Posted on July 14, 2015

Posted by: Lara Pawlak, Director of Human & Intellectual Capital

At Enclude, we apply business solutions to development problems in a process that is, in its essence, organizational transformation and change management.  Real change needs people behind it, so we’re pleased to see the business and development worlds increasingly investing in the idea that it is people and their levels of commitment which drive organizational performance.

Fueled by advances in neuroscience and social psychology, and encouraged by the growing popularity of behavioral economics, the business world has by and large woken up to the fact that employees are not simply utility-maximizing, incentive-chasing robots, but actual humans with a more complicated and largely emotional decision-making calculus, and the ability (indeed, the compulsion) to think and act independently.

This cultural change has liberated many workers from command-and-control management models that were often counter-productive, and left many employees somewhere between confused and annoyed, but in any event, not fully engaged to yield maximum value.  Old habits die hard, especially when individual managers are under great pressure, but today businesses have recognized this potential gold mine in plain sight, and are increasingly shifting from an administrative view of traditional, siloed HR departments to one that elevates human capital management to a strategic function, linked closely to and flowing directly from business strategy.

Consequently, there is a mounting body of evidence which shows that meeting employees where they are—what we now call employee engagement efforts–is not only common sense, but also good business sense.  Author and engagement expert Kevin Kruse has compiled a list of 32 studies linking employee engagement to higher revenue and profitability, as well as improved productivity, customer satisfaction and loyalty, workplace safety, quality and other measures of organizational performance (which drive revenue and profitability).

It’s a great time to be a manager – now that we are free to act in concert with real human motivations, and to allow people to be more productive by trying new approaches to organizing work and managing people.  I would even say that more progressive and strategic thinking about people management is the next great frontier in business productivity.  In development, we might read this as the next key to scale, the ingredient that comes after technology to make solutions truly sustainable and “market driven,” responding not only to technical challenges but to the human behaviors at the heart of most dilemmas.

While full of opportunity, it’s also quite a challenging time to be a manager, as the pace of change and employee expectations spiral ever upwards.  But there are established models, albeit underutilized, which link specific human capital management practices to better organizational performance, and others which link specific practices and levels of system development to stages of business maturity.  Especially in young and growing businesses, you can’t have everything at once.  For example, you might start with clear and comprehensive job descriptions, together with performance evaluation systems calibrated to these well-defined job expectations and a basic competency model tailored to the organization’s specific strategy and needs.

From there, you can begin building a human capital management (HCM) function that extends beyond traditional “HR” to put people at the center of strategy.  By establishing a strong human capital function, with a real seat at the management table, you can help business line managers maintain focus on and implement the many aspects of people management that tend to fall by the wayside in the face of other, more immediate problems to solve.  A strong HCM team can help maintain focus on developing an employee engagement culture, building feedback and coaching into organizational DNA, and developing recruitment, retention, succession and employee & leadership development strategies that extend well beyond the traditional menu of training and financial incentives.

After all, it is people that drive change, not targets.  Targets cannot be achieved without the right people in place, equipped, empowered and energized to do the jobs that need doing.   In business or development, new levels of performance or scale can only flow from increased capabilities of people, new and different behaviors, and new ways of working together – or else from additional resources which will require orientation and training.  Human capital strategy must flow directly from organizational strategy, and neither can be developed in isolation.

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