Monday, March 18, 2013

Social Accountability in Human Capital Management

Recently, I seem to keep hearing(and saying myself) the word S-U-S-T-A-I-N-A-B-I-L-T-Y in the context of HR and talent. Looking for an actual definition of the word, I stumbled across multiple jokes and puns, such as:

“It is very hard to be against sustainability. In fact, the less you know about it, the better it sounds.” Robert M. Solow, Sustainability: An Economist’s Perspective [1]

What really is sustainability? 

I am striving for a simple definition, something that I could use to explain it to a young child (because then, I am sure I can understand it…). To me, something can be considered sustainable if the resources required to produce it can be continuously replaced. The Webster dictionary is somewhat aligned: using a resource so that the resource itself is not depleted or permanently damaged.

Sustainability can mean different things inside and outside an organization. In the HR internal context, it means taking a good, hard look at employees as an asset (or a commodity?). As we see more and more companies defining themselves as “knowledge companies” and their employees “Knowledge workers”, storing and exchanging experiences, knowledge and networks, being sustainable means being able to replace human resources in an economical and non-disruptive way – and the more specialized a company is, the more complex this task becomes.

This is already challenging enough in a world where we start only to see the effects of the announced “war on talent”.

Now I would like to look beyond the obvious, and ask if we really think that Talent procurement is enough to be truly sustainable in the Human Resources sense, internally to the company and externally to the world. If being sustainable means not to deplete resources,we have to look at the value of the individual, and at the cost to society.

We have all heard multiple times that “employees are our most important asset”, isn’t it time to act on it?

Is there more to it?

I think there is.

The Human Resource department is in many corporations a catalyst, taking responsibility for sustainability at large. It is also to be noted that companies putting a priority on resources sustainability (in this context, all resources) often supports HR-friendly organizations, highlighting the more soft competencies that best allow human growth.

Can we apply the above sustainability definition to the HR world, ensuring that it remains meaningful to the specific resources that employees and the workforce represent? To do so, we need to be able to verify that the Human Capital is not damaged, and is replaceable at a reasonable cost. The next question is: how can we measure the depletion (or lack thereof) of the Human Capital? And how is it different if we look at it from the individual point of view, or as a group?

In many other industries and functions, it is an easy feat. We can measure the wear and tear of planes, trains and automobiles; books have been written about how to proceed and what elements should be most relevant. The fact that the train will not take the evaluation personally also helps us to be objective. The train doesn’t care about its own depreciation.

Now - sticking to the planes example - how do we measure “depreciation” for the pilots? Individually, it could be a combination of stress, hours worked, vacation taken, training completed. From the Organization’s point of view, as part of the workforce of a company, relevant skills (noting that skills themselves often have a perishable nature and require maintenance) and competencies can be weighted against the time to retirement and individual “depletion” of the asset, allowing eventually a verification of the ease of replacement of the resource.

Employees are perishable resources, and as such cannot be stored and squirreled away for future use. A very high granularity, with lumpy acquisition, low storability and controllability, implies a “use-it-or-lose-it” bottom line; it must be used in the best way, keeping an eye at replacing it – hello, Recruiting and SuccessionPlanning. [2]

In the end, sustainability in HR means the same as for any other function. It means looking at the triple bottom line: success is not determined only by economic performance (or by the lack of empty seats!), but by the impact on the community and the environment.

.... Continued: Global Cost (or Value) of a Human Being