Leading and Managing Human Capital

In this blog I will cover the most significant challenge organizations face in today’s business environment: Engaging senior leaders to manage human capital. In recent years, engaging senior leaders to manage human capital has become a hot topic because of the challenges many organizations face. One of the main causes for the challenge is the ongoing and rapid demographic shifts. The Baby Boomer Generation is approaching their eligibility for full retirement. This is of course making workforce and succession planning strategies necessary. Smith and Thompsen (2005) warn that,

In the coming fiscal year, some estimates show that approximately 493,000 people – 31 percent of the federal workforce – will become eligible for retirement. A high concern reported by 87 percent of public sector leaders in a recent study was the need to grow leaders from within the current ranks. (p. 2)

Engagement of organizational leaders and their ability to manage human capital is key to effective “strategic” human resource management. Simple things need to be taken into consideration in order to be more successful. It is also important how an organization aligns its human capital, better known as the workforce, with business goals and strategies while strongly promoting senior leadership engagement with front line employees. Today, we live in a fast-paced, highly-driven business environment. It is no secret that the success of any organization is driven by those individuals with innovation, great leadership and abilities to align business goals with business needs. How do we achieve these organizational goals while maximizing the performance and outcome? Organizations should take the approach of leading by example, that is, engaging organizational leadership with employees while communicating effectively to best manage their workforce. Eichinger et al. (2004) advised, “Much more can be accomplished through others than by oneself. In our years of collecting data on managers and executives… getting things done through others is key to success as a manager. That’s the cycle of inspiration” (p. 173).

Unfortunately, in the past it seems as if organizations mistakenly focused only on bottom-line profit gains. What mattered most was not the employees’ contributions, their motivational factors, drive for success and so on, but rather the efforts of producing high quantity goods and generating profit gains. Quickly, many employees lost their interests in those characterless organizations which in the end caused more harm to that particular organization through the high turnovers. In 2008, Eitelberg, Kazemi and Susseles completed, “The study found that the biggest driver of turnover for employees under age 40 (all of whom are in Generation X and Y) is dissatisfaction with job content and career opportunities” (p. 5). There are many reasons for the trend and some are move obvious than others. This includes low compensation, training and development opportunities, lack of recognition, or untrained supervisors. However, the main cause is still the lack of leadership engagement with line employees. If you do not have such engagement, you will never understand their contributions, motivational factors or dissatisfaction, and true reasons for turnover. Turnovers are very costly for an organization and often harm the motivation of other employees. Organizations ought to take a closer look at their turnover rates and why they exist. What are the root-causes? How do we attract and retain talented workforce? How do we improve internal relations? The main cause is driven by the lack in approach and engagement of senior leadership with its workforce. Eichinger et al. (2004) advised that,

today's business environment is quickly shifting its gears and often requires new leadership and management practices. If you want to lead, you have to act the part. Lack of confidence, inability to handle push back, and hanging back don’t project the presence necessary to lead change. People need to know you are around and what you stand for. Presence creates receptivity in others. They will stop and listen. (p. 196)

It is important that we leave the past behind us and focus on an innovative future. If the organization wants to attract and retain a talented workforce and compete for new markets, I say organizational leaders must step up, lead by example, and become more engaged with the workforce while using strategic methods and tools to best manage the human capital.



References
Eichinger, W. R., Lombardo, M. M., and Raymond, C. C. (2004). FYI For Talent Management: Based on the Choices Architect 2nd Edition. Minneapolis, MN, (pp. 54, 173, 196).

Eitelberg, C., Kazemi, H., and Susseles, R.E. (2008). Segal Survey: Benefits, Compensation and HR Consulting – Winter 2008. (p. 5) The Segal Group, Inc., the partner of The Segal Company. Washington D.C.

Smith, E. P. A. and Thompsen, A. J. (2005). Building Leadership Bench Strength: Current Trends in Succession Planning and Management. (p. 2) AchieveGlobal, 2005.