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We Read For You: Talent - Making People Your Competitive Advantage


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Organisations can gain a powerful competitive advantage by tapping into their talent and learning how to organise and lead it effectively. In this session of We Read For You, Jessie Whitehouse …

Organisations can gain a powerful competitive advantage by tapping into their talent and learning how to organise and lead it effectively. In this session of We Read For You, Jessie Whitehouse presents "Talent: Making People Your Competitive Advantage", a book by Edward E Lawler, that provides a comprehensive framework for helping human resource professionals, senior executives, CEOs and corporate boards structure their organisation in order to attract, retain and manage their talent effectively.

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  • 1. Talent: Making People Your
    Competitive Advantage
    By Edward E Lawler
    Presented by:
    Date: 10 June 2011
  • 2. Background to book
    Edward E Lawler III is distinguished professor of Business and Director of the Centre for Effective Organisations in the Marshall School of Business at the University of Southern California.
    He has been honoured as a top contributor to the fields of organisational development, HR management, Organisational Behaviour and Compensation.
    He is the author of more than 350 articles and 43 books.
  • 3. Chapters
    Chapter 1: Talent Matters
    Chapter2: Making The Right Management Choice
    Chapter 3: Designing Organisations
    Chapter 4: Managing Talent
    Chapter 5: Managing Performance
    Chapter 6: Information & Decision Making
    Chapter 7: Reinventing Human Resources
    Chapter 8: Governing Corporations
    Chapter 9: Leading
    Chapter 10: Managing Change
  • 4. Chapter 1: Talent Matters
    In the last several decades an avalanche of business books, articles 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 the two most important management challenges are:
    - Recruitment of high quality peopleacross multiple territories
    - Improving the appeal of company culture and work environment
  • 5. Ed Lawler wrote this book detailing what he believes organisations need to do in order to gain competitive advantage as a result of their ability to organise and manage talent.
    What is needed are organisations that are designed from the boardroom to the frontline in ways that optimise talent.
    He calls this type of organisation Human Capital- centric (HC-centric)
  • 6. I’ve been saying for years that employees are our most valuable asset. It turns out I was wrong. Money is our most valuable asset.
    Employees are 9th.
    When asked what came in 8th, he says: Carbon paper!
  • 7. How do you tell whether an organisation should be HC-centric or not?
    Multiple factors have contributed to the creation of the knowledge economy and the rise of talent as a potential source of competitive advantage.
    • Access to financial capital
    • 8. Information technology that has been created in the last decade
    • 9. Growing need for technical knowledge
    • 10. More flexible work practices
    • 11. Creation of a new competitive landscape as a result of the change-becoming increasingly service-driven
    Because of the amount of change that has taken place the source of competitive advantage in many industries shifted from execution and reliable processes to the ability to innovate and change.
  • 12. What does a HC-centric organisation look like?
    An organisation that aligns its features towards the creation of working relationships that attract talented individuals and enable them to work together in an effective manner.
    Major features of a HC-centric organisation:
    • Business strategy is determined by talent considerations and this in turn drives human capital management practices
    • 13. Every aspect of the organisation is obsessed with talent management
    • 14. Performance Management is one of the most important activities
    • 15. The I.T. system gives the same amount of attention to measures of talent costs, performance as it does to measures of financial assets
    • 16. The HR department is the most important staff group
    • 17. The corporate board has the expertise and information it needs to advise on talent issues
    • 18. Leadership is shared and managers are highly skilled in talent management
  • Chapter 2: Making the right management choice
    Which is the right management approach?
    Structure- centric or HC-centric
    In the case of a structure- centric approach a company can organise either as a hierarchical bureaucracy or as a low cost operator
    Hierarchical Bureaucracy: This approach was used by leading corporations such as IBM, AT+T, Exxon and was used by most of the large US and European corporations. It is still used in government and non-profit organisations but has lost favour due to high cost and inflexible performance
    Low Cost Operator:
    • Jobs not stimulating with low pay and few prospects
    • 19. Minimum fringe benefits
    • 20. Little training and development
    • 21. Tight job descriptions
    • 22. Top down decision making
    • 23. Low job security
    • 24. Use of part-time and temporary employees
    The defining feature is a focus on gaining competitive advantage through low wages and benefits rather than through the performance of talent.
    The most visible low cost operators are Walmart,McDonalds and Burger King
  • 25.
  • 26. HC-Centric Management
    Lawler identifies 2 HC-Centric approaches:High – Involvement approach
    Global competitor approach
    The characteristics of high involvement organisations
    • Enriched work designs
    • 27. Participative decision-making structures
    • 28. Shared business information
    • 29. Committed to education and development of people
    • 30. Career Orientated
    • 31. Rewards for organisation performance
    • 32. Community
    • 33. Shared Leadership
    • 34. Committed to Talent Management
    Leading examples are Harley Davidson, Whole Foods, Proctor and Gamble, South West Airlines & Starbucks
  • 35. Global Competitor Approach:
    (Glamour companies of current era)
    • Interesting work
    • 36. Global talent pool
    • 37. Offshoring
    • 38. Outsourcing
    • 39. Employment depend on performance & skills
    • 40. Pay for performance
    • 41. Just in time training
    • 42. Career self management
    • 43. Willing to buy talent rather than build it
    Examples of organisations: Apple ,Microsoft , Intel , IBM, Cisco, Citi Corp, Merrill Lynch
  • 44. Chapter 3: Designing Organisations
  • 45. Chapter 4: Managing Talent
    HC-centric organisations excel only when they have outstanding talent. To have outstanding talent they need to have an outstanding talent management system- one that attracts the right talent and helps them understand what to expect from their work experience from the company.
    Jack Walsh is quoted to say “ talent management deserves at least as much focus as financial capital management”. This commitment to talent is a big part of what has made General Electric so successful and it continues to be strong.
    GE is famous for its session meetings where senior management discuss the development of their teams talent. The same process is replicated at lower levels in GE.
    HC-centric organisations always face tough competition for the talent they want.
  • 46. No-one argues with the focus on talent when the organisation is a professional sports team.
    In sports, different approaches can be successful.
    New York Yankees are classic global competitors who buy talent, whereas teams such as the Oakland A’s have championed the build strategy and pay lower wages and still win – although not as frequently as the Yankees.
    The Oakland A’s with a low budget win because they do an excellent job at talent management
  • 47. Talent Management is the most important process in HC-centric organisations. The most important features are:
    • How well talent is managed, measured and managers are held accountable for their talent management performance
    • 48. A strong employer brand clearly identifies the organisation as an attractive place to work
    • 49. The employment contract differs for a high involvement organisation and a global competitor organisation. For the former it emphasises long term employment and for the latter it emphasises the employee’s responsibility for personal growth
    • 50. Rewards package that individual receives fits their preferences and needs
    • 51. Critical skills for a competitive advantage are identified and individuals with those skills are hired regardless of costs
    • 52. The selection process is used to identify who has or can learn the skills the organisation needs
    • 53. Development opportunities are carefully planned and made available
    • 54. Career self management is enabled through information systems
    • 55. Major emphasis on retaining high performance talent
  • Chapter 5: Managing Performance
    The key features of a performance management system in HC-centric organisations are:
    • Senior management commitment to the importance of performance management
    • 56. Goals that are cascaded down the organisation and based on business strategy
    • 57. Timely assessment of performance against goals
    • 58. Measures of the skills individuals have
    • 59. Pay based on market value of the skills individuals have
    • 60. Separate discussion of pay and development needs
    • 61. On-going feedback
    • 62. Rewards tied to performance measures
    • 63. Appropriate mix of rewards for individual, group & organisational performance
  • Chapter 6: Information & Decision Making
    What are the decision practices to be present in all HC-centric organisations?
    • Sophisticated human capital information systems that focus on talent
    • 64. Analytical models that assess the impact of human capital
    • 65. Measures of the condition of an organisation’s core competencies and capabilities
    • 66. Effective communication program for sharing business results with all employees
    • 67. Public reporting of the condition of an organisation’s human capital
    • 68. Decision processes that involve individuals in key decisions of human capital management
  • Chapter 7: Reinventing Human Resources
    Enormous opportunity exists for leaders of HR functions to enhance their role in the business.
    HC-Centric organisations have no choice – someone must take responsibility for organising and managing talent.
