Business Leaders don’t really Value People

In November 2016 The Korn Ferry Institute published their grim findings of a global study: In August and September, 2016, Korn Ferry interviewed 800 business leaders in multimillion-dollar global organizations on their views on the value of people in the future of work. These leaders were in the United Kingdom, China, the United States, Brazil, France, Australia, India, and South Africa.

• 63% of the CEOs said that in 5 years, technology will be the firm’s greatest source of competitive advantage.
• 67% said that technology will create greater value in the future than people will. (and 64% believed people are a cost, not a driver of value)
• 44% said the prevalence of robotics, automation and artificial intelligence (AI) will make people "largely irrelevant" in the future of work.

Worse still, the study found that when asked to rank what their organization’s top five assets will be 5 years from now, the company’s human resources  did not make the list. The top five assets were:

1. Technology (product, customer channels);
2. R&D / Innovation;
3. Product / Service;
4. Brand; and
5. Real Estate (offices, factories, land).

So much for Human Capital Management and Learning Culture! I can even affirm that some of the companies in the survey also like to say people are their greatest asset. Ha! (They just don’t tell shareholders that – 40% of respondents in the Korn Ferry survey said they have experienced shareholder pressure to direct investment toward tangible assets like technology). This known as a "tangibility bias".

As someone deeply involved in Learning and people development, I had to follow my strong belief that it is people that make THE difference, its people that add value and people are the best investment we can make. So I dug deeper. Eureka!

But the Tangibility biased are wrong!

In December 2016, in an economic analysis also commissioned by Korn Ferry, they report that human capital represents to the global economy a potential value of $1,215 trillion – more than DOUBLE the value of tangible assets such as technology and real estate (valued at $521 trillion today).

So, while large organizations put technology in the spotlight in the future of work, it is, in fact, human capital that holds the greatest value for organizations now and in future.

Human capital is also the greatest value creator available to organizations: For every $1 invested in human capital, $11.39 is added to GDP, (the Korn Ferry economic analysis finds). The CEO’s should note that the return on human capital—value versus cost—is the by far the best investment over time.

The problem is "Leaders may be facing what experts call a tangibility bias," said Jean-Marc Laouchez, at Korn Ferry. "Facing uncertainty, they are putting priority in their thinking, planning and execution on the tangible – what they can see, touch and measure, such as technology investments. Putting an exact value on people is much more difficult, even though people directly influence the value of technology, innovation and products."

How can we, the L&D specialists address this issue?

We are faced with a constant threat of budget cuts and lukewarm commitment from the executive.  I have always said that if you can’t measure it, you can’t manage it. Also what you measure is what you get…..

What are you measuring? My casual research suggests that most training managers measure learner satisfaction with their training, and there are plenty of tools for measuring knowledge and skills attainment. Sadly this doesn’t lead us to a tangible ROI. We can only measure that if we measure outcomes of the L&D investment. That is to say the change in work performed and the increased value of that work. 
 

Managing Minds, not Hands

Additionally I came across some new thinking published this year by David Grebow and Stephen J. Gill in the USA. They have been researching for a book to be published early 2018 by the ATD press, entitled: "Minds at Work: Managing for Success in the Knowledge Economy".

They began the research by looking for examples of companies that said they were learning cultures, where learning was continuous and supported in every aspect of organizational life. They never found one. They found some examples of learning cultures within companies, in various departments and units, but never consistently across the whole enterprise. They eventually realized why:  A company can tell the world it has a learning culture, provide lots of learning opportunities, and supply eLearning for everyone. But if management support for learning is not apparent and not constantly on display by managers every day, the original culture that supported and rewarded "not learning" will dominate over any attempt to be a learning culture.

They realized that a culture focused on learning needs leaders and managers focused on learning. So they looked at the critical relationship between managers and learning. Managers are expected to direct people’s daily work and performance. They are not usually expected to develop employees. In the research the authors (Grebow and Gill) identify two basic categories of business organization:

1. 19th style Century "Managing hands" older companies, an endangered species
2. 21st century knowledge economy, new companies "Managing minds"

The business results of the latter group are far more spectacular than the former. The authors go on to look at several case studies, in order to identify best practice of managing minds. David Grebow will present their results (and the book) at Learning Technologies France, international conference stream, on 23rd January 2018.