Wednesday, 4 July 2007

The strategic value of people management

The Telegraph has been publishing an interesting series of articles on chief executives' perspectives on business. On 28th June, they published one on the value of people in business:

"Talk to chief executives and they invariably say that the most important factor in business success is investing in people, or talent management - the latest buzz phrase for selecting and nurturing excellent staff. But how many really live it through the way they personally manage their businesses?"

In my experience, not many. Or, at least this doesn't perculate through the organisations they lead. Look at the result of most organisation's engagement surveys for confirmation of this. Or look at the number of people working in organisations who are switched off and checked out.

About 6 months ago, I presented at a platform with David Bolchover, author of 'The Living Dead', who presented a number of hugely important statistics on this lack of engagement (9 million questionable sick note requests are given to UK doctors every year, 16% of US workers surf the web all the time, 2/3 of visits to porn sites are made between 9-5.00, Monday to Friday etc). David started his presentation by playing a parody of James Blunt’s famous single ‘My Cubicle’ – a musical clip which has downloaded a staggering 11 million times from You Tube, demonstrating the deep resonance of David’s message with working people.

And think about your own experience of working in organisations. If yours is anything like some of the organisations I've worked for recently, you'll agree we have a long way to go.

In Jakarta, I attempted to explain why I think people really are the most important factor in a business. To do this, I built upon a presentation I made at the HR Forum in May - describing how Ulrich's ideas on
organisational capabilities continue the shift in strategic thinking from Michael Porter's competitive strategy that began with Hamel and Prahalad's core competencies and take this to a new level.

The shift can be seen in many different pieces of research, for example, Nitin Nohria's study of
evergreen companies, which found that while competitive strategy is still important, what is even more important is an organisation's ability to executive, supported by an appropriate culture, structure, and at least two of talent / leadership / innovation / mergers and partnerships. These additional factors are all about people, and this central positioning in providing competitive advantage is why people really are a business' most important factor.

In Jakarta, I also used Kaplan and Norton's balanced scorecard to show that while the energy for Porter's competitive positioning is in the customer and financial perspectives, and the drive for Hamel and Prahalad's core competencies is in the internal processes perspective, the energy for developing organisation capabilities comes from within the learning and growth perspective of the scorecard. We then spent some time visualising new strategies building upon people's current and potential capabilities and developing strategic objectives and measures in the other perspectives based upon developing these capabilities. This provides a completely different way of thinking about strategy and the role of people within business and the managers present clearly found it a very useful exercise.