What Do CEOs Need to Know about Human Capital?

How can CEOs develop their human capital strategies?

What’s the number one challenge for my CEO clients in 2015?  They want to know how they increase their revenue in the coming year. This year, many believe their business’ future growth will be tied to their ability to create and enlarge their employees’ capabilities to learn and grow.  Human capital is critical to your organization’s success.

CEOs want to know if their people can help them continue to expand into additional opportunities in the coming year.  Many entrepreneurs are looking at a great 2015 and beyond if they can find the right people for their organizations. I’ve been tasked with finding out what the key trends in human capital are and what CEOs need to know about it.

Yesterday afternoon, I got a chance to interact with Josh Bersin and Jason Geller from Deloitte on Twitter chat. Both provided great insights into human capital they shared with us.  They are two of the world’s best known thought leaders in the field of human capital. And yes, I said Twitter chat. You can’t accuse me of not going that extra mile to see what the best solutions are for my clients and readers!

Deloitte has a great new report called Global Human Capital Trends 2015 that should be on the desk of every CEO and Senior HR leader today.  This report provides a great overview to what’s happening in human capital. Since I believe that people are your only source of competitive advantage, I thought I would share some of what I learned on Thursday.

The first trend they shared is the more things change, the more they remain the same. The lack of leadership talent is becoming critical to an organization’s success. This was not new, but as the economy continues to expand, great companies are looking to attract more and better talent to the organization. So the first takeaway for my clients is, if we are growing, and most of you are, how fast and how soon do you need to get your human capital strategy incorporated into your organization if you hope to expand your business success.

The second trend they shared is that everyone is trying to uncover the key to attracting, developing, and retaining the best people for your organization. For leaders, this means we need to expand how we look at our roles in human capital management.  Now here’s where it gets tricky.  Everyone knows what to do, but few are implementing it successfully. I found many of the people on the Twitter timeline were sharing ideas that were very practical and accessible. I still prefer the more traditional webinar  or in person when sharing this kind of material, but technology is just starting to change how we share in a format that allows for increasing engagement with the audience.

The challenge for human capital management may be if everyone is doing something similar, where does the edge come from? Great companies are very good at the basics of culture, but few have created high performing cultures. The breakthroughs may occur by focusing on the critical 10% of an organization’s performance.

For example, take the statement; culture starts at the top.  Sounds great, doesn’t it? We’ve been saying this for over 30 years. Then why do our best organizations fail to connect culture with their frontline people?  Did someone not get the memo? In the past, culture was a CEO priority. Today, it should be a priority across the entire organization. On the call, you could tell that almost everyone agrees at the senior level. Then why do your frontline employees not embrace this? Worse than that, they do not own the culture, and tend to be indifferent to the customer. Want to retain your best performers?  You need to make them feel they are stewards and creators of your culture.  Millennial employees must feel connected first then engaged, and finally, empowered to succeed.

The most complicated trends incorporate several key factors that in the past have been addressed separately. Today, these trends and disciplines are converging.  They are in this report. I do not believe they can be addressed successfully as separate issues. A good human capital strategy requires different capabilities from your HR team.

We are moving into a time where technology plays a larger and larger role in how you make your human capital decisions. The report shares information on people data, analytics, and performance management. These solutions go a long way to help you reinvent HR.  But does this new HR 2.0 really ensure a high performing organization?

This was not discussed on Twitter, but the report on human capital shares several key trends that they’ve uncovered around the next generation of human capital management. It shares several potential solutions for your organization. This is a provocative report because it surfaces several challenges and potential solutions.  As Einstein might have said; the solution may exist at a different level than we are thinking about it today.

The one additional element I would incorporate into this organizational development process is the entrepreneurial mindset that’s required to address this problem. We need to upgrade the HR organization’s capabilities to attract the best and brightest in your organization.

This challenge requires collaboration on par with the resource investment you make in your new product development pipeline. For winning organizations, it is well worth the investment. By the way, this report even shares some thinking on how machines can be incorporated as talent to provide your organization a different solution to the talent shortage.  Don’t worry, we will continue to discuss human capital management more over the next several months.

Grab a copy of this Deloitte’s free report and the tools they provide to help you spark conversations with your fellow leaders. This report is an incredible tool to help HR get a seat at the executive table in a way that was inconceivable only five years ago.  I can’t recommend it enough.

See you next Monday.