Talent E-Book

Edward E. Lawler

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 464

Veröffentlichungsjahr: 2010

Beschreibung

The source of competitive advantage has shifted in many organizations from reliability to innovation and flexibility. But what does it take for an organization that innovates to then manage effectively? In this follow-up to Built to Change, Ed Lawler argues that it is a combination of the right structure and the right people. First, organizations must decide what structure they are: are you a high-involvement organization that has products and services that require a high level of coordination and cooperation among employees? Or do you have a more global competitor structure in which you are constantly bringing in new talent and technological expertise? Are you a mixture of both? Lawler outlines the unique human capital strategy for each approach, shows what it looks like in action, and provides the foundation and tools for creating competitive and innovative organizations.

Leseprobe

Table of Contents

Praise

Title Page

Copyright Page

Foreword

WHY?

WHAT

HOW

WHO

SO WHAT?

PREFACE

Acknowledgments

CHAPTER ONE - TALENT MATTERS

COMPETITIVE REALITIES

THE HC-CENTRIC ORGANIZATION

NEED FOR HC-CENTRIC ORGANIZATIONS

CHAPTER TWO - MAKING THE RIGHT MANAGEMENT CHOICE

STRUCTURE-CENTRIC ORGANIZING

HC-CENTRIC MANAGEMENT

MAKING THE CHOICE

AFTER THE CHOICE

CHAPTER THREE - DESIGNING ORGANIZATIONS

THE STAR MODEL

STRATEGY

COMPETENCIES AND CAPABILITIES

STRUCTURE

PROCESSES

REWARDS

PEOPLE

IDENTITY

DESIGN DIFFERENCES

CHAPTER FOUR - MANAGING TALENT

MANAGEMENT PRIORITIES

THE EMPLOYER BRAND

EMPLOYMENT CONTRACTS

INDIVIDUALIZED DEALS

CRITICAL SKILLS

PICKING THE RIGHT PEOPLE

DEVELOPMENT OPPORTUNITIES

RETAINING THE RIGHT TALENT

WHAT IS NEEDED

CHAPTER FIVE - MANAGING PERFORMANCE

DEFINING PERFORMANCE

DEVELOPING EMPLOYEE SKILLS AND KNOWLEDGE

MANAGING MOTIVATION

PERFORMANCE MANAGEMENT SYSTEM DESIGN

GETTING PAY FOR PERFORMANCE RIGHT

WHAT IS NEEDED

CHAPTER SIX - INFORMATION AND DECISION MAKING

WHAT SHOULD A HUMAN CAPITAL INFORMATION SYSTEM LOOK LIKE?

KNOWLEDGE DEVELOPMENT

INFORMATION AND KNOWLEDGE MEET DECISION MAKING

WHAT IS NEEDED

CHAPTER SEVEN - REINVENTING HR

THE CURRENT STATE OF HR

WHAT HR SHOULD DO

STAFFING HR

ORGANIZATIONAL DESIGN AND HUMAN RESOURCES

WHAT IS NEEDED

CHAPTER EIGHT - GOVERNING CORPORATIONS

WHAT A BOARD NEEDS

EXECUTIVE COMPENSATION IS CRITICAL

BOARDS FOR DIFFERENT TYPES OF HC-CENTRIC ORGANIZATIONS

WHAT BOARDS SHOULD DO

CHAPTER NINE - LEADING

LEADERS, MANAGERS, OR BOTH?

WHAT MANAGERS NEED TO DO

CHALLENGES FACING EXECUTIVES

REWARD DIFFERENCES

IMPERIAL CEOS

CREATING SHARED LEADERSHIP

HOW GLOBAL-COMPETITOR AND HIGH-INVOLVEMENT LEADERS SHOULD DIFFER

WHAT ALL MANAGERS SHOULD DO

CHAPTER TEN - MANAGING CHANGE

WHY NOT?

MOVING TOWARD AN HC-CENTRIC ORGANIZATION

STRATEGY AND FLEXIBILITY IN HC-CENTRIC ORGANIZATIONS

THE FUTURE BELONGS TO THE HC-CENTRIC ORGANIZATION

EPILOGUE

NOTES

REFERENCES

THE AUTHOR

INDEX

Praise forTalent

“Leadership supply is a rate-limiting factor for advancing our global business strategy. We simply must continue to address the talent issue head-on. Ed’s new book gives some clear how-to advice we can start using today!”

