How I discovered that I was the Second Human Capital is the CEO’s # 1 Business Challenge

By Dwayne Jorgenson, CIA, CFE, Andersen Alumnus, Senior Advisor to Human Investment Advisory, Inc., Director of Standards Process Controls for the In-Memory Apps Institute Standards Organization, and an expert in Corporate Governance and Internal Audit Services and Jim Villwock, Founder and CEO, Human Investment Advisory, Inc. and the Director of Standards for the In-Memory Apps Institute Standards Organization.,

According to a recent study by The Conference Board, the #1 Challenge of CEOs worldwide is Human Capital “HC”. Every CEO that I meet, I ask, “How is Human Resources “HR” working out for you?” While I am sure there are many exceptions, so far we have yet to find any ecstatic replies. Clearly, there is a business gap but also an opportunity. Closing that gap may be your #1 Business Opportunity.

Companies who look at HR/HC through a traditional lens will not likely see major business changes. The opportunity is in new paradigms, strategies, and processes at the CEO and Board level, which are business based rather than HR based. Once the opportunity has been defined, then teaming with HR to align with your business requirements can support true companywide business transformation.

The key issues, as cited by The Conference Board Survey of 943 CEOs, presidents, and chairmen are:

  1. High quality sustainable growth with increased employee engagement and workforce up-scaling

  2. Developing a strong culture around innovation, engagement and accountability

  3. Strategies to raise productivity and become/remain a high-performing organization

So, how can a CEO and their team transform the company to address those issues?

After all, according to Gallup, in the average company:

  • 70% of the people hate their jobs

  • 70% of people hate their managers

  • 70% of the people are not engaged – and of that a significant percentage are actively harming the company

Despite all the money and time previously invested by companies, these statistics haven’t materially changed in over 20 years.

So, what is your company doing differently to make a difference?

At least for the CEO’s measured in the Conference Board Survey, everyone seems to agree on what is needed. The words are agreed upon, but the road map to making it happen is often missing.

There are significant gaps between what CEOs want and need to drive their business in today’s highly competitive, fast paced, and disruptive world. Beyond technical gaps, the largest gap appears to be between the CEO and their People.

So, what are the key drivers for what CEOs say are their key issues?

  1. What drives employee engagement and workforce up-scaling?

  2. How do you develop a strong culture around innovation, engagement and accountability?

  3. What are the strategies to raise productivity and become/remain a high-performing organization?

The answer does not start with your People or your HR organization. People follow leaders. HR is a support organization that implements the direction that it is given…or, lacking guidance, HC simply imitates what everyone else is doing or makes it up.

The answer is in you, the CEO, defining your unique business strategy and plan so others can understand it, align with it, and engage with it. The next step is also in you. After you define your business, the next step is to define the culture, values, and many other definitions that allow employees to follow and for HC to support.

Once these questions are answered for your business, only then can consistent paradigms, processes, metrics, and governance be implemented to support your definitions. Once that happens, your goals of alignment, engagement, agility, innovation, accountability, productivity, and high performance can be pursued. The result is usually increased revenue, profit, growth, and market share for your business.

Does every employee understand your business? Do they know what is required from them to drive your company’s success? Have you, the CEO, defined your business and how your people model needs to be implemented to support your unique business? Do you have metrics, controls, and active governance to ensure companywide compliance with your definitions?

Whereas the above provides the guidance that is incorporated into a proper “Tone at the Top” approach, we also want to encourage you as the CEO to sit with your executive team and discuss the points presented above. Leadership is always better when the opportunity for input is available, which then drives a consensus-based approached to the organization.

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