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2017 | Buch

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The Human Capital Imperative

Valuing Your Talent

verfasst von: Alan Coppin

Verlag: Springer International Publishing

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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"Alan Coppin is a rare individual. His experience and insight span private and public sectors, charities, and the Armed Forces. The vital importance of human capital is the thread which has bound all this together. His book is a rich gold mine of data, research, wisdom and anecdote."

—Sir Gerry Grimstone, chairman of Standard Life, deputy chairman of Barclays, non-executive director of Deloitte and lead non-executive director at the Ministry of Defence

In this new book Alan Coppin, a leader with extensive cross-sector experience, draws on discussions with leaders in the public and private sectors, as well as from charities, the military and trade unions to offer you the ideas and practical applications that have proved effective in ensuring human capital is properly valued and managed.

Most business decisions are based on lag data – historical reporting of what happened last month, last quarter or last year. It’s solid, real and comforting. Unfortunately, it’s also not a very good indicator of what might happen next. The best lead data – information with genuine predictive power – comes from understanding your people and what they can deliver.

All major organizations claim that people are their greatest asset and yet, at the first sign of problems, the first action they take is to fire people. Why, because employees are also an organisation’s biggest liability in terms of cost – and their cost is much easier to quantify than their value. But, like any asset, human capital will only deliver its full value if it is properly understood, measured and managed.

The author offers you the tools you need to take the issue beyond the HR department and satisfy the number crunchers in the boardroom. With their help, you can make human capital part of the normal financial metrics essential to running a successful organisation.

Isn’t it time you understood and managed the metrics that can predict your organization’s future rather than relying on those that simply report on its past?

Inhaltsverzeichnis

Frontmatter

Erratum to: The Human Capital Imperative

Abstract

The Alnwick Garden is a complex of formal gardens adjacent to Alnwick Castle in the town of Alnwick, Northumberland, England. The gardens have a long history under the Dukes of Northumberland, but they fell into disrepair until revived at the turn of the twenty-first century by Jane, the current Duchess of Northumberland. I met Jane and visited the gardens a few years ago, witnessing at first hand her inspirational vision, commitment and incredible imagination, which have combined to create one of the North East’s leading visitor attractions. The garden now features various themed plantings, including a Poison Garden, and is designed around an imposing central water cascade.

Alan Coppin

Introduction, Definition, National and Global Perspective

Frontmatter

1. Introduction

Abstract

It took some time before the decision was made to include ‘human capital’ in the title of this book. It is not a construct readily appreciated in boardrooms, although it is used widely in academia. In 1992, Professor Gary Becker, who received the Nobel Prize for his work on human capital and allied topics, said that human capital is accepted and therefore ‘uncontroversial’, although he went on, somewhat controversially, to allude to the potential of the human capital approach to the treating of people as machines (Becker 1993). One key reason for deciding to use the term was to appeal to the target audience of boards of directors, chief executive officers (CEOs) and those aspiring to board membership; given the finance-centric composition of boards and the debates within them, a book with ‘capital’ in the title would surely be more appealing.

Alan Coppin

2. Human Capital and Employee Engagement—Global and National Viewpoints

Abstract

In this chapter, UK productivity performance is reviewed in order to provide context for a book which, in essence, is about improving productivity. This analysis is also undertaken to demonstrate the criticality and relevance of human capital management to the national interest. In the words of Klaus Schwab, Executive Chairman of the World Economic Forum (2013), ‘the key to the future of any country and any institution lies in the talent, skills and capabilities of its people’. Other sources drawn upon will be reports from the World Economic Forum 1 (WEF), regarding the international consideration of human capital, the work of two consultancies (AON Hewitt and ORC International) and several professional institutes, with respect to global employee engagement.

Alan Coppin

3. Board Capital and Leadership Capital

Abstract

Board capital is a construct introduced in a study by Hillman and Dalziel (2003) of Arizona State University. They defined board capital as ‘as the sum of the human and social capital of the board of directors, and a proxy for the board’s ability to provide resources to the firm’. Obviously, in terms of providing resources to the organisation, board directors give advice and counsel on key areas, such as the formulation of strategy (which boards then approve), using their skills and expertise. Human capital awareness and management skills are not typically in a board director’s toolkit; since people are an important asset of the organisation and an essential driver of performance and productivity, this needs to be addressed.

Alan Coppin

The Eleven Critical Elements of the Human Capital Imperative

Frontmatter

4. Strategy and Culture

Abstract

Strategy is simply a plan of action designed to achieve a long-term or overall aim. In essence, it should be rational and logical, and clear, simple and easy to understand.

