The importance of employees to corporate success has been a major theme of many articles and books during the last 20 years. So what new thoughts on the subject can be found in the two books reviewed for this article?
The book by Bruce Tulgan, Winning the Talent Wars, concentrates on the world of high job mobility. How does management cope with a constant loss of experienced and talented workers and their knowledge?
Tulgan has three important messages for dealing with this manpower problem. The first message is that a company need not lose the talents of those who leave. Do not end the employment relationship. Instead, ties can be maintained with a reserve army of workers who are employed elsewhere but still can be called back to help with special tasks.
A second message pushes for total career customization – create as many career paths as you have people. In order to hold on to more talented employees, organizations should consider a full range of possible work conditions for high performers. While pay remains important, there are also other considerations such as work schedule, duration of employment, location, assignments, and so forth. For those who are tired with standardized work assignments, there are special working relationships such as roving assignments and being part of an unassigned internal labor talent pool.
The third message calls for the introduction of flexible staffing arrangements. Build around a relatively small regular staff and outsource company activities to external sources whenever you can. Only employ people when they are needed. Capable management can develop lists of talented people and put together the staff for every task based on a mix of contractors, employees, part‐timers, and some‐timers.
While Tulgan provides us with worthwhile thoughts on the free agency model, it seems to me that he oversells the concept. Employee loyalty to a work organization is still important to organizations. Virtual organizations cannot react quickly to changing situations since they must first mobilize the necessary labour resources. Committed employees are ready to carry out necessary but unsatisfying tasks. Organizational cultures can still be constructed that keep talented employees loyal to their workplace.
The book by Andrew Mayo, the Human Value of the Enterprise, deals with the intangible asset of human capital – a major concern in the evaluation of the value of any enterprise today. The author provides us with a textbook of methods for monitoring, measuring and managing such human assets.
The organizing principle for the book is called the Human Capital Monitor Model. This model aims at explaining the people contribution to added value in an organization through a combination of people as assets and people motivation/commitment.
In chapter 3, Mayo considers various measurements of good human resource practices. We learn about Watson Wyatt’s human capital matrix, The European Business Excellence Model and the Malcolm Baldrige criteria for performance excellence, William Mercer’s human capital wheel, and Arthur Anderson’s approach to human capital management. In one way or another, these measures deal with recruitment, leadership, training, and work motivation.
In chapter 4, the author considers measures of human capital. We are told about three possibilities for human resource accounting:
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(1) cost based, involving acquisition or replacement cost;
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(2) market based, having to do with the price to be paid in an open market; and
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(3) income‐based, measuring the cash stream into an organization due to the contribution of a human asset.
The author provides his own formula for calculating human asset worth as equal to employment cost multiplied by an individual asset multiplier and divided by 1,000. Employee cost is the base salary plus benefits plus taxes. The individual asset multiplier is given as a somewhat subjective set of measures that examine capability, potential, contribution, and alignment to organizational values.
More details about the construction of an asset multiplier are given in chapters 5‐7. Capability is shown to consist of behavior, know‐how, experience, networking, and attitudes. Maximizing human capital is based on acquisition, retention, and growth. Motivation and commitment are influenced by leadership and culture, with rewards based on performance
Chapter 9 returns to the measurement of human capital but from the point of view of different stakeholders. For instance, the non‐financial value of human assets to parent companies can be measured by the extent to which employees live up to corporate values, enhance company reputation, fulfill strategies, and transfer knowledge. On the other hand, non‐financial values for employees involve challenging work, developing new capabilities, feeling committed, and enjoying the working environment.
In chapter 8, innovation/creativity is explored as a capability of organizations. The author considers innovation and change as coming out of a learning environment, leading him to place importance on a culture of learning and even the establishment of corporate universities.
Chapter 10 appraises the difficulties and pitfalls when human assets are combined through mergers, acquisitions and alliances. Important elements of social capital can be lost because of rationalization, problems of finding management appropriate to new workforce, and the leaving of some of the best people.
In summary, the book by Mayo deals with a number of important issues in human resource management but does not move any of them forward. Instead, the reader is given an excellent summary of the various efforts made by others to deal with these issues. But do not expect an integrated summary of the different approaches, and it is up to the reader to decide which method he or she prefers. This is a joint review with Winning the Talent Wars: How to Manage and Compete in the High‐tech, High‐speed, Knowledge‐based, Superfluid Economy
