Pioneering New Business Frontiers: Unaware of What “Shouldn’t” Be Done
Dan Hilbert
NEARLY A DECADE LATER, I sit on my back porch overlooking the Texas Hill country and humbly laugh about the events that occurred that resulted in the breakthrough strategic human capital advances my team pioneered at Valero Energy. I lean back a little farther and smile ironically, thinking about how today my company, OrcaEyes, helps businesses measurably deliver breakthrough results in shareholder value, operational performance, and risk mitigation. If I were a different sort of person, I might stand up in front of an audience and pontificate about some divine intervention or moment of inspired brilliance. But if I committed that type of self-deceptive absurdity, I couldn’t enjoy the real-life humor of the amazing occurrences. It all happened because I simply didn’t know “what I shouldn’t do” at the Fortune 15 company Valero Energy.
I’ll never forget the first meeting I had with the Executive Plant Management Committee at Valero. I was unaware that HR seldom was able to speak to the committee. At Valero, this committee was arguably the second most powerful group outside of the board of directors. EVPs, SVPs, and GMs (general managers) of refineries are analogous to starship captains in Star Trek, exploring dangerous new worlds. A refinery is a very dangerous place. One small mistake results in deaths, and this happens multiple times every year at refineries. One major mistake and a small city is incinerated—literally.
These executives and GMs never completely rest. When on the road, they live by their cell phones, always on guard waiting for a crisis. I played golf with these leaders on a number of occasions. Golf was supposed to be relaxing. I learned by the third hole that these executives never completely relax—not even close. When the cell phone rang or they received a text, a frown immediately engulfed their faces.
When I look back to that first Executive Plant Management Committee presentation, inevitably, the first memories that arise are how lucky I was not knowing what I shouldn’t know and shouldn’t do.
Before me, the head of organizational development presented. Her excitement and accompanying anxiety were front and center. Since, as I said, I didn’t realize how rare it was for HR to present to the committee, I didn’t understand her level of emotions. I watched in amazement while this brilliant subject matter expert and eloquent speaker gave her best while the refinery executives ignored her, talking about football, stocks, and children. The apparent rudeness was stunning. But I didn’t know that the refinery executives did not believe HR could contribute strategic value. In their world of blowing up small cities, no room existed for “soft” conversations. HR didn’t very often talk strategic business, and, in their eyes, HR “shouldn’t” talk strategic business.
As I stood up to present to the committee, the members’ constant conversational rumblings did not subside in the least. I had only one slide to present. It was a large table of data from an Excel worksheet. As I began to speak, they paid no more attention to me than they had to my HR organizational development cohort. It was like talking into the wind. Then out of the clear blue, from the very back of the room, came a stern voice asking in jest, “Is this some HR weenie talking stats?”
I took the chance to get their attention and responded rather loudly, “Yes, sir! This is an HR weenie talking stats!” All of a sudden, the room was dead silent as they all gazed at the data slide being projected—not one set of eyes on me, just on the data on the screen. One of the GMs asked, “So what are you trying to tell me with this data?”
“Sir, what this data says is that if Valero’s stock keeps rising at the same pace it has for the past twelve months and the average age of retirement for our engineers drops from 59 to 55, which is the actual retirement age our predictive models forecast, you will have a shortage of senior engineers of at least 20 percent on average in the next two years. Might that cause you any operational problems?”
The mood in the room changed instantaneously as we, the HR weenies, handed out packets of spreadsheet printouts. The plant executives rapidly circled around two tables, examining the printouts, talking among themselves.
Then the salvo began. “If we give you other critical positions, can you do the same analysis?” “Can you extend the projections beyond two years?” “What’s your standard deviation?” “Can we send one of our analysts down to examine the data and formulas?”
