Leadership: investment in human capital

Font Size

Print

Feedback

Email

Discuss

It is all so simple, Anjin san. Just change your concept of the world

—James Clavell, Shogun

In a world where intellect is the new form of property, tomorrow’s leaders will be those who invest in human capital, now and today. The enthusiasm one encounters in the industry is, indeed, infectious. Business leaders that I meet are strategising to multiply manifold. Where one would attempt in earlier days to draw a new ‘S’ curve on an ‘S’ curve, the quest now is to focus on enabling an ‘I’ curve of perpendicular growth instead.

Organic growth is no longer a primary way to grow, with mergers and acquisitions both in the domestic arena and at a cross-border level clearly in vogue. This is the time where we need to get smarter everyday to seize the opportunities around us, and develop people around to deliver success and sustain it. In our quest to create the future, ironically the rear-view mirror seems to be clearer than the windshield. Change needs mastering.

Rajiv Memani, CEO, Ernst & Young, India, speaks of two kinds of leaders: the all-capable Main Hoon Na leaders who endeavour to make everything happen on their own and the nurturing Hum Saath Saath Hain organisation builders who grow teams. Collins and Porras too have vividly demonstrated that for companies to be visionary, it is not mandatory to have charismatic leaders.

It does call for a leader to recognise that for sustainable growth, we must develop leaders at all levels. Leaders not only need to have a compelling vision but also ensure that it is shared. The ability to create positive expectations has been recognised as a primary role of a leader and also his ability to create an organisation that endures.

The new leader is the one who energises people to action, develops followers into leaders, and transforms organisational members into agents of change, Warren Bennis, an American scholar, who pioneered leadership studies, observed. It is the job of leaders to define organisational direction, clarify the context, articulate vision and values, energise the team and create coherence.

A universal principle of leadership and the way to nurture it continues to engage researchers. Walter Wriston had pithily observed: “The person who figures how to harness the collective genius of his or her organisation is going to blow competition away. In the quest to create an institution built to last, and on the journey of unlocking real value, the human resources function is indeed a formidable ally of the CEO.”

Questions that every CEO must ask himself—is my people agenda right on top of the list; is the human resources function given primacy; is it a strategic partner; do our employees truly share the vision of the organisation and are they engaged; have we re-examined the entire value chain of the human resources function to make it an effective enabler; am I a people CEO?

The role of your HR leader is that of an alchemist and an advisor where the dividends are a function of the degree of importance and empowerment that a CEO bestows. In the challenging and complex people milieu today, the HR function needs to be centre stage. As we look ahead, I recall the lyrical lament of The Beatles: Yesterday all my troubles seemed so far away. Now it looks as though they are here to stay. Great talent is increasingly difficult to find, and retaining it is doubly so. When in full flow, the human resources function must be like a circle whose centre is everywhere and whose circumference, nowhere. To help the function reach there would require the CEO to recognise the value of investing in human capital and empowering his most vital change agent—the HR team.

The management of human capital is now both an art and a science. It requires specialist attention of employee champions to attend to people issues. The human resources development function has been rediscovering itself over the past century where we were just renting skills to a time where human capital has gained recognition as a pre-determinant to organisational success.

The role of the human resources function today embraces a powerful gamut: developing a capable leadership pipeline; nurturing an adaptive organisational culture; strengthening performance and productivity, fostering innovation and customer centricity, catalysing change for organisational effectiveness. Effective

HR interventions and practices enable employee engagement leading to high customer delight ensuring long-term growth and profitability.

The experienced HR practitioner has a well-stocked armour to address critical parts of the HR value chain, which he skillfully combines to deliver solutions. In leading organisations, CEOs ensure that the HR leader plays the role of an active and strategic partner who needs to be clearly vested with the responsibility of maximising the value of intellectual capital and their productivity. Where necessary, he seeks the partnership of a seasoned skillful external HR consultant to combine with, to infuse best practices and bring a critical external world-view.

A good HR practitioner understands not just the cost of action but equally possesses the knowledge of value addition that every initiative creates, as well as the inter-linkages that harness desired goals.

The vital elements of the HR value chain start assuming significance as soon as an organisation is formed with a vision and works out its strategy and business plan. The first critical element thereafter is the creation of an organisational structure, which serves as the bridge between strategy and execution. The aspects of enabling role clarity and evaluation of relative job worth help people to own the process. The hiring of talent ensures that all the defined positions are manned with the right people. Creating a robust compensation system helps attract talent, and a well thought-through performance management system well-aligned with business goals sets the tone and tenor desired. The whole cycle of attracting, motivating and retaining talent forms the crux of talent management. A focus on training and development is vital to ensure that people are continuously trained, re-skilled, both on technical areas as well as in soft skills. Each of these steps require specialist expertise.

Even in organisations that are not being created anew, most of these HR elements could necessitate a serious evaluation and review to enable that they achieve organisational goals in changing times. An important and growing field is the need to define a set of universal competencies that people must possess to enable organisational success into the future.

Mature organisations are, indeed, investing heavily in defining a competency mode, conducting leadership assessments quite often through external HR cons-ultants, and then weaving integrated leadership capability development programmes to develop talent. Pouring resources into nurturing human capital is akin to planting a Chinese bamboo; it requires two years of patient watering every single day and when the shoot breaks through, it grows 50 feet tall in less than two months—an investment, not an expense.

Unleash the latent people potential of your organisation now to reap rich rewards by being a people CEO. Call your head of HR over and spend today to rediscover the untapped wealth. The pop group Eagles remind us in their song: So often time it happens, we all live our life in chains, and we never even know we have the key.