HCM: The future of (HR) management

Travelling up to Sheffield to give a presentation on HCM to clients of the Chamber of Commerce on behalf of Learning Light, I listened to one of Lucy Kellaway’s recent FT podcasts on the joy of fresh stationery.

Asking her colleagues how they could create the same level of happiness experienced by the children in the Sound of Music, Lucy’s colleagues suggested ‘going home’ and ‘being left alone to get on with work’! Persevering, Lucy describes the ‘small pleasures’ she experiences at work, and of which she sings (to the sound of ‘my favourite things’): “stationery cupboards and lattes with lids on, small ego boosters and…”.

But surely work can offer people more than these small things? From a purely humanistic perspective, people spend so much of their time at work, that there must be a need to ensure work in itself is a fulfilling and engaging activity. And from a business perspective, if people aren’t fulfilled and engaged, are they really going to act as an organisation’s ‘most important assets’?

I talked about this at my presentation in Sheffield, contrasting the traditional perspective of people management as Human Resource Management (HRM), and what I believe is now emerging as Human Capital Management (HCM).

HRM has proved itself as a significant step forward from the more basic perspective of Personnel, which focuses mainly on the administration of people management. HRM’s main focus is on the business, and on what the business strategy means for people and people management, ensuring that all employees are aligned behind business objectives. This process of alignment has delivered huge benefits for organisations, but its downside is that, as the name suggests, HRM tends to treat people as resources. It provides a great way to gain compliance from employees, but not necessarily their commitment. Just look at most organisations’ engagement surveys of evidence of this.

HCM focuses, again as the name suggests, on human capital. This isn’t meant to suggest that we should think about people as capital: that wouldn’t be any more empowering than treating them as resources. It’s about how organisations can accumulate human capital which is an intangible capability provided by their people (managing FOR human capital rather than OF human capital). It’s about building jobs around people rather than fitting people into standard job descriptions. It’s about personalising people management activities to each employee’s individual needs. It’s about understanding each person’s own engagement drivers and ensuring that these needs are being met.

I explained that given the fact that we are all emotional beings, HCM strategy development is likely to depend at least as much on creative and emotional (right brain) thinking as it is on analytical, logical and left brained analysis. I pointed to the increasing use of Emotional Intelligence in organisations as evidence that there is increasing appetite for this sort of approach.

The message seemed to resonate with some of the audience, although I was challenged at the end that it all seemed a little bit intangible, a bit ‘emperor’s new clothes’.

When I got back home, I found that I had been posted Gary Hamel’s new book, the Future of Management, which I have just read on another train trip up to Birmingham. This isn’t supposed to mean that it’s a light read, just (despite its dreary cover) an engrossing one, or at least I found it as such.

One of Hamel’s points is that we need to use the right paradigm for a particular problem. He quotes Thomas Kuhn's explanation that we will typically only be able to solve problems which fit within our paradigm:

“To a great extent these are the only problems that the community will… encourage its members to undertake. Other problems… are rejected as metaphysical… or sometimes as just too problematic to be worth the time. A paradigm can, for that matter, even insulate the community from those socially important problems that are not reducible to the [familiar] puzzle form because they cannot be stated in terms of the conceptual and instrumental tools which the paradigm provides.”

Hamel comments:

“We are all prisoners of our paradigms. And as managers, we are captives of a paradigm that places the pursuit of efficiency ahead of every other goal. This is hardly surprising, since modern management was invented to solve the problem of inefficiency [eg HRM]… And while progressive managers may work hard to ameliorate its stultifying effects, there are few who can imagine a root-and-branch alternative.”

However, the need for this new paradigm is increasing:

“What s true in other fields of human endeavour is also true for management: you can’t solve new or chronic problems with fossilised principles… To untangle the story of life, Darwin had to abandon traditional views and conjure up a new theory based on the principle of natural selection. Similarly, physicists eager to understand the anomalies of the subatomic world had to look beyond Newton’s clockwork laws to discover the principles of quantum mechanics. I believe we are now at a similar juncture in the history of management. Put bluntly, there is no way to build tomorrow’s essential organisational capabilities atop the scaffolding of 20th-century management precepts.”

Without the right paradigm, HCM will smack of the emperor’s new clothes, and it reinforces the need, that I’ve referred to previously, for HR to ensure that it’s using the right paradigm to consider the opportunities for people management in its organisation, and for maximising its own role.

More on the future of management to follow shortly…