The IPA hosted its Talent Adaptathon at Altitude in London on 7th October 2014 in association with Daniel Marks London. Dr Max Blumberg (CEO Blumberg Partnership, Goldsmiths Research Fellow & CIPD Consultant) talked about harnessing the power of human capital for the digital age. Get involved by visiting the ADAPT Hub www.ipa.co.uk/adapt/talent and on Twitter #ipadapt.
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Dr Max Blumberg: Harnessing the power of human capital for the digital age
1. Mastering Complexity
Max Blumberg, PhD
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2. Personal Introduction
2
Musician
Computer scientist
Accenture consultant
Technology start-up
PhD & Research Fellow at Goldsmiths
Consult globally: HR Analytics, Organizational & Sales force performance, CIPD people
strategy
3. The changing value of organizations
3
95%
5%
1978
Book value
Other value
28%
72%
2002
Book value
Other value
5. Asset/capital value
5
Resource Competitive differentiator?
Tangible assets e.g. technology; relatively easy to replicate
Financial capital Available to most organisations with a good plan
Intellectual capital
Customer capital Not really: most organisations have access to the same markets
Structural capital Yes but replicable in medium term
Human capital Yes: very difficult to imitate
6. Driving value creation and shareholder return
6
Total Return to
shareholders
(TRS)
Spread
Return on
Invested Capital
(ROIC)
Minus
Weighted
Average Cost of
Capital (WACC)
Growth
Organic Growth
Growth through
M&A
Operating
Margin
Capital
Efficiency
Components of Value Creation and
competitive advantage:
Spread: Competitive advantage derived
from operational and capital efficiency
and pricing strategy
Growth: Value from new
products/services through innovation,
M&A, market share, etc.
Ratio between them is a matter of
competitive strategy
Quality
Innovation
Productivity
Customers
Human
Capital
7. How much do we invest in people?
7
TMT 37%
Heavy
manufacturing
25%
Light
manufacturing
32%
Pharmaceuticals
/Prof services
45%
Financial
services
43%
CFO Research Services
9. Generational conflict: The generations
9
Born Age
Silent generation <1945 70+
Baby boomers 1946 - 1960 54 – 68
Gen X 1961 - 1977 37 – 53
Gen Y 1978 - 1995 19 - 36
10. How do we invest in human capital (versus HR)?
10
£X programme
Competencies
(Knowledge)
Employee
performance
(Behaviour)
Contribution to
organisational
objectives
Programme?
Recruitment
Development
Retention/engagement
Diversity
Compensation
Etc.
11. Valuing your Talent
Valuing your Talent
Objectives 1. Develop a broad framework of HR Metrics for measuring
human capital.
2. Showcase current practice.
3. Develop a tool / methodology.
Members of
the steering
group:
Findings 1. People and investment in them should be at the heart of
the business model.
2. A new language for business is needed.
3. HR should lead greater data integration across the
business.
4. Value = People
cipd.co.uk/valuingyourtalent
13. Human capital 2014
13
From capital to people (judging by company valuations)
Generational conflict because attitudes to work are changing faster
than the organisational structures and processes used to manage
them
Skills shortage which means employer branding is crucial
Transparency (data, technology) complicates everything
Recognising difference – career paths for e.g. “techies” and
“leaders”
14. Intergenerational conflict: The generations
Generation Born Age Values at work
Silent/traditional <1945 70+ Delayed gratification, loyalty, discipline,
14
authority & hierarchy
Baby boomers 1946 - 1960 54 – 68 Teamwork, live to work, hierarchies,
annual feedback
Gen X (latch-key
kids)
1961 - 1977 37 – 53 Grew-up alone, esteem issues,
independence (hate reviews), dislike
hierarchy, value personal lives,
pioneered flexibility
Gen Y 1978 - 1995 19 - 36 Highly nurtured, high self-esteem
(believe they’re important), used to
frequent recognition regardless of
performance, always on peer-communication
15. Intergenerational conflict
Baby boomers are not retiring Retirement age is rising (Gallup
= rising to 62 years old)
15
Baby boomers and Gen X must manage Gen Y with very
different values
Gen Y wants to be where the action is rather than loyalty
= Leaders must plan to manage 3 or 4 generations, each with
their own values (but difference can be an advantage)
18. Intergenerational conflict: Actions
18
Culture: Promote flexible work/life balance, challenging work,
openness, informal, entrepreneurial
Younger generations need the “why” before the “what”
Younger generations, frequent feedback – peer-based
Post recognition instantly & widely – use social media if
possible
19. Employer brand: The Picture
19
Glass door:
“The advances made seem a bit superficial. They offered flex
time, but it was always subject to approval. They assured
reviews and raises, but they were tepid at best.”
20. Employer brand and transparency: The issues
20
Social media has made your brand transparent
Engagement is the new employer brand
Gallup (2014): 13% of employees are engaged
Glassdoor:
– 51% of employees experience buyer’s remorse
– 54% of employees would recommend their employer
– 83% leave their employer in the first year
22. Developing skills and career paths
22
Technical skills are not enough
New organisational structures make it attractive to go solo
Career paths for everyone
Notes de l'éditeur
Performance-based culture: Communicating performance based culture policies at different stages of the employee life cycle can enhance the chances of attraction because Gen Y employees have high aspirations and expect faster growth opportunities in an organization. This could include strong compensation plans, pay for performance, non-monetary rewards and recognition, special leaves and customized leadership development or fast-track programs.
Feedback: Based on numerous field studies, one of the most responsive methods to invoke Millennials’ internal drive (i.e. intrinsic motivation) is to provide them the why before the what when coaching them. In other words, before organizational leaders describe what a project entails, they should take the time to explain the purpose of it (i.e. the why) in order to help Millennials see the “big picture” and hopefully get their commitment to want to contribute.
Respect: In addition to knowing where to connect with Millennials, it is important to know “how” to motivate them at work. As members of “The Trophy Generation,” who earned prizes for merely participating in events, it should be of no surprise that they are thirsty for positive feedback, particularly from their manager. In fact, according to Barbara Keats, a management professor at the W.P. Carey School of Business, “the Millennial generation craves compliments and constantly needs reassurance that they are performing well.” In addition , accolades that can be noticed by their colleagues will pack twice the punch for them. Furthermore, Millennials report to appreciate it when they are praised “publicly.”
Technology: Technology has also proven to be an effective motivator for Millennial associates. Technology presents organizations with the opportunity to reward associates with devices that make them feel special and recognize their talent by investing more in their hardware than the average associate.
For Millennials, this type of recognition and reward can spark enthusiasm in the job environment and generate indebted motivation within the associate.
For instance , organizations should reward their highly regarded Millennial associates that have been assigned the top projects with the newest, fastest and lightest laptops available.
Additionally, if it does not instigate a disruption to other IT associates, Millennial associates that are working on “special” projects (that require greater portability) could be issued more portable, mobile devices as a reward (for their role) and a recognition of the innovation required. For the cream-of-the-crop Millennials, it may behoove organizations to grant them with “full-fledged” computing devices, such as smart phones or tablets, as a way to express their importance to the company. Regardless of position, it is essential for organizations to pay close attention to the hardware they issue to Millennial associates. In return, Millennials need to demonstrate that they can restrict the tools to professional use.
According to Cisco’s 2012 Connected World Technology Report, which surveyed Millennial associates across 14 countries, the ability to use superior hardware (i.e . laptop, mobile device or phone) in the workplace will influence their job choice, sometimes even more than salary. As a matter of fact, 40 percent of Millennials surveyed said they would be willing to take a lower-paying job in exchange for better technology in the workplace.