Making People Your Competitive Advantage—Just Lip Service for Most Companies?

Edward Lawler starts out his new book, Talent
, discussing how sick he is of hearing executives give lip service to their employees with nothing to show for it.
“Time after time I have heard senior managers say, ‘People are my organization’s most important asset’ or ‘Employees are number one in my organization.’ Sounds good, but in many organizations, there’s an enormous gap between the rhetoric and the reality,” Lawler writes.
So Lawler, who is the director of the Center for Effective Organizations at the University of Southern California, spends the next 242 pages describing what processes and procedures companies need to put in place to create what he calls a “human capital centric organization.”
There is a lot in Talent that you may have heard before: how to make sure you have the right HR people in place (business partners versus administrative staff); how to implement an effective performance management system (that evaluates and motivates); and how to develop your managers so that they are leaders and managers.
This is all important stuff. However, there was one chapter in Talent that I found to be really new and interesting. That was the chapter about corporate boards and talent management.
Often when we think about boards of directors we think about a room of former CEOs and finance guys who go over numbers and compliance issues. That’s pretty much what Lawler has found in his research as well.
But if a company wants to really use its people as its competitive advantage, then these boards of directors have to be informed on the talent management issues within the company. Not only that, but at least some of these board members should have some HR expertise—which, according to Lawler’s research, is a pretty rare occurrence.
Most of the time, former CEOs are the go-to person on the board about talent issues.
“There is no doubt that many CEOs have some understanding of the human capital issues that corporations face, but they rarely have the kind of in-depth expertise that a professional in HR could bring to a board,” Lawler writes.
If boards rely on finance experts for financial matters, why wouldn’t they have HR experts for human capital issues? he asks.
To address this issue, boards should not just seek out HR experts to join them as members, but they should also participate in training sessions on talent management issues, Lawler says.
While boards often undergo training on compliance and finance issues, they don’t do anything with regard to talent management. This is really a problem considering it’s the board’s job to make sure companies have proper succession planning processes intact. How can they oversee this if they don’t fully understand it?
Lawler suggests that boards assess their companies’ talent by acting as “mystery shoppers,” either by dropping by companies and chatting with employees or watching focus groups.
Lawler proposed that boards set up “human capital committees” to delve into these issues.
But probably the most controversial suggestion that Lawler makes when it comes to boards is to have board members go through performance reviews in the same formal way that executives should be evaluated.
He notes that more than 80 percent of board members say they do an effective job. But most of these individuals are evaluated informally.
Lawler described how he once asked a board chair about this, and the chair suggested it would be insulting to establish a formal evaluation for board members considering the amount of time they are giving to be on the boards. But, as Lawler points out, aren’t these individuals being paid hundreds of thousands of dollars to be on these boards?
I think Lawler is right in saying that a company that really focuses on talent management should have a board of directors that does the same.
I don’t think that his vision will become the norm anytime soon, however. Particularly in the wake of Sarbanes-Oxley and SEC rules on executive compensation, boards are busy enough with financial matters to take the time to focus on talent management.
Maybe I’m just a skeptic. What do you think?
Listen to a Workforce Management Podcast with Edward Lawer. Link opens a 2.25 MB MP3 file.

