I did not know that HR weenies shouldn’t talk statistics to business leaders. I did not know that HR shouldn’t use modeling and forecasting programs linked to multiyear capital expansion projects and correlations to retirement projections based on rising stock prices. My entire career had been in business leadership and revenue production. So I ignorantly, and luckily, went into HR thinking that everyone at a company should discuss, and should be encouraged to discuss, any sound business process that might deliver valuable business results with the highest-level business leader who could be reached. Three years and sixteen HR awards later, the rest is history.
To those of you who come from financial modeling, supply chain management, IT, or other mission-critical management, monitoring, and optimization systems, the following will be second nature and easily comprehended. For those who have little to no background in software system management, these processes may be challenging, so wherever possible, I will try to use common and hopefully somewhat familiar analogies.
The first two key terminology phrasings to grasp are:
1. Human Capital Business Impact Correlation (HC-BIC). This first concept is exactly similar to the financial term ROI. Instead of referring to financial return on investments in capital projects, new services, securities, or other forms of typical financial investment products, the investment here is in human capital (HC).
2. This is not a “soft,” “touchy-feely” conversation in the least. To make sure this is clearly understood for finance, operations and strategy executives, board members, and the C-Suite, these are not soft values. These are as measureable as nearly all financial investment assets and even more mathematically straightforward than capital amortization or derivatives. And most human capital drivers are much more easily manageable than security investments.
A few weeks ago, one of our new healthcare clients was trying to create the value proposition with its finance executives. Having had more than a half-dozen CFOs work for me, I like finance executives, particularly the hard-nosed, no fluff, I’ve-pretty-much-seen-it-all attitude generally accompanied by a wee touch of sarcasm (or maybe even a heavy dose of sarcasm). I just had to have fun and couldn’t stop myself, so I asked the VP of finance, “Would you be interested in decreasing bottom-line costs by 2 percent to 10 percent with little or no investment, with very minimal change management fees, and usually receive an increase in operational efficiency?” The normal answer is something like, “Is that a rhetorical question?” usually laced with a strong dose of skeptical sarcasm. But this time he came back with a hysterical deadpanned comment: “You sound like a used car salesman!”
THE FACTS ARE SIMPLY THE FACTS
And the facts are simply the facts, and these facts were true for that organization. And after fifteen minutes, my somewhat cautious and quite droll VP of finance asked, “Will this be finished by the end of February? We start the strategic planning process then and I want this data for the planning.”
And the facts are simply the facts. Because this is based on new data repositories and correlated in new ways to business, it can sound new or unbelievable. But here it is, strange or not.
Our experience with more than seventy-five global companies with workforces ranging from 600 to 72,000 employees has shown that strategic human capital management can deliver these levels of earnings improvement, and there is every reason to believe that the results to date can be bettered.
Strategic human capital management addresses the workforce at all levels as a core asset of the business, ensuring that the performance of this “asset” can respond to demands of the business or organization while mitigating workforce-related risks to the business.
One common thought that must be noted and cannot be stressed strongly enough: Human capital management is NOT human resources. Because of the criticality of this dimensional view, we stress it again: Do not correlate human capital management (HCM) with human resources (HR).
Here are the facts: 2 percent to 21 percent of earnings—LOST, unnecessarily—annually! The majority of companies unnecessarily lose in the range of 3 percent to 8 percent annually, including companies that rank in the upper quintiles of total shareholder return (TSR).
This is a massive business problem and opportunity that has largely been ignored because what you can’t see is what you miss. Leadership has been blind to these drivers and correlations. And it’s not the visible tip of the iceberg above the water that sinks a ship. It’s the unseen mass of ice below the surface.
OrcaEyes now has data sets on more than seventy-five global companies. Here are a few of the facts represented from these data sets:
The average company loses .09 percent to 12 percent of earnings completely from unnecessary mishandling of overtime positions.
• The median is 1.88 percent.
• One Fortune 50 company was losing 14.5 percent of earnings from unnecessary OT (overtime) of truck drivers. Yes! 14.5 percent!
The average company loses .84 percent to 14 percent of earnings from unnecessary loss of top performers and time-to-fill of revenue-producing positions.
