Date: 10 June 2011

Talent: Making People Your Competitive Advantage

By Edward E Lawler

Edward E Lawler III is distinguished professor of Business and Director of the Centre for Effective Organisations in the Marshall School of Business at the University of Southern California.He has been honoured as a top contributor to the fields of organisational development, HR management, Organisational Behaviour and Compensation.He is the author of more than 350 articles and 43 books.

Background to book

Chapter 1: Talent Matters

Chapter2: Making The Right Management Choice

Chapter 3: Designing Organisations

Chapter 4: Managing Talent

Chapter 5: Managing Performance

Chapter 6: Information & Decision Making

Chapter 7: Reinventing Human Resources

Chapter 8: Governing Corporations

Chapter 9: Leading

Chapter 10: Managing Change

Chapters

In the last several decades an avalanche of business books, articles and seminars have stressed the importance of human capital- people-in gaining competitive advantage.

Executives seem to be paying attention.According to a recent survey of senior executives the two most important management challenges are:- Recruitment of high quality people across multiple territories- Improving the appeal of company culture and work environment

Chapter 1: Talent Matters

Ed Lawler wrote this book detailing what he believes organisations need to do in order to gain competitive advantage as a result of their ability to organise and manage talent.

What is needed are organisations that are designed from the boardroom to the frontline in ways that optimise talent.He calls this type of organisation Human Capital- centric (HC-centric)

I’ve been saying for years that employees are our most valuable asset. It turns out I was wrong.

Money is our most valuable asset.Employees are 9th.

When asked what came in 8th, he says: Carbon paper!

Dilbert

How do you tell whether an organisation should be HC-centric or not?Multiple factors have contributed to the creation of the knowledge economy and the rise of talent as a potential source of competitive advantage.

• Access to financial capital• Information technology that has been created in the last decade• Growing need for technical knowledge• More flexible work practices• Creation of a new competitive landscape as a result of the

change-becoming increasingly service-driven

Because of the amount of change that has taken place the source of competitive advantage in many industries shifted from execution and reliable processes to the ability to innovate and change.

What does a HC-centric organisation look like?

An organisation that aligns its features towards the creation of working relationships that attract talented individuals and enable them to work together in an effective manner.Major features of a HC-centric organisation:• Business strategy is determined by talent considerations and this in turn

drives human capital management practices• Every aspect of the organisation is obsessed with talent management• Performance Management is one of the most important activities• The I.T. system gives the same amount of attention to measures of talent

costs, performance as it does to measures of financial assets• The HR department is the most important staff group• The corporate board has the expertise and information it needs to advise

on talent issues• Leadership is shared and managers are highly skilled in talent

management

Chapter 2: Making the right management choiceWhich is the right management approach?Structure- centric or HC-centricIn the case of a structure- centric approach a company can organise either as a hierarchical bureaucracy or as a low cost operator

Hierarchical Bureaucracy: This approach was used by leading corporations such as IBM, AT+T, Exxon and was used by most of the large US and European corporations. It is still used in government and non-profit organisations but has lost favour due to high cost and inflexible performance

Low Cost Operator: • Jobs not stimulating with low pay and few prospects• Minimum fringe benefits• Little training and development• Tight job descriptions• Top down decision making• Low job security• Use of part-time and temporary employeesThe defining feature is a focus on gaining competitive advantage through low wages and benefits rather than through the performance of talent.The most visible low cost operators are Walmart,McDonalds and Burger King

WALMART BMW• High Profile• Low wages generate a variety of

negative employee behaviours• High Labour turnover (50%)• High rates of absenteeism• Need to overstaff• Employee pilferage• Union Costs• Quality of workers

• Gives buyers a wide variety of choices

• (Same exact car is produced only once in 9 months)

• Quality products• Manufacturing plants radically

different• Highest quality workers• Rigorous employee selection

process• Flexible work structures• Unprecedented job security• Ability to learn and problem solve

HC-Centric Management

Lawler identifies 2 HC-Centric approaches:High – Involvement approachGlobal competitor approach

The characteristics of high involvement organisations• Enriched work designs• Participative decision-making structures• Shared business information• Committed to education and development of people• Career Orientated• Rewards for organisation performance• Community• Shared Leadership• Committed to Talent Management

Leading examples are Harley Davidson, Whole Foods, Proctor and Gamble, South West Airlines & Starbucks

Global Competitor Approach:(Glamour companies of current era)• Interesting work• Global talent pool• Offshoring• Outsourcing• Employment depend on performance & skills• Pay for performance• Just in time training• Career self management• Willing to buy talent rather than build it Examples of organisations: Apple ,Microsoft , Intel , IBM, Cisco, Citi Corp, Merrill Lynch

Chapter 3: Designing Organisations

Strategy

Structure

Rewards Processes

People

HC-centric organisations excel only when they have outstanding talent. To have outstanding talent they need to have an outstanding talent management system- one that attracts the right talent and helps them understand what to expect from their work experience from the company.

Jack Walsh is quoted to say “ talent management deserves at least as much focus as financial capital management”. This commitment to talent is a big part of what has made General Electric so successful and it continues to be strong.

GE is famous for its session meetings where senior management discuss the development of their teams talent. The same process is replicated at lower levels in GE.HC-centric organisations always face tough competition for the talent they want.

Chapter 4: Managing Talent

No-one argues with the focus on talent when the organisation is a professional sports team.

