deploy and fight over that most valuable
of resources – workforce talent.
Don’t laugh. We share your healthy
skepticism. We, too, have become a bit
cynical hearing companies grandly proclaim, “People are our greatest asset!”
only to watch most of them show little
true commitment to developing and
leveraging those people’s abilities. We
are also aware of the less-than-flattering
stereotypes of HR professionals – you
know, “administriviators” – and of the
reality that many traditional HR activities, such as benefits management, are
increasingly being outsourced.
But the staggering cost of finding and
hiring top talent today – not to mention
the millions of dollars’ worth of productivity that can be left unrealized when
a company’s employees aren’t engaged
with their jobs – highlights the need to
devote more time and resources to developing and managing this greatest asset. The stakes are becoming ever higher
as the human-capital-intensive services
sector continues to grow; as workers’
mobility increases and moving laterally
becomes more attractive to some people
than moving up; as baby boomers vacate their corner offices, decreasing the
supply of experienced managers; and as
the Millennial generation brings new
expectations to the workplace. In short,
the long-held notion that HR would become a truly strategic function is finally
being realized.
We have therefore been puzzled that
although almost every successful CEO
who visited our business school classes
declared the importance of attracting
and developing talent – and many said
that the 10% to 20% of their time spent
on this was the most rewarding part of
their jobs – we heard little about how to
actually do it in practice.
Things are changing, though. As talent management becomes a make-or-break corporate competency, the HR
function is responding with a shift from
managing the monetary levers of human
resources – compensation, benefits, and
other expenses – to increasing the asset
value of human capital, as measured by
ARTICLE AT A GLANCE
Matthew Breitfelder and Daisy
Wademan Dowling entered
human resources, after graduating from Harvard Business
School in 2002, to get in early
on a field poised to take off.
Talent management is now
a make-or-break corporate
competency, and HR has
become – once and for all –
a truly strategic function.
The characteristics of the
“New HR” are being defined
at top-tier firms that know
what it takes to stay ahead of
the curve.
intangibles such as employee engagement. A new kind of HR professional is
emerging to manage this transformed
function, someone who deeply understands not only talent-management processes but also an organization’s strategy
and business model – someone who is
responsible for, say, hiring and training marketing managers but who also
knows how to put together an effective
marketing plan.
From our current vantage points inside two major companies at the forefront of this trend, and in our prior roles
at two other such firms, we’ve seen the
“New HR” in action. We have participated in the sort of nitty-gritty tasks that
constitute this redefined HR and have
observed the practical results – all the
while weighing the implications for our
own careers. (Though acquaintances in
business school, we didn’t compare notes
until relatively recently.) True, our experience is primarily with professional services firms. But such people-dependent
businesses are at the cutting edge of
talent management because they face
some of the most daunting challenges in
that area, including employee turnover
rates that require some organizations to
replenish virtually their entire ranks every five years.
In business school, we were trained to
seek out underappreciated investment
opportunities and to create value in sur-
prising places. Unlike our peers searching for bargains in private equity or at
hedge funds, though, we see the deepest
discounts in the complex task of identifying, attracting, developing, and deploying people. We also see an undervalued
and underpriced asset in the HR function itself, one that is poised to appreciate significantly. Like the smart value
investors we learned to be in business
school, we wanted to get in early.
Oh, one other thing: We’re having a
great time.
Daisy’s Story
It’s 10 AM in London, and the fixed-income trading floor is abuzz. Salespeople shout out prices while the digital
ticker overhead scrolls unrelentingly. I
spent five years before business school
in debt syndications, so the scene is
familiar. But today I’m here doing something quite different: With a British colleague, I’m scouting potential
action-learning projects for the top 100 vice
presidents at Goldman Sachs. The projects involve groups of six to eight VPs
who tackle current business challenges.
The aim is to develop their ability to lead
complicated initiatives across business
and geographic lines and, at the same
time, generate real (read: P&L) value for
the firm. One project we’re considering
would involve assessing the market potential of an underbanked country that
has significant raw resources. As a VP on
the Pine Street team, the firm’s senior
leadership-development group, I’d help
