Managing Human Capital in Changing Times Edward B. Yost Ph.D., SPHR August, 2012

1. Managing Human Capital in Changing Times Edward B. Yost Ph.D., SPHR August, 2012 Ohio University College of Business Executive Education

2. Boa vinda a Ohio University Ohio University College of Business Executive Education

3. What is Strategic Success? • Delivering high value results to significant stakeholders Financial Success Operational Success Customer Success Workforce Success Ohio University College of Business Executive Education

4. Strategic Success Hierarchy Ohio University College of Business Executive Education

5. Defining the Business Strategy Strategy is: The central, integrated, externally oriented concept of how we will achieve our objectives. (Hambrick & Fredrickson) Ohio University College of Business Executive Education

6. Strategic Success Hierarchy Ohio University College of Business Executive Education

7. Start with a Strategic Intent Looking for operational, financial customer, workforce success through… • Betting on the incompetence of competitors • Acquiring and utilizing the competencies of others • Using existing resources & competencies differently Ohio University College of Business Executive Education

8. Organizational Competencies • Tangible and intangible resources and capabilities that enable the organization to: • develop, • choose and, • implement value enhancing STRATEGIES. Ohio University College of Business Executive Education

9. 3 Basic Properties of Organizational Competencies 1. Potential to add VALUE (stakeholder) Utilize strengths/eliminate weaknesses and exploit opportunities/neutralize threats 2. HETEROGENEOUS: Very few firms have it or can provide it 3. NON-TRANSFERABLE Durable, immobile, hard to duplicate Ohio University College of Business Executive Education

10. Where do I Get Competencies? • From a firms internal resource endowments • Buy or shared resources (M&A) • From resource deployments, systems and processes that cannot be imitated. • All depends on the workforce to enhance the exploitation of these resources. Ohio University College of Business Executive Education

11. The Secret Revealed! What is the SECRET of obtaining a Strategic Competitive Advantage? Not just having a strategy and competencies but executing the strategy. Ohio University College of Business Executive Education

12. Applying the Concept Aplicando o conceito 1. What competencies does your organization have? 2. How are the competencies exploited? 1. Que competências é que a sua organização possui?2. Como são as competências exploradas? Ohio University College of Business Executive Education

13. Developing Human Capital in Changing Times What IS Human Capital? Ohio University College of Business Executive Education

14. Human Capital Defined The collective sum of the attributes, life experience, knowledge, inventiveness, energy, and enthusiasm that people choose to invest in their work. Weatherly 2003 Ohio University College of Business Executive Education

15. Human Capital Markets • Various levels of value • Appreciates and depreciates • Traded in markets and regulated • Individually owned but collectively realized Ohio University College of Business Executive Education

16. Human Capital Value • Unlike conventional assets human capital does not appear on the balance sheet. • How would one value the asset? • What rules for appreciation in value? Depreciation? Ohio University College of Business Executive Education

17. Human Capital Value • If assets are an investment how can we calculate the ROA/ROI • Is there a scrap value? • Is there an off setting liability? Ohio University College of Business Executive Education

18. Human Capital is Invisible • It is vested in the human resources often in the form of intellectual and social capital. • It is acquired, developed, utilized, and sustained through the management practices. • Being invisible it is harder to duplicate. Ohio University College of Business Executive Education

19. Human Capital Value inherent in the form of individuals collectively interacting in the context of formal and informal systems • Individuals are the repository for human capital • Systems, process, culture and context extract the value “People are our most valuable asset” Ohio University College of Business Executive Education

20. Human Capital Has Value “People are our most valuable asset” PROVE IT! Must be demonstrated by management practices and actions that compose the Human Capital Architecture Ohio University College of Business Executive Education

21. Expectativas de TodosquePossuemInteresseDiretoouIndiretonaOrganização • Acionistas(proprietários)desejam um retornoqueconsideramjusto no investimentofeito. • Clientesdesejam um alto valor agregadoaoprodutoouserviçoqueconsomem, e umamanutenção(garantia) quemantenhaseu valor. • Empregadosdesejamumarelação de empregoqueforneçacompensaçõesintrínsicas e extrínsicasemcontrapartidaàscontribuiçoesquefazem.   • Publicoesperaque a organizaçãotenharesponsabilidade social e se preocupetambém com o bemestar dos cidadãos (cidadania corporative) Ohio University College of Business Executive Education

22. Instruções para o preenchimento das questões Pense em uma organização com a qual você está familiarizado. Talvez a organização que você trabalha agora. Para cada par de partes interessadas selecionar o que você sente é mais importante para a organização que você escolheu. Pense sobre os recursos dedicados ou as políticas que afetam o grupo de partes interessadas. Quando você completa você irá gravar o número de vezes que você selecionou o grupo de partes interessadas e escrever o número no espaço fornecido. Ohio University College of Business Executive Education

23. Stakeholder Pesquisa Permite Compartilhar - Qual dos 4 clientes interessados​​, proprietários, funcionários públicos e que a sua organização ser mais provável para atender:Em primeiro lugar?Última? Ohio University College of Business Executive Education

