Table Of ContentThank you for downloading this
AMACOM eBook.
Sign up for our newsletter, AMACOM BookAlert, and
receive special offers, access to free chapter downloads,
and info on the latest new releases from AMACOM,
the book publishing division of
American Management Association.
To sign up, visit our website: www.amacombooks.org
The copyright information for this title may be found at the end of this eBook.
American Management Association • www.amanet.org
HIGH- IMPACT HUMAN
CAPITAL STRATEGY
American Management Association • www.amanet.org
American Management Association • www.amanet.org
HIGH- IMPACT
HUMAN CAPITAL
STRATEGY
A 12 M C
ddressing the Ajor hAllenges
t ’ o F
odAy s rgAnizAtions ACe
Jack J. Phillips and Patricia Pulliam Phillips
American Management Association
New York • Atlanta • Brussels • Chicago • Mexico City •
San Francisco • Shanghai • Tokyo • Toronto • Washington, D.C.
American Management Association • www.amanet.org
Contents
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
1 The Importance of Human Capital:
The Journey to Show the Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 The Importance of Human Capital Strategy
and the Role of the Chief Human Resources Officer . . . . . . . . . . . . . . . 13
3 Set the Proper Investment Level: Establishing
the Appropriate Amount to Spend on Human Capital . . . . . . . . . . . . . 29
4 Align with Business Needs: Achieving Business Alignment
with Human Resources Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5 Manage Talent for Value: Optimizing the Most Important Asset . . . . . 75
6 Engage Employees at Work: Changing the Nature of Work
to Maximize Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99
7 Create a Performance and Innovation Culture: Developing
and Sustaining a High- Performance Organization . . . . . . . . . . . . . . . 125
8 Keep Employees Healthy: Controlling Health Status and
Healthcare Cost of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
9 Embrace Demographics and Societal Changes: Using
Differences to Drive Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
10 Utilize Technology Effectively: Making Technology Work for
All Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
11 Confront Globalization: Maximizing the Value of
Human Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
12 Protect the Environment: Implementing Green,
Sustainable Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
v
American Management Association • www.amanet.org
vi CoNTeNTS
13 Build Global Leaders: Developing Agile Leaders to Drive
Business Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
14 Use Analytics and Big Data: Using Analytics to Drive Business
Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
Free Sample Excerpt from Talent Leadership by John Mattone . . . . . . 295
American Management Association • www.amanet.org
Preface
This new book focuses directly on how to develop a human capital (HC) strat-
egy in today’s turbulent and changing environment . Too often, HC strategy
encompasses a classic and traditional approach to human resources (HR): recruit-
ing the best people, preparing them for assignments, motivating them for high
performance, and retaining them for several years . While this is all necessary, it is
more helpful to have a strategy that fits into the current environment and context.
An HC strategy must effectively address the demographic changes in the workforce,
current skill shortages and mismatches in labor markets, societal and structural
shifts in organizations, the persistent energy crisis, globalization, and important
environmental challenges . At the same time, the strategy must be feasible, action-
able, measurable, and implemented with remarkable success . This book addresses
twelve forces that must be addressed in HC strategy .
Why This Is Necessary
No function, process, or issue in an organization is more important than the human
capital managed by the HR department . HC strategies often make great companies,
build great products, and deliver great services . Even in governments, a human cap-
ital strategy can make the difference between success and failure. A major part of
the financial problem in Greece came from its HC issues, as the Greek government
created more jobs than needed, paid far too much for them, and provided excessive
benefits, making it easy to retire early with large pensions. At the same time, the
accountability for the work went away . Every high school graduate wanted to work
in a government job . The government grew, overshadowing the private sector as
the dominant employer and leaving the country with a staggering debt that is still
unraveling. Greece did not have an effective HC strategy.
The HR function is so important that some magazines (e .g ., CFO Magazine)
have suggested that it should be placed under the direction of the chief financial
officer, because it represents the largest expenditure in an organization and has
the most promise of creating a very successful and effective organization. Gartner
Research has reported that this is now a trend .
While HC’s importance has never been higher, the image of HR is still tarnished,
and according to some, it is at a low point . For the most part, HC strategies are
driven by the HR executive instead of the top executives . While this is helpful and
important for action, it marginalizes the influence of the HR executive. In some
organizations, the view of HR is often outdated, still perceived as an administrative,
vii
American Management Association • www.amanet.org
viii PreFACe
legal, and transactional process that is, at best, a necessary evil . Jack Welch, the
former CEO of General Electric, has stated that many of his colleagues see HR as a
“health and happiness sideshow .”1
Typical HC strategy focuses on recruiting, selection, talent development, compen-
sation, motivation, compliance, and maintenance . While these functions are obviously
important, the dynamics of the environment where these processes occur is changing
rapidly . Many forces contribute to an organization’s health and its employees’ well-
being and success, and these must be addressed when developing HC strategy .