• The median is 2.1 percent.
More than 70 percent of the companies have severe labor supply gap problems now and over the next three years in at least seven critical positions.
• However, only two industries have systemic labor supply problems: healthcare and energy.
Companies that handle PerformanceTurnover™1 effectively generate 20-plus percent better TSR.
Flight loss risk of top performers can be predicted with 75-plus percent accuracy up to three years in advance with specific, preventable reasons.
Specific levels of overtime over defined periods of time of hourly employees result in increased accidents, errors, and lost customers and higher legal costs.
• These “high-risk” thresholds can be predicted from weeks to months in advance before becoming serious business problems.
More than 67 percent of U.S. companies have at least one area of high “class” risk EEO liabilities. More than 51 percent have at least three areas of class liability risks.
Lack of required skilled labor, timely delivery of this skilled labor, and retention of employees in critical positions negatively impacts more than 40 percent of strategic plan projects and major contracts.
The average company loses 1.1 percent to 3.8 percent of earnings as a result of ineffective appropriations of labor across different business entities and even departments: employees being laid off and paid severance when another business unit is paying agency fees for the exact same skills.
Aging demographic retirement loss is not going to be the disaster for businesses as predicted. The impact will be more than Y2K but far less than a labor experience shortage and supply disaster.
• However, in healthcare, energy, and utilities, more than 61 percent of companies have severe aging demographic problems in at least five critical position groups today. The majority of these at-risk positions require “localized” skilled labor.
• This is defined as at least 40 percent of workers in a critical position being 55 years of age or older, and the two levels of feeder pools below have less than 50 percent of required talent to account for the coming loss,2 with external talent pools insufficient to meet the gaps.
For the ten “Human Capital-Business” correlations listed above, more extensive analysis can be undertaken, providing at least thirty different measures relating to business risk and performance. In addition, there are a further number of industry-specific metrics that we have and expect to continue to evolve. This is not a static approach; rather, it is an evolving body of work responding to the dynamics of the business world.
In my dealings with finance executives, I learned to appreciate and value that top finance executives need to measure the size of the iceberg under the water, the speed and direction of movement, and a risk damage assessment. To top finance and business executives, it’s not the tip of the iceberg they see above the water that concerns them. The first step for business leaders is transparency—making what were perceived as unquantifiable and undefinable issues into clearly identifiable and quantifiable action items. The second step is statistically and financially providing leadership with the quantifiable drivers to change lost earnings, costs, and revenue into competitive advantages. And the majority of HCROIs (human capital returns on investments) are absurd. I hesitate to mention normal HCROI ranges because I fear executives will immediately dismiss this. Even to me—someone who has lived in the area more than any other human on the planet in the last decade—they still seem incredulous. Businesses often invest large sums of money to get a “hopeful” five-year average rate of return of 15 percent. So I dare say that most HCROIs return over 100 percent in the first year. Actually, I would be straying from the facts. The facts are that the first-year returns usually exceed 200 percent.
In early January 2012, I had my first conversation with the VP of finance at a major healthcare system. I said “Hello!” Without a bit of emotion, he immediately replied, “I don’t understand why we bought this software. We do nearly all of this in other financial programs we developed. I have no idea what we will gain from this except higher labor and software costs.” If I hadn’t had some understanding of senior finance executives, this would have been one of those movements when I thought about cutting my wrists with a butter knife.
Instead, I asked a simple question: “If you could reduce labor costs by 4.9 percent, overtime costs by 21 percent, and unplanned contract labor by 15 percent in the first twelve months with minimal investment and minimal political headaches, would you be interested?” Knowing I was from New Orleans, he jokingly replied, “Sounds like Mardi Gras math!” I couldn’t help but bust out laughing and retorted, “I do not do funny tricks for beads. So please bear with me before we both make an assessment of my suspect math logic!”
“Are you aware of your full cost of turnover?” I asked. He shot back, “$6,700 for professional positions, $4,900 for skilled labor, and a couple of grand for everyone else!” I then asked, “Loaded or unloaded?” to which he replied, “What do you mean by loaded recruiting costs?”
“Recruiting software, performance review software, fully loaded recruiter costs including their management, association, and SHRM certification costs,” I told him. “These are factored into G&A and amortization costs,” he answered.
Trying to get to what I thought was a slam-dunk strategic HCM win, I offered, “Let’s just forget those for now since they are buried. And please don’t answer until I ask my brief questions. How many positions turn over a year? How many lost work hours are related directly to refilling these turnover positions? How much is the average ‘premium’ being paid for overtime and contract services while these full-time employees are being replaced?” Since we had access to their data, we had a pretty good idea at least within a few percentage points.
I continued, “How about 2,900-plus replacements per year with an average time-to-fill of sixty-nine days? The average ‘premium’ hourly cost is between 69 percent and 72 percent. This translates into more than 1.6 million hours paid at an average of 70 percent higher labor costs. What happens if the time-to-refill is reduced ten days on average?” This was a real sharp professional. He needed no more prompting. His first reply was, “This is not a way we were taught to view labor spend. But this is bottom-line reducing nearly 400,000 hours at 70 percent or more labor cost per hour.” He then asked me, “Where did you get the time-to-fill data? From the recruiting system?” When I answered, “Yes,” he immediately jumped in and said, “But this is not accounting for the time it takes to get a requisition approved, priced in compensation, then posted. Nor does it include the time it takes the average employee to start once the offer is accepted—on average more than two weeks.”
I told him that there was not always a one-to-one correlation between an employee turnover and a premium paid replacement. And he jumped back in, saying, “This does not include the cost-to-fill per position that will be eliminated. If we change the performance review structure and add $5 million in bonuses for managers with low turnover, the return is likely more than 400 percent. It shouldn’t be that straightforward.” I laughed to myself, remembering my recent mental conversation on the back porch: “I wouldn’t be here today if I didn’t know what ‘shouldn’t have ever been done’!”
But it is. And it’s measureable fact, and it’s another of those major business successes right underneath the corporate offices that just shouldn’t be that way. And that is just the tip of the iceberg—literally, when it comes to labor costs, lost revenue, and business operational risks.
And at the end of the day, once again, the facts are the facts and these are the facts. Previously hidden or inaccessible data about mission-critical processes, entities, and functions are competitive game changers, especially when it relates to the highest business cost—usually by far.
THE HUMAN CAPITAL BUSINESS IMPACT CORRELATION METHODOLOGY
The Human Capital Business Impact Correlation (HC-BIC) methodology is a four-part management system for discovering, diagnosing, and measuring business impact; defining business risks; performance optimization modeling; implementing and managing performance enhancement; and ongoing monitoring of HC drivers that impose risk on financial, operational, and strategic performance.
The first key understanding is that this is:
Not rocket science
Technically not new to businesses at all
Typical in management of nearly all other mission-critical business functions
Not time-consuming or disruptive
For companies that utilize supply chain management methodologies, this will be readily apparent. For companies that use network management, plant management, financial modeling, load balancing, or transportation management software, this will also be readily apparent. For all of its other claims, Google is essentially a network management company. Walmart, Dell, and HP are supply chain companies. These are dominant companies based on software modeling and software management systems.
Can you imagine for one second what Michael Dell would say if he were told, “We just ran out of LCD displays for our highest-selling laptops. We don’t know why. We have no idea where we are going to get more, or when.” Tar and feathering would be gentle. And imagine if someone told the CEO of Google, “We ran out of electricity to support our networks. We have lost 30 percent functionality, and response time has increased by 370 percent. We don’t know why, when, or how we will fix this!”
However, in the domain of human capital, this is not only acceptable—it’s the norm. The results are staggering financial and operational losses and increased strategic risks. There’s no one to blame. It’s no one’s fault. Until recently, the methodology, data, and technology did not exist to deal with these issues. As you will see, though, this model is sound, based on proven processes and technologies.