—Sandy Ogg, chief human resources officer, Unilever

“Business leaders glibly talk about people as the most important asset in their companies. Ed Lawler challenges these platitudes with a book that answers the question, ‘Suppose we took people and human capital seriously—how would we design and lead our organizations?’ Lawler has summarized his years of research and consulting in a hard-hitting and tremendously useful guide for the true people-centric organization.”

—David A. Nadler, vice chairman, Marsh & McLennan Companies; author, Building Better Boards

“Human capital is the Holy Grail for creating sustainable competitive advantage, and Talent provides a step-by-step guide, chock full of the latest examples, to the strategies involved in achieving competitive advantage through people.”

—Peter Capelli, professor of management; director, the Center for Human Resources, the Wharton School

Copyright © 2008 by John Wiley & Sons, Inc. All rights reserved.

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Library of Congress Cataloging-in-Publication Data

Lawler, Edward E.

Talent : making people your competitive advantage / Edward E. Lawler III ; foreword by Dave Ulrich. p. cm.

Includes bibliographical references and index.

ISBN 978-0-7879-9838-7 (cloth)

1. Personnel management. 2. Human capital—Management. I. Title.

HF5549.L2886 2008

658.3—dc22

2007050957

HB Printing

FOREWORD

As a discussion starter for doctoral students, I like to ask, “Who are the six most important and influential people in management thought in the last century?”1 Their answers often include such scholars and authors as Peter Drucker, C. K. Prahalad, Michael Porter, and Tom Peters—and Ed Lawler!—and business leaders such as Jack Welch, Tom Watson, and Bill Gates. This question is like opening a debate in a sports bar about the best athlete in a given sport or position, so regardless of what names the students give, I like to prod them by suggesting another six people.

In the 1920s and 1930s, organizations were designed and run by efficiency experts who worked to scientifically prove the best ways to manage the physical settings of work. One groundbreaking experiment, conceived by Harvard researchers, was conducted at the Western Electric Company’s Hawthorne plant. This experiment involved variations in the intensity of lighting and other factors such as pay rules, rest breaks, and work hours. In it, six workers were placed in a separate room doing assembly work similar to that of other employees, but under the watchful eye of management. While trying to find the ideal level of light and workforce practices needed to increase productivity, the researchers discovered that these six workers reacted more to their relationship to management than to their physical surroundings. That is, it didn’t seem to matter what the experimenters changed in the environment—more light, less light, or whatever—performance always improved as long as the experimental group was the center of attention. In many ways, these six workers began the modern management era, where attention to the human element at work matters at least as much as workers’ physical surroundings.2

In the ensuing decades, people and their work in organizations have received enormous attention as researchers and executives have tried to figure out how to create organizations that turn knowledge into productivity. We have seen insights on assumptions (Theory X and Theory Y), systems theory, sociotechnical processes, leadership, and organizations of all types (excellent, great, purposeful, and adaptive).

In recent years, attention to these more intangible aspects of organizations has increased, in response to the changing nature of business. Ed Lawler’s new book is a marvelous synthesis of this work, addressing four basic questions:

• Why are the softer, more intangible issues (broadly defined as human capital) in business increasingly important today?

• What is meant by human capital?

• How should human capital be created, sustained, and managed?

• Who is responsible for the management of human capital?

Answers to these questions are the essence of this outstanding book. It offers a snapshot of how much the study of organizations and people has evolved since the original insights gleaned from the Hawthorne studies. Consistent with Lawler’s earlier work, this book is a deft mixture of scholarship and practice. He synthesizes theory, reports research, but then advocates for practice based not only on the theory and research but on his unique insights from decades of observing and studying organizations.

WHY?

Recently my daughter and I were in Madrid. Before going, she checked out the travel guide and located a flamenco shop where she could get authentic clothing and music. We found the place, a very small storefront on a hidden side road. I marveled at how this small store could stay in business being away from the heavily trafficked shopping areas. Then, while my daughter shopped, I noticed that the two employees were very busy even when no one else was in the store. As I talked to them, they told me that the major part of their business was now done through the Internet. The store itself was a convenient warehouse for tapes, CDs, clothes, and other flamenco-related items. The local flamenco store in Madrid competes worldwide in a modern business world shaped by a number of current business realities. The reasons?

• Technology. Automobiles and aircraft enabled people to be mobile and to remove space boundaries. Electricity removed boundaries of time (day and night). Today’s technologies remove information and connection boundaries. MySpace, Facebook, and other Internet sites change how people connect. Google allows people anywhere in the world to have access to information. Almost anyone with a Web site and computer can access global connections, even a small flamenco store in Madrid.

• Globalization. Corner stores may be housed anywhere in the world. Flamenco stores in Madrid sell to customers anywhere in the world. The much-touted “global village” is upon us.

• Knowledge. My colleague Arthur Yeung makes a fascinating point about how businesses are organized in emerging markets. (See Figure 1.) Many countries are trying to succeed by using technology to do manufacturing, assembly, or service work (India, Pakistan, Philippines), but real value is created by the focusing less on assembly and more on R&D and engineering (going backward), and on marketing, branding, and distribution (looking forward). Ultimately, more value is created in a

FIGURE 1. NATURE OF WORK.

knowledge economy when countries or companies focus on high-value-added knowledge work.

• Pace of change. Few realize that Netscape, the firm that played a major role in forming the backbone of the Internet, is barely a decade old (incorporated in 1995). The Internet has become such a staple of society that we forget its novelty. Nokia has sold almost a billion phone devices, which now include not only voice but data, video, and access to the Internet. Companies that took fifty years to build can be lost in a couple of years in today’s rapidly changing world. Netscape, purveyor of one of the first widely adopted Web browsers, still exists as a part of Time-Warner but is no longer a serious contender to the crown now held by Microsoft and its Internet Explorer.

• Employees. No one who interacts with those in their twenties or teens or preteens doubts that employees of this generation differ in significant ways from their elders. Sensitive to global issues, nimble with technology, and focused on short-term results, future employees will be the most talented and difficult to manage yet.

• And so forth. Customers, regulators, suppliers, investors, and others are going through dramatic change.

The world is changing. While companies used to be able to compete by accessing capital, creating products, and protecting their firm and product borders, the new source of competitiveness is shifting to the softer side of business—the people who create products, define borders, and raise capital, and the organizations in which they work. This book explains why human capital is so important and how it should be organized, managed, and developed.

WHAT

It is easy to fall into a trap of talking and thinking about human capital as “only” a talent issue. Organizations with talented employees are likely to outperform organizations with less talented employees, but not always. All-star pickup teams rarely beat an established and well-functioning team if the latter does not match up player by player on talent. While talent is necessary, it is not sufficient. Successful management in today’s business world requires attention to both talent and teamwork, individual ability and organization capability.

Lawler captures both. He talks about talent and its importance, but then he defines the ultimate human capital (or organizational capability) not as an individual who has talent, but as the processes that create, manage, and organize talent (see Figure 2). Leadership as an organization capability matters more than gifted individual leaders.3 Leadership focuses on the processes used to create future leaders. Sustainable, long-term success is not just a matter of having the leaders but of having the processes that reliably create them.

This book finds the balance between the challenge to source great talent and the challenge to meld individual talent into collective organization capability. In focusing on organizations as bundles of capabilities, it moves beyond defining organizations by their hierarchies. High-involvement organizations are characterized less by the number of levels of management and more by their use of some basic processes to ensure that knowledge turns into performance.

FIGURE 2. MIX OF INDIVIDUAL ABILITY AND ORGANIZATION CAPABILITY.

Leaders know that people and organizations matter. This book offers a language and approach to talking about people and organizations that is vivid and accessible.

HOW

Becoming a human-capital-centric (HC-centric) organization requires change, but where should those changes occur? This book offers an architecture that succinctly yet robustly defines how to go about organizing and leading an organization focused on human capital. Called the Star Model, it identifies the organization features about which choices need to be made to create the HC-centric organization.

• Strategy. Strategy defines the products, services, and markets an organization will focus on and how it will compete.

• Competencies and capabilities. Competencies are the knowledge, skill, and values possessed by individuals, while capabilities are the identity of an organization and what the organization is good at doing.

• Structure. Structure in an HC-centric organization focuses on turning individual competence into sustained organization capabilities. Authority is often shared throughout the organization.

• Processes. Information and decision processes in an HC-centric organization focus controls through values more than rules. Management by mindset replaces management by objectives.

• Rewards. HC-centric organizations allocate rewards less on tenure and hierarchy and more on performance. Individuals are rewarded for equity more than equality.

• People. People in an HC-centric organization are the centerpiece. Organizations that emphasize human capital are obsessed with finding people with outstanding talent, then working with them to make the whole work well together.

• Identity. An organization’s identity is what it is known for by those who use its services. When this external identity, which can be called a firm brand, is aligned with internal organization and people practices, it becomes the culture of an organization.

For an organization to be more than the sum of the individuals working there, Lawler shows, the systems in the Star Model need to be aligned and integrated so they drive and implement strategy. A customer-share strategy will differ on all these dimensions from a product-innovation strategy. Being integrated means that any changes in one of the elements will require modifications in others. Sharing information with people should show up in how rewards are allocated.

To build organizations that combine talent and teamwork, Lawler then dives deep into three systems. For the people, or talent, element, he offers tips on sourcing, screening, securing, orienting, and motivating employees. For the performance management, or rewards, element, he draws on his vast and deep knowledge of incentive systems to offer guidance on how to define performance, manage motivation, conduct appraisals, set measures, and allocate financial and nonfinancial rewards systematically. For information and decision processes, he defines the core features of human capital analytics and proposes what human capital should look like.

WHO

So who is responsible for making this organization of the future operate successfully? It is not one person or role; in a true human-capital-centric organization, the responsibility must be shared. HR professionals must learn to deliver the administrative work but not be defined by it or bound up in it. They need to relate to the business, tie their processes to strategy, and build effective organizations. Line managers need to lead through sharing power, ownership, information, and incentives. Boards are stewards over fiscal and strategic firm investments, but they are also stewards over organization and people. Boards should make sure that organization and talent audits are done as rigorously and as frequently as financial, strategic, and product audits.

By sharing responsibility for the people and organization, boards, executives, and HR professionals each bring unique insights into the creation and maintenance of people and organizations.

SO WHAT?

To go forward, sometimes we need to capture what is. For the field of human capital (people and organizations), Talent offers a definition of what can be, a statement of the gap in getting there, and a blueprint for action.

As the internal elements of an HC-centric organization are defined, diagnosed, and developed, they will help employees become more competent and committed. Employee engagement inside an organization will show up in customer loyalty and investor confidence from the outside. As customer expectations turn into employee actions and organization capabilities, long-term success will follow.

When asked to pick thoughtful and relevant academics who have significantly shaped the field of management, particularly how managers shape organizations and people, Ed Lawler is high on my list (or anyone else’s). This book shows why. By providing a rich combination of theory, research, stories, and personal insights, it synthesizes the state of human capital management, and makes operational what many still consider a soft and ambiguous area.

Alpine, Utah

DAVE ULRICH

February 2008

PREFACE

“I am fed up with being told it, and I am not going to listen anymore!” This outburst captures my reaction to hearing executives say how important their employees are. Time after time I have heard senior managers say, “People are my organization’s most important asset” or “Employees are number one in my organization.” Sounds good, but in many organizations, there’s an enormous gap between the rhetoric and the reality. In too many organizations, people are not treated as important assets, and it seems particularly insincere and inappropriate when managers persist in saying they are.

Of course, it is one thing for me to say that organizations don’t treat people as their most important asset—it is another to specify what an organization needs to do if it is going to act on this rather overused phrase. But that is why I’ve written this book. In these pages, drawing on research, consulting, observation, and experience, I’ve detailed what I believe organizations need to do in order to gain competitive advantage as a result of their ability to organize and manage talent. In other words, this book is about what an organization needs to do to act on the idea that people are its most important asset.

The starting point of any serious effort to treat people as a key source of competitive advantage is to determine whether in fact it makes sense to do it! Only under certain conditions is talent the logical go-to source of competitive advantage. Thus the first issue that I deal with in this book is whether the business conditions an organization faces are the ones that mean it should use an approach to management that actually puts talent front and center as a source of competitive advantage. If the answer to this question is that talent should be an important source of competitive advantage, it leads to the next choice an organization needs to make: which of two approaches to human-capital centric (HC-centric) management, high-involvement or global competitor, it needs to put in place.

Both these approaches put people first, but they use somewhat different management practices and produce different kinds of organizational performance. Choosing the right one is critical to making talent a source of competitive advantage. It has major implications for how an organization should be designed and managed and how it will perform.

Until recently it might have been possible to argue that a major barrier to managing organizations in a way that treats talent as the most important source of competitive advantage was a lack of knowledge about how to do it. I’m not sure this has been true for quite a while, but I am sure that it is no longer an obstacle.

