On managing human capital

By ,

The following is one of series of excerpts posted here from the business book Good to Green: Managing Business Risks and Opportunities in the Age of Environmental Awareness, by John Phyper and Paul MacLean (John Wiley & Sons, 2009). Paul MacLean is President of ÉEM, a Nimonik affiliate partner.

Human capital is the key resource issue of the coming decades and its recruitment, its development, its deployment and its retention all determine a company’s potential. Unfortunately, most companies, large and small, are often ill-equipped to effectively manage talent.

Key strategic challenges for the corporate human resources function today include:

  • greater integration with core business functions – this need stems from HR’s perceived status as tactical, lacking influence and not sufficiently analytical.
  • better management of “demographic risk” – a term used to describe the challenges posed by employee population dynamics, i.e., the pool of available talent in North American companies is currently split between a senior group and a junior group, and the latter is now more mobile, more informed and arguably more fickle than in the past. These characteristics pose challenges for recruitment and retention.
  • leadership development – must handle environmental and social issues in an increasingly complex world, and to engage with different communities outside of the organization, as well as those internal to it.
  • talent management – must ensure that recruitment, development and talent retention activities are aligned with business strategy, and that performance against these criteria is measured and rewarded.
  • maintaining a learning organization – by understanding the learning needs of different employee groups and implementing a strategy to meet these effectively. Conventional training programmes can only provide a small piece of the puzzle.

The HR function is currently in a state of flux, owing to an absence of stable models that cost-effectively frame talent recruitment, retention and development. Cost control pressures, demographic challenges and uncertainties in the business environment underlie the problem. But the burgeoning opportunities for more effective management of environmental issues in all businesses beg for greater control, ownership and management of talent and knowledge across the value chain. The importance of HR and the competitive advantage it can offer are likely to grow.