Newsletter - May 2008
Why are Talent Management and Human Capital Important?
May 8, 2008 - Bill Kirby
I recently joined HR consulting and am still learning the ever-changing world of people management in which I’ve had 40+ years experience.
In my long and industrious career, I have witnessed euphemistic changes in naming the corporate function of hiring, developing, managing and firing individuals. In my first introduction to HR, the function was called “Manpower,” a good word, but was quickly eliminated in the multiple battles of changing values of the 60’s. So “Personnel” was the new name, which lasted for quite a while. People weren’t valued any greater but they at least had an advocate for how they should be treated. I have always been a baby boomer follower and, as my dad counseled me growing up to “follow the money son,” there has never been a more influential generation than the boomer generation. Consumerism and self-gratification reached new highs every decade, and new challenges came and were driven by the materialistic boomers.
People in corporations became commoditized as corporations grew. Companies that grew too quickly, over hired, over spent during growth or inflationary times but then had to re-engineer, downsize, right size, marginalized during recessionary times. Companies also re-organized constantly from centralization to de-centralization back and forth each time they hit a wall, reducing the workforce rather than learning how to manage and retain good people.
“Human Resources” became an operative name and seemed to fit the boomer’s bent toward valuing people and returning to the world of what is important. Even our churches have seen a return of middle-aged adults to raising their children in an environment their parents viewed as having value.
New trends in management of people have begun to take hold. “Human Capital” and “Talent Management” are new words which reflect and recognize the value of the individual. Talent management is an all-inclusive word that incorporates the entire life cycle of a person’s work life. It begins at recruiting and hiring, and includes on-boarding, assimilation, training, development, assessments, performance management, incentives and rewards systems, mentoring, coaching and finally outplacement and retirement.
Some of these trends have been recognized because the U.S. has moved away from a manufacturing-based economy and become more of a service economy. Tangible Assets like inventory, plant equipment, buildings, and other fixed assets are disappearing from companies and their balance sheets. However, Intangible Assets such as good will, employees, brands, strategies, and customers do not always appear to have any value and are not recognized on the balance sheet. People are now being recognized as the most valued asset of major corporations.
Ninety million baby boomers will soon be retiring, and less than half that amount will be entering the work force - a frightening thought to many corporations. The cost of turn over has been stated at 25% of annual salary, so if you have an average salary of $20,000 per year and are losing 30 employees per month, or a cost of $150,000 per month, this is equal to $1.8 million annually just for turn over. It is not surprising companies are increasing retention programs such as training and leadership development.
To further complicate this, according to Marston Communications the X Generation and Millennials have a whole different view on their career planning. The average number of lifetime jobs is projected at 10-12. X’ers and Millennial’s belief on quality of life is far different than the career-driven, self-gratification, esteem-driven baby boomer. They are the most self-actualized generation in history and fall at the top of Maslow’s hierarchy.
My generation (over 60) was at the bottom, just basic needs. Boomers (age 42-60) are driven by success and defined by their work. Generation X (born 65 to 79) question authority, can be cynical, view time as currency, take a “Carpe Diem” approach and have been raised by their parents’ friends. Millennials view themselves as individuals vs. group or team, feel that they are not adults, nor are they adolescents (”Adultolescent” phase) and view the “future” as very short term.
Why is this a problem for talent development? Compare this to the Matures born prior to 1946 where duty, honor, country, dedication, sacrifice, patience, delayed gratification, duty first and pleasure later. Or, compare it to the boomers (born 46-64) whose work ethic = worth (“Workaholics”). They are competitive, success is largely visible-trophies, plaques and certificates. They are the “We are the world, we are the children,” rather than the “It’s my money and I want it now” generation X & M.
It will be interesting how we face these changes and challenges in our society and the passing of the work baton becomes more realized. Talent Management and Human Capital will only continue to increase in importance.
Bill Kirby has more than 40 years experience in executive management with diverse business experience including retailing, wholesaling, manufacturing, merchandising, sourcing, strategic planning, operational planning and finance. Bill has a B.A. in mathematics from Western Kentucky University and various business certifications from Harvard and American Productivity & Quality Center. He is managing partner of OI Partners - Russell Montgomery & Associates (Tennessee) and can be reached at 615.377.9603 or bkirby@oipartners.net.