Thousands of research studies on organizational effectiveness have provided an enormous amount of evidence on how to manage the human side of organizations effectively. The scientific literature not only provides useful theories; it contains a considerable amount of data on how effective a variety of practices are. If there is a knowledge problem at this time, it is the persistence of a knowing-doing gap. In other words, the knowledge exists, but it is not being used effectively.

Starting with the discussion of the star organization design model in Chapter Three and continuing through the next six chapters of the book, I point to how organizations that put talent first should be managed and contrast that with what the most common practices are in the United States and other developed nations.

For example, in the area of rewards, most organizations still have job descriptions and merit pay systems. They fail to use knowledge-based pay, profit sharing, and stock ownership plans that create a high level of involvement in the success of an organization.

With respect to their structure, they fail to use self-managing teams and flat structures that optimize member contact with the external world. As a result, they fail to create the right amount of organizational surface area so that the members of the organization are close to and in touch with key external individuals and issues.

In the discussion of talent management, I point out that many organizations lack the kind of employment deals and contracts that are appropriate for an HC-centric organization. Most organizations also fail to appropriately reward managers for developing individuals and individuals for developing themselves. The performance management systems of organizations all too often are seen as a bureaucratic pain in the posterior rather than as a key strategic tool in helping to develop and manage individual and organizational performance.

The information and decision processes in organizations often exclude many members of the organization from having input to key decisions. They also fail to deliver to them the kind of information they need in order to make good decisions and to be engaged in the business of the organization. The HR function in many organizations is poorly staffed and lacks the kind of decision-making sophistication that is required to adequately manage the organization’s most important asset: its talent. Most corporate boards lack the information and expertise they need if they are to oversee an HC-centric organization. Last but certainly not least, most organizations fail to develop the kind of shared leadership approach that is needed in an HC-centric organization.

My hope is that by the time readers arrive at Chapter Ten they will have a comprehensive view of what an organization needs to look like if it is going to act on the idea that talent really is its most important asset. They then can proceed with the challenging task of creating an HC-centric organization. Chapter Ten provides some thoughts about how they should go about this.

The content of my book provides a benchmark against which executives can compare their organization’s approach to management. I hope it will help them translate “people are our most important asset” into practice—or, if they are unwilling or unable to treat people as their most important asset, I hope it will persuade them to stop saying that they are!

ACKNOWLEDGMENTS

I owe thanks to many individuals and organizations for their contributions to this book. Although I’m the only author, I received help from many sources. Let me first thank the institutional sponsorship that my research has gotten for the last thirty years from the Marshall School of Business at the University of Southern California. It has supported the creation and development of the Center for Effective Organizations, which has provided research support for my work. The Center has a terrific staff that provides me with both editorial and research support. In writing this book I received particularly strong support from Arienne McCracken, who did much of the manuscript preparation.

The Center for Effective Organizations is supported by more than fifty corporate sponsors, some of whom contributed to the data and ideas in this book; all of them contribute financial support to the Center. I owe them a large amount of gratitude.

Two members of the research staff at the Center for Effective Organizations deserve special thanks with respect to this book. Jim O’Toole, my coauthor on The New American Workplace, stimulated much of my thinking concerning the different approaches to managing organizations when human capital is critical. Chris Worley, the coauthor of my other recent book, Built to Change, provided a number of insights into change management, strategy, and organization design.

A special thanks to Dave Ulrich for contributing an insightful foreword. His contribution shows why and how he has had a major impact on how talent is managed in modern corporations.

Regina Maruca provided me with a great deal of editorial help. Not only did she improve my writing, she helped me clarify my thinking. Many thanks to Regina for being a great help and such a pleasure to work with.

Last but not least, my wife, Patty, provided support throughout the writing of this book. She read chapters, suggested titles, but more important, she provided love, support, and enthusiasm for the project.

Los Angeles, California

ED LAWLER

February 2008

CHAPTER ONE

TALENT MATTERS

In the last several decades, an avalanche of business books, articles, speeches, and seminars have stressed the importance of human capital—people—in gaining competitive advantage. Executives seem to be paying attention. According to a recent survey of senior executives from all over the world, the two most important management challenges are

• Recruitment of high-quality people across multiple territories, particularly as competition for top talent grows more intense

• Improving the appeal of the company culture and work environment

Fifty-five percent of the respondents to that survey reported that they expect to spend more time on people management than on technology in the next three years. More than 85 percent of the respondents said that people are vital to all aspects of their company’s performance particularly their top strategic challenges: increased competition, innovation, and technology.