Monday, 17 December 2007

Belief #2 - HCM is difference to HRM because of its focus on human capital

I started posting on my beliefs about people management last month.

Belief #2 is that HCM is substantially different to HRM, because of its focus on human capital, or because it accepts that, as I explained in belief #1, people are more than just cogs in the wheel.

I don't think this is a particularly common view - HCM is sometimes just used to indicate a more 'modern' approach to HRM, sometime to indicate a focus on measurement, and sometimes in connection with people management technology.

And it's not a very popular piece of terminology either. People object to their classification as 'human capital'. But for me, HCM isn’t the management of people AS human capital, but the management of these people FOR human capital. It’s about how organisations accumulate human capital as an intangible capability that is increasingly the most important and sustainable source of competitive success.

HRM tends to treat people as resources which can be expended and used up in the pursuit of business goals. It’s a perspective that has helped make organizations much more effective and efficient, but it tends to produce compliance rather than commitment from employees.

HCM recognizes that people are investors of their own human capital, and that they will only keep this capital invested if they’re well looked after and their investment produces a suitable return.

HCM isn't different to HRM because of the processes it includes, but the strategic and people centred approach it brings to each of these processes.

Suppose for example that you saw a really good job for one of your people advertised in the Sunday Times. Even if this job would be the perfect next role for this individual, in general, most business leaders today would ignore the fact that the job had been advertised. They might well suspect that the individual will have applied for it, but the unwritten rules in most organizations suggest that this can never be mentioned. Some business leaders would go as far as to keep the employee working over the next weekend to reduce the chance of them seeing the ad!

I think in the future, business leaders are going to see the advert as an opportunity rather than a threat. They will want to talk to the employee about the advertised position and how their organization might be able to offer an equal experience. Or if their employment value proposition is strong enough, they may even encourage the employee to apply for the advertised role, knowing that they can keep in touch, and bring the employee back into their organization with even more skills and experience later on.

This may seem a million miles away from how organizations work today. But I think when you’re truly focused on human capital, it becomes a very obvious step to take. And I believe it will become a common way of managing in the new S-curve.

Please note however, that this is only an example. They key is to ask what potentially strange approaches may work for your organisation depend upon what the form of human capital or organisational capability will differentiate your organisation from its competitors or help to transform the level and type of services you provide.

See also: