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Human Capital: Value Creation and Risk
AAAAA+AA- AAA+AA-BBB+
An introduction to Organization Maturity Ratings
• Why is Toyota’s market capitalization c.3 X the size of GM?
• Why can’t all banks produce value per head like Goldman Sa...
The paradox is that by not
pursuing profitability to the
exclusion of all else, the Great
Engine companies in their Golden...
• …the extent to which an organization realizes its’ human
potential such that it maximizes the value it can create.
• Hum...
“an assessment of the extent to which an
organization is designed around the goal of
maximizing its value, while controlli...
Profit is critical for a
healthy organisation but
value is much broader,
cleaner and sustainable
OMR
Stage 2
Good
Professional
Practice
Stage 3
Effective
Management
Stage 4
Human Capital
becomes integral
to business
ope...
Value
Motive
Whole
system
Learning
Organization
Improvement
philosophy
People riskHuman
capital
ethos
Trust
Engagement
Coo...
Measuring or rating maturity
9
Maturity in practice: value outcomes
Early indicators
• Exec expectations of human capital & value now aligned
across the ...
How Maturity predicts value creation & destruction
Value vs supply
chain orientation
Embedded
societal value &
responsibility
Truly inclusive
workplaces
Best/sustainable
res...
Reaching Your Potential
The perfect, virtuous circle is one where the best values
of your people are reflected in the way ...
Maturity & Value
creation
Thank you
www.omratings.com
Stuart.woollard@omratings.com
Improve your Organization’s Maturity
Increase your Organization’...
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Organization Maturity Rating - human capital, value & risk

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How can organizations understand how they can leverage more value from human capital and manage people risk.

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Organization Maturity Rating - human capital, value & risk

  1. 1. Human Capital: Value Creation and Risk AAAAA+AA- AAA+AA-BBB+ An introduction to Organization Maturity Ratings
  2. 2. • Why is Toyota’s market capitalization c.3 X the size of GM? • Why can’t all banks produce value per head like Goldman Sachs? • Why hasn’t Rolls Royce made money on aero engines? • Why are BP & other oil majors still at risk of large scale disaster? • How did mis-selling arise at Lloyd’s after PPI & 5 years post GFC? • How does Costco stock consistently trade at a premium to Walmart? • How can Ryanair make even more profit and be a ‘nice’ company too? • How is a 40 year old clothing firm more interested in saving the planet making so much money? Key Human Capital Questions need convincing answers:
  3. 3. The paradox is that by not pursuing profitability to the exclusion of all else, the Great Engine companies in their Golden Age would achieve enormous increases in value...whereas, by single-mindedly pursuing profit...these same companies and their successors actually created less genuine, lasting wealth; indeed, they would often destroy it. Value orientation – short, long term; narrow or broad based? “ ”
  4. 4. • …the extent to which an organization realizes its’ human potential such that it maximizes the value it can create. • Human potential in this context relates not just to an organization’s people, but to all people connected with the development, production and supply of an organization’s goods and services. • Value relates to value generated by reference to the organization itself (i.e. productivity, quality, financial, efficiency) and value generated by the organization in a societal context (e.g. economic, well-being, environmental). Oranizational & HR Maturity is…
  5. 5. “an assessment of the extent to which an organization is designed around the goal of maximizing its value, while controlling risk, with emphasis on its ability to manage its human capital to best advantage”. What is an Oranizational Maturity Rating?
  6. 6. Profit is critical for a healthy organisation but value is much broader, cleaner and sustainable
  7. 7. OMR Stage 2 Good Professional Practice Stage 3 Effective Management Stage 4 Human Capital becomes integral to business operations Stage 5 Transition: operational to strategic focus Stage 1 Personnel Administration Board & Executives resistant/unaware of people & human capital value up to this point Stage 6 Organisation becomes a whole system Stage 0 No Conscious People Management Maturity spectrum: OMR ‘AAA’ Scale ©Paul Kearns/OMR 2013 LONG TERM - STABILITY SHORT TERM – UNSTABLE A+to AA- AAA BBBto A BBB- BB+ BB C B
  8. 8. Value Motive Whole system Learning Organization Improvement philosophy People riskHuman capital ethos Trust Engagement Cooperation Performance system Communication Business/pe ople strategy The Ten ‘Pillars’
  9. 9. Measuring or rating maturity 9
  10. 10. Maturity in practice: value outcomes Early indicators • Exec expectations of human capital & value now aligned across the business • Organization now adopting a new language around HCM • 10 Pillars embedded into assessment of planned HC activities • Maturity provides new framework for value based assessments and decision making • Mature thinking becomes conscious & senior execs now lead on HC initiatives • Practically NSW HR team now focused on the business rather than blindly adopting "best practice”
  11. 11. How Maturity predicts value creation & destruction
  12. 12. Value vs supply chain orientation Embedded societal value & responsibility Truly inclusive workplaces Best/sustainable resource use Learning, knowledge & innovation High trust, cooperation & informed decision making Maturity drives higher value, lower risk & ‘good’ outcomes “social, economic, environmental, and ethical factors directly affect business strategy—for example, how companies attract and retain employees, how they manage the risks and create opportunities from climate change, a company’s culture, corporate-governance standards, stakeholder-engagement strategies, philanthropy, reputation, and brand management.” – David
  13. 13. Reaching Your Potential The perfect, virtuous circle is one where the best values of your people are reflected in the way you do business. This means you provide the greatest value to all your stakeholders and to society, who in return generate the greatest value for you. Maturity is about everyone aligning with the purpose of the organization; wanting to realise its full potential and wanting to be around in the long term.
  14. 14. Maturity & Value creation
  15. 15. Thank you www.omratings.com Stuart.woollard@omratings.com Improve your Organization’s Maturity Increase your Organization’s Value Enhance your Societal Impact & Reputation

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