Wednesday 4 November 2009

Andrew Mayo on Human capital management


 eye   The current issue of Strategic HR Review tackles the broad theme of human capital management.  In one article, Andrew Mayo describes his thoughts on the differences between HCM and Human resource management (see my recent post on his thoughts about human resource measurement too).

HRM is about treating people as resources:

“People are resources and represent significant costs, and they have to be managed and administered. HRM is the platform of policies, processes and procedures that enable that to happen. The effectiveness of all these activities, and their efficiency of delivery, need measuring – with standards and targets and regular reporting. But it is a measurement framework that should be separated from HC measures – and too often, “HR metrics” is a basket in which they are all mixed up.”


HCM however is about how we look at people as value-creating assets:

“For me, it is very close to talent management. Many organizations have a very restricted and exclusive view of talent, confining it to “high potentials” – which are typically 1 per cent or so of an organization’s people. I would define talent as “those people directly in the line of value creation to one or more stakeholders, and who possess a high level of the relevant knowledge or skills needed.” This will include some quite humble people on the front line of the organization, and is a radically different way of looking at people compared to the systematized and hierarchical approaches of HRM.

The first discipline of HCM is identifying who these assets are. They may be defined by role, or as exceptional individuals…

Our next task is to engage them and retain them. Do our HRM systems allow enough flexibility to meet the financial and non-financial aspirations of our essential assets?

We also want to grow their potential – some will just be great performers, but others will be able to take higher responsibility in the future.

Finally, we need a culture that recognizes talent and the fact that it may be treated differently...”


Although I think HCM can go much further than this, I agree with much of what Mayo writes, particularly his first paragraph above (also see my presentation at ITU) .  And I think he makes an important point in stressing that HCM isn’t a replacement for HRM:

“We need both HRM and HCM. They are different mindsets and many traditional HR professionals find a human capital approach challenging. But it is at the heart of what an organization is there for – nothing could be more strategic.”


Mayo also writes that he doesn’t think there is a widely accepted and definitive definition of HCM.  I also shied away from giving one when I wrote my book.  But I think it’s time.  Look out for my views on HCM vs HRM later this month.


Also see my Strategic HR Review article on human and social capital.


PS, I think the two eyes from our book covers go rather nicely together, don’t you think?




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