Step 1: Resource Planning—Demand Forecast
It’s literally unimaginable for transportation companies to not perform sophisticated resource planning. Do we have the trains, planes, and trucks to meet the demand of our customers and new strategic initiatives?
Can you imagine retail stores not performing sophisticated resource planning to ensure that they understand the projected buying patterns of their customers?
Or hospitals not performing resource planning to ensure they have an accurate estimate on the number of procedures that will have to be performed?
And what about . . .
Planes for the Air Force?
Buyers for automobiles?
Semiconductors for customers?
Money required for capital expansion?
Electricity required to run a city in the heat of the summer?
Budget to meet operational needs?
In the context of the HC-BIC methodology, we are not talking about traditional workforce planning as the answer. In HR, workforce planning means at least a half-dozen different processes and outcomes. To some it’s headcount planning, to others it’s financial arbitrage, to others it’s budgeting, and to still others it’s call center management.
It’s quite interesting and revealing that the definition for Enterprise Resource Planning (ERP) in Wikipedia makes no mention of labor, workforce, or HC:
Enterprise Resource Planning . . . systems integrate internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application. Their purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.
Including human capital planning in resource planning does not have to be a complex process. The most effective and familiar way to begin resource planning is just like budgeting. Managers submit a human capital requirements analysis to their superiors for approval. As long as management is included for all existing operations, strategic plans, future growth, new products, and services, this will be sound start. The key components are:
1. Projected need by individual position for each quarter for at least the next three years
2. Some sort of notation to indicate “critical” or essential positions
This is not to be confused with headcount planning. HC resource planning links the human capital variable to the strategic and operational business components.
Mark DeYong is the CEO of ATK, one of the largest U.S. defense contractors, annually consistent in delivering TSR in the top market quintile. Once he saw the power of this model, Mark insisted that the business unit leads at ATK update their human capital demand forecast quarterly in their quarterly operations report. Mark clearly understood that an accurate, dynamic HC plan that adjusted to changing business conditions was the essential first component of business-driven strategic human capital management. A proactive human capital demand forecast was the first vital step. Mark told me that he’s wanted to do this type of strategic human capital planning for twenty years, “but the technology and data was not there.”
Step 2: Supply Forecasting
Human capital supply forecasting is not complex. It can be performed systematically. With Step 1 in place, the demand forecast is aligned directly and dynamically to the business. Supply forecasting can also be dynamically aligned to the business.
The two primary components of human capital supply forecasting are (1) internal resource projections and (2) external supply availability.
Internal Supply Projections. Historical employee data is used to analyze and forecast through predictive modeling that projects the actual company headcount over the next three to five years. The key variables by position, business unit, and location are:
Current headcount
Historical turnover
Historical fill rates
Projected retirement
The #1 objection is “Our data is terrible.” There’s no question some company data is cleaner than others. The real answer is this: Have you been paying your employees? Do you have a payroll system with records? Then you have enough data. If this data is bad, you really need to know because it likely means your employees are not being paid accurately. As with all data, simple analysis tools can be used to assess accuracy, so that the accuracy of the projections is understood—exactly how most of the rest of the business works.
Recently, sophisticated employee flight risk prediction software has enabled companies to predict who will leave, when, and why with stunning accuracy. One of our clients uses it to assess the impact of bids in union negotiations. This client was able to analyze who would leave if certain benefits were changed. The results were clear that the loss of critical employees would be severe, so this intelligent information empowered the client to shape its bid to achieve the desired outcomes.
External Supply Data. This is another area where technology has just emerged, especially in North America, and where a lot of guesswork has been removed. Business leaders no longer have to guess about the availability, cost, and trends of external labor.
Intelligent data empowers intelligent decision for leadership:
How large is the supply in the required location?
How big is the gap or surplus right now?
Is the gap or surplus going to get better or worse over the next five to six years?
What is the actual cost in the market today?
Is it going to increase over the next five to six years, and how much?
Critical HC business questions no longer have to put financial and operational performance at risk.
With precision, leaders can know:
Is there enough affordable talent in the critical positions at the right locations to support ongoing turnover?
Is there enough of this talent to support growth?
How bad is it going to get?
Where can I find the largest available pools of skilled labor at the best costs to expand or consolidate?
Do I need to adjust my strategic plans as a result of the labor supply?
Other external variables to be monitored are general economic conditions or specific industry factors that will increase HC demand and, thus, the actual supply.
A perfect example of no supply demand forecasting occurred at one of the major insurance companies. The director of organizational development had built a superb management training program. On multiple occasions, the CEO suggested that the director not focus so much energy on one business unit. He didn’t listen to the CEO. A few months later, it was announced that the business unit was sold. As a result, a good deal of time and resources were expended to train leaders for another company. And, yes, the director was among the ranks of the unemployed shortly thereafter.
Step 3: Monitoring—Problem Determination.
If any of you have ever been into the NOC (network operating center) at a major company, you have witnessed an exceptional implementation of advanced technology. Literally thousands of global servers, PCs, bandwidth, switches, and routers can all be monitored, diagnosed, managed, and optimized from a single set of color-coded monitors.
The monitoring need for strategic human capital management is no different. Strategic human capital management without effective monitoring is an oxymoron. It’s impossible. It’s like throwing darts blindfolded at a moving target.
First and foremost is the supply of required labor meeting the demand today and over the next few years. As with all critical business elements, proactive discovery of business risk is always preferred so the potential problem can be corrected before it manifests into a business problem. Monitoring supply and demand with a good system is quite easy. Does a green icon turn yellow or red? When does it turn red? How big is the potential gap? In what positions? Where is it? Why is it occurring? What is the potential risk on business performance?
It’s essential that leadership is aware of supply-demand imbalances. It’s also essential to understand the root causes so that corrective and effective actions can be implemented. The answer is in the HRIS and external labor data.
As strategic human capital management systems evolve, financial, operational, accident, and performance data is added in short order. The sophistication and power of the monitoring increases exponentially, as do the measureable benefits.
Monitoring and effective problem determination are essential for high-performing organizations. In fact, many of the soft points made by HR that incessantly drive business leaders crazy can now be quantified in terms of business performance:
Do we really have aging demographic problems?
Is turnover in our sales staff really impacting revenue?
What levels of OT cause accidents and customer complaints?
Is leadership training delivering any measureable business results?
If we spend a few million dollars on a talent management system, what business benefits will we realize?
Is paying certain employees more or increasing benefits across the board really in the best interest of the business?
Is there really a talent crisis that will impact the business?
We met the CEO of what became a major client. When the subject of aging demographics arose, he boldly and proudly stated, “We don’t have any aging demographic problems. The average age of our workforce is 29.7 years old.” I asked if we could get the HRIS data needed and promised him an analysis. Having spent the past four years living inside the data of more than twenty energy, utility, and mining companies, we were pretty sure the company in question had aging demographic problems someplace.
After loading the data, we called the CEO back and told him, “We have never seen so few aging demographic problems in an energy firm. We found only one area of concern: 39 percent of your sales staff is 62 years of age or older, and from the limited amount of sales data we have, it looks like more than 50 percent of annual sales are at risk.” We signed a contract in less than a week.
Step 4: Risk Management and Performance Optimization—Human Capital Business Impact Correlation
Relatively simple correlations can each increase earnings by 2 percent or more:
Performance turnover to earnings
Time-to-fill of revenue billing positions
OT levels to accidents, customer service complaints, and thefts
External labor supply and costs to success of strategic plan initiatives
Aging demographics to fulfillment of multiyear contracts
Loss of top performers due to duration in a position
Optimal levels of FTEs and temporary labor
Human capital performance compared to industry competitors
Time-to-fill of OT positions to earnings
Actual ROIs of leadership training
Top management importers and trainers of talent
Worst management at retaining top talent
Optimal layoffs
Significant reduction in training and recruiting costs while improving workforce performance
Once the demand, supply, and business variables are into the strategic human capital management system, the amount of low-hanging fruit is unbelievable. Actually, it’s not unbelievable at all. It’s simply new usage of mature data correlated with intelligent decisions measurably linking human capital to business—predictively. However, by traditional thinking, “It just simply shouldn’t be viewed or work like that!”
Last year, we did an assignment for one of largest transportation companies in the United States. Our staff always studies annual reports of publicly traded companies before visiting a prospective client. We noticed that the company’s margins were below those of its competitors. Within two hours of getting the data into the system, we called the CEO and asked him why the company was paying $182 million in OT to truck drivers. He explained that $60 million of the OT was part of the business model for certain trucks requiring advanced certifications. That still left about $120 million. We accessed the company’s recruiting system data and discovered that the average time to fill was sixty-one days, and the average manager was sitting on resumes for forty days before responding. We used our external market intelligence products and discovered there were ample supplies of certified eighteen-wheel drivers in the majority of the company’s major locations. We recommended a recruiting outsourcing firm that guaranteed thirty-day fills as long as the managers responded to their resume submission in seven days. The recruiting firm simply started to pipeline driver candidates.
As ridiculous as this may sound, this one simple process added $63 million in first-year earnings.
The risks and opportunities abound simply because system management, resource planning, monitoring, and performance tuning have not been applied to strategic human capital management.
WHERE WILL STRATEGIC HUMAN CAPITAL MANAGEMENT RESIDE?
We were recently engaged as the principal external consultant on a futures project for one of the major HR software vendors. As part of the assignment, we participated in a focus group of elite analysts and thought leaders. More than 80 percent believed human capital management was too strategic to reside in HR.
Our company, OrcaEyes, has as its primary message “Translating Human Capital into the Language of Business,” but the reality is that strategic human capital management is the language of business and is much broader than the traditional HR function, requiring significantly greater skill sets.
In some organizations, the HR function may well step up and grab what would clearly be a transformative opportunity to become intimately and significantly involved in key strategic decision making in a measurable way. The alternative position is that once business leaders see the value of what can be provided to them, they sensibly will require direct reporting and be in a position to take specific action themselves, through their HR department or through external service providers.
AT THE END OF THE DAY
A number of major takeaways can be realized from this fact-based methodology. Every company is losing stunning amounts of earnings, experiencing unnecessarily high costs, dealing with numerous serious business risks, and losing strategic competitive advantages. But the “soft” side of this transformative new methodology is that “sometimes being unaware of what we shouldn’t know” and being allowed or empowered to examine what unspoken corporate culture normally prevents are the platforms for industry-leading companies.
Notes
1. Simple ratio for the number of low performers who leave an organization to each top performer who leaves.
2. This does not include projected normal attrition of the feeder pools, further exacerbating the business risk.
Dan Hilbert is Global Talent Acquisition and Planning Lead at Valero Energy Corporation. Recognized by Jobster as the “Bill Gates of Workforce Planning,” hailed as the workforce planning industry “Trailblazer” by HR magazine, awarded the Optimas award for innovation by Workforce Management magazine and industry leader of the year by IQPC and ERE, Dan Hilbert is considered the undisputed leader and pioneer in strategic workforce planning. His fifteen years of successful experience leading early-stage, venture-capital-backed software companies as both chairman and CEO provide him with the vision to clearly see workforce and talent management strategically, through the eyes of business leaders.
His ground breaking work in the areas of workforce supply chain management, predictive workforce modeling, quantifiable workforce to business value chain correlation analysis, talent acquisition process mapping, and workforce performance metrics resulted in over a dozen industry awards in 2006—record-setting.
He holds a bachelor’s degree in business from Belford University, General Management certification from the McCombs School of Business at the University of Texas, and Advanced Process Engineering certification from the University of Texas.