Strategy is an organisational guide and it is concerned with future goals, objectives and activities. However, we live in turbulent social and economic times where the future is no longer reasonably predictable based on history, is liable to change rapidly and be fundamentally different from even the immediate past. Accordingly, boards need to be alive to these facts and continuously to review their strategy processes to ensure plans are agile, in order to create adaptive strategies.

Alan Coppin

5. Organisation Structure and Design

Abstract

In their 2007 book Organisational Behaviour: An Introductory Text (2013), David Buchanan and Andrzej Huczynski define organisation structure as ‘a formal system of task and reporting relationships that controls, co-ordinates and motivates employees so that they work together to achieve Organisational goals’. In his seminal book The Practice of Management (2007), Peter Drucker recognised the link between organisation structure and productivity: ‘Organisation structure is an indispensable means; and the wrong structure will seriously impair business performance and may even destroy it.’ In Management and Organisational Behaviour (2016), Laurie Mullins asserts that organisation structure ‘affects not only productivity and economic efficiency but also the morale and job satisfaction of the workforce’.

Alan Coppin

6. Recruitment

Abstract

Implicit in the statement ‘our people are our biggest asset’ is that the people are the right people and, therefore, recruiting the right people in the first place is an essential corporate activity. It is also a continual process: in the UK the average staff turnover rate is approximately 15% per annum according to XpertHR and one third of UK organisations experience staff turnover rates above 21% per annum.

Alan Coppin

7. Learning and Development

Abstract

The capability to learn faster than the competition is now widely considered a (yet another) mission critical capability. But organisations do not always recognise the link between investing in people and possible gains in productivity and other business outcomes. This might well arise because of a lack of understanding of the potential return from investing in people, including problems with evaluating the return.

Alan Coppin

8. Employee Engagement

Abstract

There is a symbiotic relationship between motivation and staff engagement, and so critical to understanding and improving engagement is first to fully understand what motivation is and what actually motivates people.

Alan Coppin

9. Communication

Abstract

Communication plays a fundamental role in all aspects of organisations. Accordingly, it is critical that both internal communication within organisations and the communication skills of staff are effective. Internal communication is a key subset and enabler of employee engagement. In 2006, the Chartered Institute of Personnel and Development (CIPD) (2006) undertook a survey of 2,000 employees from across the UK, which indicated that communication is the top priority to lead employees to engagement. There is a clear link between organisational success and an effective internal communications strategy.

Alan Coppin

10. Performance Management

Abstract

The fundamental goal of performance management is to promote and improve employee effectiveness, so it is a key ingredient of human capital management. It should be a continuous process where managers and employees work together to plan, monitor and review an employee’s work objectives or goals, and his or her overall contribution to the organisation. Many organisations mistake the annual performance review for performance management, but it is a process, not a once-a-year event. It should operate as a continuous cycle.

Alan Coppin

11. Health and Safety and Psychological Wellbeing

Abstract

Organisations will already be well aware of their responsibility for health and safety. In the UK, under the Health and Safety Act (1974), ‘It shall be the duty of every employer to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all his employees’ and ‘it shall be the duty of every employer to prepare and as often as may be appropriate revise a written statement of his general policy with respect to the health and safety at work of his employees’. It is common practice for boards to approve the organisation’s health and safety policy.

Alan Coppin

12. Diversity and Inclusion

Abstract

Broadly, diversity is any aspect that can be used to differentiate groups and people from one another. In practice, it means respect for and appreciation of differences in ethnicity, gender, age, national origin, disability, sexual orientation, education and religion. But it is more than just a list. We all bring with us diverse perspectives, work experiences, life styles and cultures. As a source and lever of innovation, diversity and in particular ‘diversity of thinking’ has a critical part to play. At board level it is a dimension that negates ‘group think’.

Alan Coppin

13. Technology

Abstract

In a speech to the Trades Union Congress in November 2015 (‘Labour’s Share’), Andy Haldane, chief economist of the Bank of England, said that about 15 million UK jobs were at risk of being taken over by robots in the coming decades. Research undertaken by the Bank of England estimated the probability of a range of jobs being automated over the next twenty or thirty years and came up with the 15 million number by multiplying the probabilities by the number of people employed in each sector. This is about half of the total number of people in work in the UK today. Haldane caveated his estimates by saying they were broad brush and may be too pessimistic, and pointed out that previous assessments of the impact of technology on employment had proved unreliable since the industrial revolution.

