Thursday, 30 April 2009

HR’s accountability for social capital (Update from Bucharest HR 2.0 conference)

 

      As well as talking about outcomes, and social capital, one of the other important points I made at the HR 2.0 conference was about HR’s accountability for developing social capital.

One of the reasons I think HR fails to be strategic is that it lacks accountability.   It’s responsible for designing and supporting a set of activities, but not for actually producing anything.  Many HR professionals try to get round this by aiming to take responsibility for a proportion of business results (“this training will result in additional revenue of $x…”).  I don’t think they can.  There’s just too much of an indirect line between HR activities and the final business results.

As I’ve posted recently, trying to get closer to the business makes HR more proactive, but not actually more strategic.

To be more strategic, HR needs to take accountability.  Otherwise, it’s always just going to be a more proactive support function.  Not a true driver of competitive advantage.

So one good reason that HR should be excited about the opportunities of HR 2.0 and social capital (as well as HCM and human capital) is that these provide the function with an opportunity to be accountable for something really important to business success.

That’s the way to the strategic HR and the boardroom table.

 

See also: Can / should HR take on more accountability?

 

 

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Final reflections on Romania / HR 2.0 conference

 

        I really enjoyed my trip to Bucharest – a beautiful, green city, modelled on Paris by Ceau┼čescu and apparently supporting a strong community of HR professionals (Jason was only joking when he said you were hostile!).

I found it very interesting that 120 HR people would come to find out about web 2.0, and am not sure we would have generated the same level of interest in the UK (not that the interest was in any way unwarranted).  I’ve written about this on my latest blogosphere bulletin at HR Zone: ‘Dangers of a tyrannical approach to web 2.0’.

I’d also like to take the opportunity to recommend a former colleague who now works out of Bucharest to anyone who may be after some HR support there: Sinclair Stevenson at Premier Global.  Although I’d also be very happy to travel back…

 

 

Previous posts on HR 2.0:

HR's accountability for social capital

Jason Averbook: Creating and deploying a Digital HR strategy

Scott McArthur: HR 2.0 – the end of the business delusion

HR 2.0 and social capital

HR 2.0 – a more strategic approach to HR

Web, management and HR 2.0

 

 

Podcasts on HR 2.0:

Talking HR 016: HR and web 2.0

Talking HR 017: HR 2.0

 

 

The photo is of Casa Sc├ónteii – which rang a bell for me after having lived opposite one of Stalin’s seven sisters in Moscow, as well as having stayed several times in the Ukraina hotel.

 

 

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Wednesday, 29 April 2009

Jason Averbook: Creating and deploying a Digital HR strategy (Update from Bucharest HR 2.0 conference)

 

 

 

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Scott McArthur: HR 2.0 – the end of the business delusion (Update from Bucharest HR 2.0 conference)

 

 

 

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HR 2.0 and social capital (update from Bucharest HR 2.0 conference)

 

      Organisation capability consists of three separate types of capital (something which is valued by investors in a private sector company):
  • Human capital is the value which is provided by the people working in an organisation.  It’s owned by the people not the organisation, but invested by the people if they receive an appropriate return on their investment.  When the people go home at the end of a day’s work, they take their human capital with them.
  • Organisational capital is the value provided by an organisation’s own business and management structures and processes etc.  When people go home, the organisation capital stays in the buildings and technologies of the firm.
  • Social capital is an emergent property that results through people working in the organisation.  It’s a combination of their connections, relationships, and the conversations taking place within the organisation. If the people leave the organisation, it no longer exists within the people or the organisation.

 

Each of these three different forms of capital need to be developed in different ways.  So for example, organisation capital can be developed in fairly mechanistic ways.  Human capital needs developing in ways that acknowledges its intangibility, and the complexity between factors.  This is why, while you can redesign a process very quickly, it gets time to get people to use the new process in the right way.  Social capital is even more complex and intangible.  It’s therefore much more difficult to manage than either of the previous two forms.

But it’s also more important.  Thinking about this in more traditional, non-capital terms, the point of performance is most organisations is no longer the individual, it’s the team.  So the value that will be most important to investors won’t be the human, but the social capital.

Going back to my previous two posts (1 and 2), I’m suggesting that HR 2.0 is defined as the management of people in a way that accumulates social capital (in the same way that HCM accumulates human capital).

Note that social capital is a better outcome to focus on than something like collaboration, because it’s more strategic.  As this month’s Harvard Business Review notes, excessive collaboration can reduce rather than increase performance.  But, as I mentioned previously, capital refers to something of value to investors in an organisation.  Collaboration can be good or bad.  Social capital is always good (or or more likely, great) to have.

So how are you managing your people and organisation to accumulate social capital and increase the value of your business?

 

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HR 2.0 – a more strategic approach to HR (update from Bucharest HR 2.0 conference)

 

     In my last post, I suggested that we should think about HR 2.0 as a change in management approach, rather than simply the use of web 2.0 technology.

I want to justify this perspective in this post.

A fundamental principle behind strategic HR is that we need to focus on outcomes, not activities.  Web 2.0 is about activity.  It refers to what we do, how we do things, and the technology we use to enable this.  It doesn’t deal with the effects of using this technology.  Therefore, in my view, it’s not a basis for strategic HR.

(I’m slightly over-stating the case here – there are occasions on which simply improving the use of technology without any further change will result in competitive advantage.  But I think these occasions are fairly rare.)

