Your Organization’s Last Differentiator: Human Capital
(Editor’s Note: Today’s post is brought to you by our friends at Kronos, a leading provider of workforce management and human capital management cloud solutions. The Boston Business Journal recently named Kronos as one of the Best Places to Work in Massachusetts. It’s their eighth time on the list and third consecutive year in the top three. Congratulations to them! Enjoy the post.)
The weather wasn’t’ the best at this year’s Society for Human Resource Management (SHRM) Annual Conference. Lots of wind and rain. When I travel and the weather is ugly, I have a tendency not to explore the city as much and prefer to hang out at my hotel. Thank goodness, the service was great! The hotel bartender was friendly and made some great recommendations off their menu.
When I worked in hotels, we were keenly aware that our competitive advantage was our employees. All hotels have beds and showers. Granted, some of them are more luxurious than others. But their real differentiator were the employees. They make or break a guest’s hotel stay.
I was reminded of how much people play a role in our business strategy after chatting with Gregg Gordon, vice president of Kronos’ data science practice group. He has just published his second book, “Your Last Differentiator: Human Capital”. I asked if he would share a little bit of the book with you and luckily, he said “yes”.
Gregg, tell us briefly what sparked you to write this book. On some level, I’d like to think that organizations understand that people are a key differentiator. What is it about human capital that companies need to focus on?
[Gordon] It began with a curiosity around how these startups were using technology to upend existing markets. As I began learning about the history of the organizations, it was much less about technology than it was about people who have great ideas, are relentless in execution, and have the grit to overcome lots of obstacles. The most successful organizations, both startups and incumbents, have a clear purpose their employees and customers identify with and can get passionate about.
Your first book is titled, “LEAN Labor: A Survival Guide for Companies Facing Global Competition”. The reason I’m bringing that up is because I believe there’s some connection between the two. How do you see LEAN principles linking with human capital?
[Gordon] You are correct. In my first book, it was about applying a proven method of improving all types of work processes to workforce management processes. LEAN is a method that helps organizations identify wasteful practices and allows people to spend their time adding value to customers. It’s the scientific approach to working smarter not harder.
I’m sure many HR professionals hear LEAN and automatically think manufacturing. But LEAN can be applied to many situations/processes. What are 2-3 things everyone should understand about LEAN?
[Gordon] There are many continuous improvement techniques. The reason I chose LEAN as a framework for the book is that LEAN recognizes the people that do the work as the ones most likely to know what can be improved and how to improve it.
- Respecting and empowering people is what HR is all about so LEAN is a natural fit.
- LEAN doesn’t require big investments. It even promotes the idea of many small fixes, so it’s a budget friendly methodology.
- It’s easy to understand so anyone regardless of background can begin applying it with just a small amount of training.
What do you see as the benefits of using LEAN with human capital management?
[Gordon] Many of LEAN’S benefits are gains in time utilization and empowering employees to make independent, in-the moment decisions by understanding the purpose of the organization. The idea is to not work harder or faster, but rather eliminate time spent on non-value-added efforts and instead use that time for value-added activities.
Disruptive organizations are improving time utilization but, they also go beyond traditional LEAN analysis and techniques. They go beyond their traditional resources by utilizing technology very effectively to incorporate new ideas such as crowdsourcing. In addition to utilizing the time of people and other types of capital more effectively, disrupters capture their employees’ ability to innovate.
They also improve the utilization of peoples’ skills more effectively by redesigning jobs and processes around the peak capabilities of a set of skills. They understand their customers better than others and are able to provide a rich and consistent customer experience. To do all of these things well, an organization must harness the intangible qualities of people and understand the same of their customers.
Traditional LEAN is about breaking down tasks and making them simple to perform so they are always performed correctly. Disruptive organizations capture both their employees’ and customers’ spirit so that they have a relationship with the organization that goes beyond the specific product or service delivered. These organizations have been able to harness the intangible quantities of people such as their emotions and passions. HR practitioners may identify closely with many of the traits of a disruptive company. They too want to capture the full potential of the people within their company.
The lesson learned here is that there is a business model and return on investment (ROI) for investing in these efforts that can be emulated. People who have made their careers in HR would be wise to study disruptive companies and see what they can learn about the cause and effect of investing into human capital and incorporate these findings into their own strategies.
Last question. During the conference, I mentioned that I’ve been hearing the “sticky” word a lot lately. The notion being that organizations need to adopt practices that are “sticky”. How can HR professionals use LEAN principles to create “sticky” practices?
[Gordon] One of my favorite books is “Made to Stick: Why Some Ideas Survive and Others Die” by Chip Heath and Dan Heath. Its premise is that it is possible to design communication regarding almost any subject so that it is inherently memorable and therefore repeatable. We all know that the ability to execute a strategy is what separates good organizations from great organizations. Communication of the strategy is a cornerstone of great execution.
For example, if above average customer service is a goal, which statement would drive the behavior you desire:
“It’s critical we maintain a customer satisfaction rating of 99.9 percent.” OR
“When our customers contact us, treat them as if they were a beloved family member you haven’t seen in a year.”
By communicating in a way that is ‘sticky’ rather than in the language of business metrics, you are empowering employees to handle many different situations while still achieving the company’s goal. It’s not easy, but it’s a powerful technique that can support the company’s continuous improvement goals.
My thanks to Gregg for sharing his thoughts on human capital with us. If you want to learn more about how to use LEAN principles to differentiate your organization, I hope you’ll pick up a copy of his book. And check out his blog, “Your Last Differentiator”.
Regardless of whether your organization subscribes to a low-cost, differentiation, or focus strategy, every organization needs employees to perform at their best. That means communicating in a way that “sticks” with employees and giving them the tools to add value.
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