Before we can look forward, we must look back. To avoid repeating the past, we must learn from it. Therefore, to understand where we are headed, we must first look from whence we came.

In the beginning (late 1800’s-early 1900’s), there was “Personnel”. To be clear, workforces existed before this, but in light of workforce strikes and lockouts, companies realized they lacked a function to manage workers effectively or efficiently. In an effort to better control workers, in order to increase production and revenues, companies adopted new management practices (Taylorism 1910’s, Scientific Method 1930’s, Price’s Law 1940-50’s, Lean manufacturing 1950’s, Drucker’s MBOs 1950’s). Personnel quickly become the department of compliance, labor relations, record keeping, and wage management. It was during this time (1949) that the first human resource information system was built. Its purpose – to increase control of workers, minimize wage related risks, create process efficiencies for the Personnel function, and better control and decrease labor costs. In short, Human Resources of the time was a transactional, management-side function that treated workers like a cog in a machine, a risk to be mitigated, a cost to be cut. Together with the fact that it reported in to Finance, made the mandate for Human Resources that of a cost center.

Fast forward to today. In the twenty first century, Human Resources still offers cost containment and employee life cycle management. However, the function has also taken on the important role of driving strategic direction at the executive level by actively participating in decisions about what work will be performed, how, by who, where, and when. This includes identifying what competencies, capabilities and opportunities will best equip Talent to deliver on company objectives. If you aren’t convinced of its importance, you haven’t performed a PEST analysis lately. Labor movements grow in strength, research continues to prove that worker voice matters, Talent learns to negotiate the value of their labor, labor markets become even more unpredictable, and the world’s workforces are hybrid and global. Thankfully, advancements in technology, and in human resource information systems in particular, make it possible for Human Resources to operate strategically. Amongst them is People Analytics technologies that leverage human resource and employee data to make more informed Talent decisions. Its great for understanding policy and training impacts, and predicting behaviors like turnover. In this way, People Analytics supports Human Resources’ mandate as the purveyor of Talent.

Now, let’s review what we learned. We learned that workers have power and, as such, companies need to do for workers, not only for themselves. We learned upskilling, while valuable, isn’t the end goal, but that opportunities need to be strategic, impactful, and measurable. We learned that its not enough to have

human resource and people data, but that it needs to be valuable, narrative and meaningful.

The New Mandate for Human Resources

In an effort to understand the value that Talent represents for the company, human resource and employee data attract more attention, investors and executives want better employee data to enable more informed investment decisions, and legislation increases around employee data reporting and protection. The problem is current Human Resource Management practices and technologies, including People Analytics, do not capture the value that Talent represents for the company.

To solve for this new requirement by investors, executives, and outside agencies; we introduce Human Capital, defined as ‘the value that talent brings to, and creates
for, the organization through individual and organizational performance’, and Human Capital Management, defined as “the measurement (ie valuation) and management of the value represented by Talent, in order to understand and improve the impact of company decisions on organizational performance”. More than data informed, HCM is value driven. More than descriptive and predictive, HCM is forensic and truly diagnostic. More than business partners, HCM is analysts, specialists, auditors, doctors, and coaches.

Human Capital Management recognizes how valuable Talent is, how undervalued it has been, and what it is going to take to evaluate and value it appropriately. In a world where the only two real drivers of organizational performance and value creation are technology (ie AI and automation) and Talent (ie labor), Human Capital Management takes center stage inside the Human Resources function, to ensure Humans are equipped with the Resources necessary for creating value. In this way, Human Capital Management delivers on Human Resources’ mandate as an asset manager where Human Capital is the asset.

If you need help making sense of, or positioning your company for, this future of Human Resources, then reach out to us at HumInt Labs.

Hason Greene
Founder
HumInt Labs