In sports, different approaches can be successful.New York Yankees are classic global competitors who buy talent, whereas teams such as the Oakland A’s have championed the build strategy and pay lower wages and still win – although not as frequently as the Yankees.The Oakland A’s with a low budget win because they do an excellent job at talent management

Talent Management is the most important process in HC-centric organisations. The most important features are:

• How well talent is managed, measured and managers are held accountable for their talent management performance

• A strong employer brand clearly identifies the organisation as an attractive place to work

• The employment contract differs for a high involvement organisation and a global competitor organisation. For the former it emphasises long term employment and for the latter it emphasises the employee’s responsibility for personal growth

• Rewards package that individual receives fits their preferences and needs• Critical skills for a competitive advantage are identified and individuals with

those skills are hired regardless of costs• The selection process is used to identify who has or can learn the skills the

organisation needs• Development opportunities are carefully planned and made available• Career self management is enabled through information systems• Major emphasis on retaining high performance talent

Chapter 5: Managing Performance

The key features of a performance management system in HC-centric organisations are:• Senior management commitment to the importance of

performance management• Goals that are cascaded down the organisation and based on

business strategy• Timely assessment of performance against goals• Measures of the skills individuals have• Pay based on market value of the skills individuals have• Separate discussion of pay and development needs• On-going feedback• Rewards tied to performance measures• Appropriate mix of rewards for individual, group & organisational

performance

Chapter 6: Information & Decision Making

What are the decision practices to be present in all HC-centric organisations?

• Sophisticated human capital information systems that focus on talent

• Analytical models that assess the impact of human capital• Measures of the condition of an organisation’s core

competencies and capabilities• Effective communication program for sharing business

results with all employees• Public reporting of the condition of an organisation’s

human capital• Decision processes that involve individuals in key decisions

of human capital management

Enormous opportunity exists for leaders of HR functions to enhance their role in the business.HC-Centric organisations have no choice – someone must take responsibility for organising and managing talent.

3 approaches are possible:• Transform existing HR function and become go to unit for human

capital issues• Company leaders can replace existing HR staff with individuals who

are up to the challenge• Outsource administrative tasks of HR department

Chapter 7: Reinventing Human Resources

Current state of HR

• Considered unimportant in organisations• Execution of basic HR administration diverts HR from addressing

issues like talent, organisational design and effectiveness• HR tends to be comfortable in dealing with administration• Gets power when dealing with union and labour law issues• Acting as a watchdog leads to HR being seen as a hindrance to

effective talent management

HR Staffing:

• Quality of HR staff• Career dead end• Silo department – best individuals progress up HR hierarchy, but

seldom end up as CEO• No business exposure and training

How can HR add value to HC-centric organisations?

• Handle transactional/administrative side effectively• Provide business support in Human capital management and

organisational effectiveness• Play active role in establishment and implementation of business

strategy• Provide key data and services to corporate board• Support business strategy with appropriate metrics and analytics• Deep expertise in HR function and understand relationship

between HR and business effectiveness• HR should be a mandatory key career stop for senior executives• Talent in HR should equal or exceed that in other parts of the

organisation

• IBM excelled as structure- centric organisation but transformed into a HC-centric organisation

• Credit for transformation goes to HR• Up to 1990’s IBM seen as leading employer with an attractive brand as

a high-tech company• 1993 Lou Gerstner became CEO and reinvented IBM with most

changes involving HR:- Changed benefits- Job security and life time employment disappeared- Management development programs focused on performance- HR outsourced transactional work- Company sponsored savings account introduced for training and

education- Employees took ownership for own development- Employment contracts ensured that employees own their careers- Climate where people can enhance their skills and become more

competitive

IBM Re-invents HR

What does a board need in order to deal with organisational effectiveness issues?

• They need enough power to have a significant influence on the way talent is managed

• They need extensive knowledge of the principles governing behaviour and a good understanding of talent management systems

• They should be rewarded based on the long term effectiveness of the organisation

• They need to make time available to discuss talent management and the condition of an organisation’s competencies and capabilities

• They need access to a number of metrics concerning the talent of the organisation

• They need to ensure that executive packages support management and reward human capital

Chapter 8: Governing Corporations

What should all managers do?• Become experts on performance management• Effective coaches and committed to enabling people to

perform• Expertise in talent management and organisational

effectiveness• Ability to look into the future and develop future

challenges• Ability to create truth telling and open communication with

individuals• Ability to develop leaders• Know how to’ walk the talk’

Chapter 9: Leading

How do most of today’s organisations stack up against the characteristics that are needed to be an effective HC-centric organisation? Most fall short

Most look and act more like structure -centric organisations than HC-centric organisationsWhy don’t many leaders take a HC-centric approach:• Inability:

most senior managers today are not familiar with it and business schools focus on managing of financial assets

• Unwillingness:many senior managers are in their roles because of their ability to operate effectively in traditional organisations and they have made a major commitment because they want the rewards that go along with their positionsThey also have the wrong skills, wrong motives and the wrong

values for managing in a HC-centric organisation

Chapter 10: Managing Change

Before going too far in making existing executives the villains, it is important to acknowledge that changing from a structured-centric to a HC-Centric approach is very difficult.

In recent years major US corporations like Polaroid, Kodak, US steel, Ford, Chrysler and General Motors have declined substantially or disappeared because they couldn’t or did not try hard enough to change.

Recall the star model. All points on the star need to change as well as the behaviour of leaders and corporate boardsToday’s large corporations have experienced years of success using a structured centric approach.

In Conclusion:

It is one thing to say people are our most important asset, it is another to act on it.

Those individuals, organisations, and countries that do the best job of acting on it will be the winners.

Much of what needs to be done is clear, it is time to do it.The future of HC-Centric management is now