I think this is what we found with e-learning.  A major part of the reason why e-learning has failed to live up to the benefits that were initially anticipated is that we focused on e-learning as an activity (requiring us to introduce new e-learning courses) rather than the outcome of having learnt, including electronically, which would have taken us more quickly towards a blended learning approach.

I’ve made the same point in connection to HCM as well.  HCM isn’t a more strategic approach than HRM because it involves a different way of operating (although it does).  It’s different because it focuses on a new outcome – human capital – which HRM doesn’t include.  HCM is therefore qualitatively different to HRM.

I think HR 2.0 needs to be qualitatively different to HRM too.  This is what the ‘2.0’ tag is about.  If we were talking about a slight shift, an incremental improvement on HRM, we’d be talking about HR 1.1 not 2.0.   Or at least some people might be talking about it – I probably wouldn’t bother.  I am talking (today, at the Bucharest HR 2.0 conference), and writing (here) about HR 2.0, because I think it is a fundamentally different approach to HRM.  And I think this offers new and sizeable opportunities for HR to have more impact on their organisations, and provide a direct impact on competitive success.

(If your want some good arguments to support this case, consult Gary Hamel’s ‘The Future of Management’ in which he shows how management 2.0 is fundamentally different to traditional management still in operation in most of our organisations today.)

This is also why I recently updated the web name of my blog (the name in the top bar of your internet browser: ‘HR to HR 2.0 and human capital (HCM)’, and why I’ve included HR 2.0 in my elevator pitch.

The outcome of HR 2.0, is, I think, social capital.  I’ll write further about this link and explain a little more about social capital in my next post.

 

 

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Tuesday, 28 April 2009

Web, Management & HR 2.0

 

      In Monday’s Talking HR show, Krishna and I talked about how web 2.0 and HR – with a particular focus on reward.  As part of the show, I summarised my views on Graeme Martin’s report for the CIPD, ‘Web 2.0: Groundswell or Hype?’ (see also my post of the same name, published before the CIPD report, on my Social Business blog).

Today, I’ve flown out to Bucharest to present at a conference on HR 2.0, and this is the also the focus for our next Talking HR show.  So, just what is HR 2.0?

One of my co-presenters in Bucharest, Scott McArthur of McArthur’s Rant (on the left of the photo), defines it as creating meaning in the workplace and so promoting organisational and personal excellence.  I think that’s pretty good.

And Jason Averbook, CEO of Knowledge Infusion who is moderating the session (on the right), sees it as a key component of digital HR.

The important thing for me is that HR 2.0 is not just HR based on web 2.0 technology / social media, ie blogs, podcasts, wikis etc.

I have the same concern about ‘enterprise 2.0’ which the CIPD report (based on Andrew McAfee’s work) describes as web 2.0 behind an enterprise’s firewall (eg Yammer vs Twitter).  To me, enterprise 2.0, or ‘business 2.0’ anyway, is about a new way of working, which can be enabled through the use of web 2.0, but can also be supported through other face-to-face techniques.

This is certainly the case for ‘management 2.0’ which Gary Hamel defines as a new way of operating, which tends to exhibit many of the same attributes as web 2.0, ie being open, inclusive, democratic etc.  But the critical thing is that it’s not dependent on web 2.0.  The reason these two things are similar is that they are both informed by something else – a change in society (society 2.0?) which is based upon changing expectations, or maybe just increasing assertiveness in ensuring expectations are met, coupled with growing maturity in business and other organisations, which recognises the social needs of the individuals within these organisations.

HR 2.0 to me, is part of this broader change of management 2.0.  So in the same way that HR develops the architecture for managers to manage their people, HR 2.0 provides the architecture for management 2.0.

I’m going to continue posting on HR 2.0 over the next few days…

 

 

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Tuesday, 21 April 2009

Trust in business

 

McKinsey have published research suggesting why trust has fallen in business (supporting one of Edelman’s findings) as a result of the global economic turmoil.

Of the 85% who said that trust in business had fallen, 56% blame financial firms' mishandling of risk. 33% of executives said job losses also contributed to the decline in trust and 29% cited executive compensation levels:

“There is much less consensus among the respondents on whether CEO compensation is excessive in their industries: 43 percent say it is, and 47 percent say it isn’t. Perhaps not surprising, nearly 60 percent of respondents in finance say yes, as do 49 percent of respondents at very large companies (those with annual revenue of $1 billion or more).”

 

Harvard trust in business

 

 

The most interesting point from the research concerns how companies are attempting to do more with less.

“More than half of all respondents—57 percent—say that because of good management, their companies have been less hurt than most by the crisis. Although that figure probably indicates hope for better results than are entirely plausible, it also indicates a confidence in management that runs counter to many other reports. Indeed, even at companies where executives expect profits to drop in the first half of 2009, 51 percent say that their companies have been well managed, along with 52 percent of executives at financial firms.

Perhaps even more interesting, companies that (according to their executives) are well managed have a focus somewhat different from the one that executives at poorly managed companies support. Well-managed companies have a much stronger emphasis on reducing both operating costs and capital spending, as well as on improving productivity. Although executives at poorly managed companies also advocate cutting operating costs, they then turn to restructuring and hiring [talent that would not otherwise have been available].”

 

Ie while better and worse performing companies are reducing bottom line costs, the ones performing best are also putting more emphasis into building the top line as well.  And they’re doing this by utilising the talent they already have that much better.

 

 

 

 

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