Mastering Complexity Max Blumberg, PhD All content remains the property of Blumberg Partnership Ltd and may only be used with prior written consent www.maxb.com [email protected] M - +44 (0) 7768 455345 T - +44 (0) 1252 628552
May 21, 2015
Mastering Complexity
Max Blumberg, PhD
All content remains the property of Blumberg Partnership Ltd and may only be used with prior
written consent
M - +44 (0) 7768 455345
T - +44 (0) 1252 628552
Personal Introduction
2
Musician
Computer scientist
Accenture consultant
Technology start-up
PhD & Research Fellow at Goldsmiths
Consult globally: HR Analytics, Organizational & Sales force performance, CIPD
people strategy
The changing value of organizations
3
95%
5%
1978
Book value
Other value
28%
72%
2002
Book value
Other value
The enterprise capital framework
4
Asset/capital value
5
Resource Competitive differentiator?
Tangible assets e.g. technology; relatively easy to replicate
Financial capital Available to most organisations with a good plan
Intellectual capital
Customer capital Not really: most organisations have access to the same markets
Structural capital Yes but replicable in medium term
Human capital Yes: very difficult to imitate
Driving value creation and shareholder return
6
Total Return to shareholders
(TRS)
Spread
Return on Invested Capital
(ROIC)
Minus
Weighted Average Cost of Capital (WACC)
Growth
Organic Growth
Growth through M&A
Operating Margin
Capital Efficiency
Components of Value Creation and competitive advantage:
Spread: Competitive advantage derived from operational and capital efficiency and pricing strategy
Growth: Value from new products/services through innovation, M&A, market share, etc.
Ratio between them is a matter of competitive strategy
Quality
Innovation
Productivity
Customers
Human Capital
How much do we invest in people?
7
TMT 37%
Heavy manufacturing
25%
Light manufacturing
32%
Pharmaceuticals/Prof services
45%
Financial services
43%
CFO Research Services
Should we invest in people?
8
Generational conflict: The generations
9
Born Age
Silent generation <1945 70+
Baby boomers 1946 - 1960 54 – 68
Gen X 1961 - 1977 37 – 53
Gen Y 1978 - 1995 19 - 36
How do we invest in human capital (versus HR)?
10
£X programme Competencies (Knowledge)
Employee performance(Behaviour)
Contribution to organisational
objectives
Programme?
Recruitment
Development
Retention/engagement
Diversity
Compensation
Etc.
Valuing your Talent
cipd.co.uk/valuingyourtalent
Valuing your Talent
Objectives
1. Develop a broad framework of HR Metrics for measuring human capital.
2. Showcase current practice.3. Develop a tool / methodology.
Members of the steering group:
Findings 1. People and investment in them should be at the heart of the business model.
2. A new language for business is needed.3. HR should lead greater data integration across the
business.4. Value = People
Valuing your Talent - VyT
12
Human capital 2014
13
From capital to people (judging by company valuations)
Generational conflict because attitudes to work are changing faster than the organisational structures and processes used to manage them
Skills shortage which means employer branding is crucial
Transparency (data, technology) complicates everything
Recognising difference – career paths for e.g. “techies” and “leaders”
14
Generation Born Age Values at work
Silent/traditional
<1945 70+ Delayed gratification, loyalty, discipline, authority & hierarchy
Baby boomers
1946 - 1960
54 – 68
Teamwork, live to work, hierarchies, annual feedback
Gen X (latch-key kids)
1961 - 1977
37 – 53
Grew-up alone, esteem issues, independence (hate reviews), dislike hierarchy, value personal lives, pioneered flexibility
Gen Y 1978 - 1995
19 - 36 Highly nurtured, high self-esteem (believe they’re important), used to frequent recognition regardless of performance, always on peer-communication
Intergenerational conflict: The generations
Intergenerational conflict
15
Baby boomers are not retiring Retirement age is rising (Gallup = rising to 62 years old)
Baby boomers and Gen X must manage Gen Y with very different values
Gen Y wants to be where the action is rather than loyalty
= Leaders must plan to manage 3 or 4 generations, each with their own values (but difference can be an advantage)
16
Oldie’s jokes about Gen Y...
17
Intergenerational conflict: Actions
18
Culture: Promote flexible work/life balance, challenging work, openness, informal, entrepreneurial
Younger generations need the “why” before the “what”
Younger generations, frequent feedback – peer-based
Post recognition instantly & widely – use social media if possible
Employer brand: The Picture
19
Glass door:
“The advances made seem a bit superficial. They offered flex time, but it was always subject to approval. They assured reviews and raises, but they were tepid at best.”
Employer brand and transparency: The issues
20
Social media has made your brand transparent
Engagement is the new employer brand
Gallup (2014): 13% of employees are engaged Glassdoor:
– 51% of employees experience buyer’s remorse– 54% of employees would recommend their employer– 83% leave their employer in the first year
Employer brand: Actions
21
Developing skills and career paths
22
Technical skills are not enough
New organisational structures make it attractive to go solo
Career paths for everyone