Alan Coppin

14. Remuneration

Abstract

There are a number of ways in which pay, rewards and benefits are described in the corporate world. We have wages, pay and base pay; compensation (usually describes base pay plus bonuses); and total compensation, encompassing all forms of pay and benefits. To simplify things, a definition of ‘remuneration’ in WorldofWork (2014) is used: ‘the sum of the financial and non-financial value of an employee’s package (i.e. salary, incentives, benefits, perquisites, job satisfaction, organisational affiliation, status, etc.) and any other intrinsic or extrinsic rewards of the employment exchange that the employee values’.

Alan Coppin

Cross-Sector Leaders’ Insights

Frontmatter

15. Public Sector Leader Insights

Abstract

Harrow Council is the local authority for the London Borough of Harrow, with a population of about 250,000. Its 2015/16 budget is £588.5 million. It employs about 4,500 staff. A Cabinet comprised of ten elected members (six men and four women, three BAME members), from the majority (Labour) group on the council, including the leader and deputy leader, form the executive. They are responsible for carrying out most of the local authority’s functions. There are five men on the management board: Michael Lockwood, CEO, and four directors, including a people services director. Harrow operates a multiple link between average staff pay and CEO pay, and it is one of the metrics they report and publish annually. The pay multiple—that is, the ratio between the highest paid salary (me) and the median salary of the council’s workforce—is 1.7. It does not have a worker on the board as Harrow is largely trade unionised and this is actively managed, including regular meetings with union representatives between management board members and elected members. A self-organised staff board (‘Making a Difference’ group) provides feedback on staff views and ideas.

Alan Coppin

16. Private Sector Leader Insights

Abstract

Lloyds Banking Group Plc is a FTSE 100 company that provides financial services to individual and business customers primarily in the UK. The company’s business activities include retail and commercial banking, long-term savings, protection and investment. It is the UK’s largest financial services group. The total income of the group in 2015 was £17,636 million, and it has a workforce of 75,000. The company is governed by a main board comprising thirteen members, including three women. António Horta-Osório is group chief executive and sits on the main board, as well as chairing the fourteen-member group executive committee, which has two women directors and a chief people, legal and strategy officer.

Alan Coppin

17. Not-For-Profits’ Leaders Insights

Abstract

Alan Coppin

18. The Outliers

Abstract

During the research phase I discovered a number of human capital management outliers. In this context, an outlier is a philosophy or approach that is detached from the main body of organisational thinking. Outliers are included here because it is incumbent on boards, in the words of Voltaire, to consider those ‘showing a new road’ or ‘think outside the box’. Needless to say, the featured case studies will not be applicable to all organisations across the tri-sector spectrum.

Alan Coppin

19. Institutes and Associations

Abstract

There follow insights from the leaders of five institutes and associations with members from the three sectors. But I also interviewed them in order to gain perspectives from leaders in their own right, who operate away from the coal face.

Alan Coppin

Human Capital Analytics

Frontmatter

20. Introduction

Abstract

Business measures are, of course, critical tools for success in any organisation, public, private or non-profit. They enable boards and executives to understand whether the organisation is on the right path to success. Without measurement there is no real understanding or control, and without control there is little opportunity to improve. The right metrics, properly undertaken and linked to strategy, help decision-makers to understand performance in key areas of the organisation and take action when areas are not on track. The use of advanced analytics and big data is commonplace among larger organisations, particularly in the private sector, and in areas such as marketing and finance.

Alan Coppin

21. The Human Capital Metrics

Abstract

The key employee engagement measure is the percentage of the workforce who are engaged—that is, committed to delivering the vision and mission of the organisation—or disengaged. The importance of the measure has been explained in earlier chapters.

Alan Coppin

Conclusion

Frontmatter

22. Final Thoughts

Abstract

My background is not that of an HR practitioner and, as far as I can see, I am the only non-HR specialist to have written a book about human capital. I have approached the topic from the perspective of a practising chair and trustee with private, public and non-profit experience at directorial, including CEO, levels. I am very aware of the multitude of information, generic and specific, that directors and trustees have to absorb, but I hope this book will be digestible, and its key themes understood and acted upon.

Alan Coppin

Backmatter

Titel: The Human Capital Imperative
verfasst von: Alan Coppin
Verlag: Springer International Publishing
Electronic ISBN: 978-3-319-49121-9
Print ISBN: 978-3-319-49120-2
DOI: https://doi.org/10.1007/978-3-319-49121-9