    3 approaches are possible:
    • Transform existing HR function and become go to unit for human capital issues
    • 69. Company leaders can replace existing HR staff with individuals who are up to the challenge
    • 70. Outsource administrative tasks of HR department
  • Current state of HR
    • Considered unimportant in organisations
    • 71. Execution of basic HR administration diverts HR from addressing issues like talent, organisational design and effectiveness
    • 72. HR tends to be comfortable in dealing with administration
    • 73. Gets power when dealing with union and labour law issues
    • 74. Acting as a watchdog leads to HR being seen as a hindrance to effective talent management
    HR Staffing:
    • Quality of HR staff
    • 75. Career dead end
    • 76. Silo department – best individuals progress up HR hierarchy, but seldom end up as CEO
    • 77. No business exposure and training
  • How can HR add value to HC-centric organisations?
    • Handle transactional/administrative side effectively
    • 78. Provide business support in Human capital management and organisational effectiveness
    • 79. Play active role in establishment and implementation of business strategy
    • 80. Provide key data and services to corporate board
    • 81. Support business strategy with appropriate metrics and analytics
    • 82. Deep expertise in HR function and understand relationship between HR and business effectiveness
    • 83. HR should be a mandatory key career stop for senior executives
    • 84. Talent in HR should equal or exceed that in other parts of the organisation
  • IBM Re-invents HR
    • IBM excelled as structure- centric organisation but transformed into a HC-centric organisation
    • 85. Credit for transformation goes to HR
    • 86. Up to 1990’s IBM seen as leading employer with an attractive brand as a high-tech company
    • 87. 1993 Lou Gerstner became CEO and reinvented IBM with most changes involving HR:
    • 88. Changed benefits
    • 89. Job security and life time employment disappeared
    • 90. Management development programs focused on performance
    • 91. HR outsourced transactional work
    • 92. Company sponsored savings account introduced for training and education
    • 93. Employees took ownership for own development
    • 94. Employment contracts ensured that employees own their careers
    • 95. Climate where people can enhance their skills and become more competitive
  • Chapter 8: Governing Corporations
    What does a board need in order to deal with organisational effectiveness issues?
    • They need enough power to have a significant influence on the way talent is managed
    • 96. They need extensive knowledge of the principles governing behaviour and a good understanding of talent management systems
    • 97. They should be rewarded based on the long term effectiveness of the organisation
    • 98. They need to make time available to discuss talent management and the condition of an organisation’s competencies and capabilities
    • 99. They need access to a number of metrics concerning the talent of the organisation
    • 100. They need to ensure that executive packages support management and reward human capital
  • Chapter 9: Leading
    What should all managers do?
    • Become experts on performance management
    • 101. Effective coachesand committed to enabling people to perform
    • 102. Expertise in talent management and organisational effectiveness
    • 103. Ability to look into the future and develop future challenges
    • 104. Ability to create truth telling and open communication with individuals
    • 105. Ability to develop leaders
    • 106. Know how to’ walk the talk’
  • Chapter 10: Managing Change
    How do most of today’s organisations stack up against the characteristics that are needed to be an effective HC-centric organisation? Most fall short
    Most look and act more like structure -centric organisations than HC-centric organisations
    Why don’t many leaders take a HC-centric approach:
    • Inability:
    most senior managers today are not familiar with it and business schools focus on managing of financial assets
    • Unwillingness:
    many senior managers are in their roles because of their ability to operate effectively in traditional organisations and they have made a major commitment because they want the rewards that go along with their positions
    They also have the wrong skills, wrong motives and the wrong values for managing in a HC-centric organisation
  • 107. Before going too far in making existing executives the villains, it is important to acknowledge that changing from a structured-centric to a HC-Centric approach is very difficult.
    In recent years major US corporations like Polaroid, Kodak, US steel, Ford, Chrysler and General Motors have declined substantially or disappeared because they couldn’t or did not try hard enough to change.
    Recall the star model. All points on the star need to change as well as the behaviour of leaders and corporate boards
    Today’s large corporations have experienced years of success using a structured centric approach.
  • 108. In Conclusion:
    It is one thing to say people are our most important asset, it is another to act on it.
    Those individuals, organisations, and countries that do the best job of acting on it will be the winners.
    Much of what needs to be done is clear, it is time to do it.
    The future of HC-Centric management is now