The HR function should be perceived as important, integral, and a contributing
part of the organization . One of the best ways to improve the image of this function,
increase its influence within the organization, and deliver unmistakable, credible
results is to have an HC strategy that focuses on the following twelve goals:
1 . Setting the optimal investment level for human capital and reviewing this
expenditure periodically
2 . Aligning HR programs to the business as they are initiated, developed, and
implemented
3 . Managing critical talent in the organization, ensuring that the appropriate
number and quality of talented employees are available, addressing skills short-
ages, and ensuring that talent remains in the organization
4 . Pursuing a program of employee satisfaction, commitment, and job engage-
ment, so that employees are fully involved in their work, remain loyal to the
organization, and help attract others to the organization
5 . Creating a performance and innovation culture to achieve results in the orga-
nization with proper direction, roles, and motivations
6 . Ensuring that employees are healthy and safe with proper healthcare and well-
ness opportunities
7 . Addressing the current demographics and societal issues to ensure that a
proper employee mix is available and included in processes to enhance pro-
ductivity and innovation
8 . Using technology to its fullest extent to unleash the creativity and potential
of employees, while ensuring that it is driving productivity, innovation, and
customer satisfaction
9. Addressing globalization in terms of how it effects employees in the present
and will affect employees in the future, by having them actively engaged in
every part of the process
10 . Addressing environmental and energy issues as they relate to jobs, the organi-
zation, and society
11. Developing effective leaders who can operate successfully in a global, diverse
environment
12 . Implementing a system for accountability, including measuring success with
analytics and big data, and delivering value that will be credible to top execu-
tives, including the chief financial officer
These imperatives are, at best, only casually mentioned in HC/HR strategy and
execution books but represent critical processes needed to deliver value in medium
and large organizations alike .
American Management Association • www.amanet.org
PreFACe ix
Who Will Benefit from This Book
HR executives, managers, and administrators—t he individuals who must develop
an appropriate strategy and present it to the executive team— will find this book to
be a useful guide for developing the human capital strategy. An effective strategy
will require several elements to be in place, and they are all described in this book .
This book will be an indispensable tool for HR leaders to connect the HR function
to key strategic issues in the organization and drive organizational value .
Senior executives, who must support HC strategy and take the lead in develop-
ing it, will find this book to be a helpful reference to what’s possible. These execu-
tives need to be in harmony with the strategy to support it, provide resources for it,
and constantly reinforce and adjust it .
HR specialists, coordinators, advisors, and consultants within the organization,
who must align HR with the strategy, will benefit from this book as well. They
have an important input into the strategic processes, and this book will help them
understand why the strategy is necessary. It will also help them define their roles in
the process, execute the strategy, and deliver results .
Finally, professionals who are external to organizations will also find this book to
be a valuable resource . This includes professors, consultants, and researchers who
are promoting, teaching, exploring, researching, and assisting with HC strategies .
Consultants can use it as guide to help organizations, and professors can use it as
a textbook in MBA or HRM courses at the senior and graduate levels . Researchers
will find this book to be a useful guide for HC strategy research.
The Flow of the Book
This book begins with two introductory chapters that set the stage for the remain-
der of the book . Chapter 1 focuses on the importance of human capital, tracking
some of the key issues that highlight how the concept of human capital has been a
critical issue for top executives and is the main focus of the human resources func-
tion . Chapter 2 examines the approaches to human capital strategy, outlining what
is classically covered and the strategic issues that are always contained in current
strategy documents . At the same time, this chapter points to the shortcomings of
those strategic documents, highlighting that there are twelve major forces that are
often not addressed clearly and completely .
Throughout the rest of the book, the twelve forces that are affecting businesses,
particularly in the human capital area, are addressed one chapter at a time . Each
chapter starts by defining the force, particularly in the context of how it affects
human capital and the business . Next, the force is detailed in terms of its elements,
components, principles, issues, and challenges, including the effect it is having on
organizations . Part of the discussion is about what the human resources function
should consider or explore . The chapter then focuses on what strategic questions
must be addressed and what strategic statements must be included in the human
capital strategic plan .
American Management Association • www.amanet.org