24. Stakeholder Survey • Lets Share – Which of the 4 stakeholders Customers, Owners, Public and Employees would your organization be most likely to attend to: • First? • Last? • Under Jack Welch how did GE order these? Ohio University College of Business Executive Education

25. Human Capital and The Bottom Line • To create value through Human Capital requires a fundamental change in how it is recognized and managed in most organizations. • The firm’s human assets have a value that corresponds to the present value of future net cash flows and are derived from the skills, motivation and adaptability of the firm’s workforce. Ohio University College of Business Executive Education

26. Developing Human Capital in Changing Times Strategy Execution and Human Capital Ohio University College of Business Executive Education

27. Sustainability • Goes beyond the traditional financial measures of firm performance and shareholder value - focused on achieving high levels of success in the short term without compromising the future Ohio University College of Business Executive Education

28. Strategic Success Chain Competitive Advantage Sustainability Executive Education College of Business Ohio Universaity

29. What is “Strategic Competitive Advantage?” Enacted or Utilized Distinctive Competency that: • Allows the organization to differentiate itself from competitors • Cannot be readily duplicated or imitated • Provides a positive economic benefit(s) – KPIs Executive Education College of Business Ohio Universaity

30. Strategic Success Chain Strategy Execution Competitive Advantage Sustainability Executive Education College of Business Ohio Universaity

31. What is Strategy Execution? • Value Creation – Enables the Value Proposition for all stakeholders • The combination of the firm’s resources applied by the strategic business units • Results from managerial decisions for resource allocations and tradeoffs Ohio University College of Business Executive Education

32. Focus on a Strategic Business Unit -Primary Pharmaceutical Industry Strategy Execution Enables the Value Proposition for Stakeholders Production Research & Development Marketing Human Resources Ohio University College of Business Executive Education

33. Strategic Success Hierarchy Ohio University College of Business Executive Education

34. Research & Development Group Critical Outcomes for Strategy Execution – Primary Pharmaceuticals 1. New Product Applications 2. Reduce Time to Market Ohio University College of Business Executive Education

35. Developing Human Capital in Changing Times Managing Talent for Strategic Success Ohio University College of Business Executive Education

36. Talentship • Talentship requires a redefinition of the traditional service role of HR managers in organizations. • This involves a process of "talent segmentation" and the need to focus managerial attention on "pivotal talent pools".  Ohio University College of Business Executive Education

37. Talent Segmentation • Talent segmentation is as vital to strategic success as customer segmentation. • Talent segmentation involves identifying pivotal talent pools where human capital makes the biggest difference to strategy execution Ohio University College of Business Executive Education

38. Human Capital (Pivotal Talent Pools) Strategy Execution Competitive Advantage Sustainability Ohio University College of Business Executive Education

39. Pivotal Talent Pools • Positions in the organization where qualityor availability of human capital makes the biggest difference to strategy execution • Positions that leverage the strategy execution Ohio University College of Business Executive Education

40. Pivotal Talent Pools • Those talent pools that with a 20% improvement in quality or availability (quantity) would make the biggest difference in strategy execution and organizational success • Example: Research & Development in Primary Pharmaceuticals Ohio University College of Business Executive Education

41. The Importance of Human Capital Pivotal Talent Pools Pivotal Positions Determine the Pivotal Positions to Deliver Strategy Execution Executive Education College of Business Ohio Universaity

42. Mickey Mouse VS Sweepers Ohio University College of Business Executive Education

43. Talent – Performance Yield Yield Curve - understanding where differences in quality or quantity of talent and organization have the greatest impact on strategy execution (steepness, elasticity, D, slope) Find the Pivotal Position Ohio University College of Business Executive Education

44. Yield Curves = Pivotal Positions Ohio University College of Business Executive Education

45. What is a Pivotal Position? • Not necessarily the highest paid/ranked position • Not necessarily most critical • Not necessarily the most common/number • Not necessarily the most visible • Not necessarily the most obvious • Not ever a person Ohio University College of Business Executive Education

46. Pivotal Positions in Primary Pharmaceuticals • What is the Pivotal Position for executing strategy? • Provides the most significant (relative to others in the pivotal talent pool) improvement in strategy execution • Leveraged by the Human Capital Architecture • Research Scientist Ohio University College of Business Executive Education

47. Strategic Success Hierarchy Ohio University College of Business Executive Education

48. Yield Curve Primary Pharmaceuticals Best Sales Rep Worst Sales Rep Strategy Execution Sales Representative Best RS Research Scientist Worst RS Performance Ohio University College of Business Executive Education

49. Yield Curve Primary Pharmaceuticals Best Sales Rep Worst Sales Rep Strategy Execution Sales Representative Best RS Research Scientist 20% Worst RS Performance Ohio University College of Business Executive Education

50. Yield Curve Primary Pharmaceuticals Best Sales Rep Worst Sales Rep Strategy Execution Sales Representative Best RS Research Scientist 20% Worst RS Performance Ohio University College of Business Executive Education