HCM 4.0 # The Business-Centric Model for managing human capital: HCM 4.0 - A NEW MANDATE TO MAKE HUMAN CAPITAL THE DIFFERENTIATING FACTOR

CAN HUMAN CAPITAL BECOME STRATEGIC AND PROACTIVE?

INDUSTRY 4.0 has a new business paradigm – characterized by speed, innovation, short cycle time, quality and customer satisfaction. The torrential winds of change brought about by Industry 4.0 are both a challenge and opportunity for the HCM profession. Cynics may speak of the decline of the HCM function; yet the champions of HCM see a vibrant rejuvenated version to match the challenges of Industry 4.0.

HCM is an upstream of corporate strategy but aligning it to the corporate planning process is a delicate and complex process.

· Drawing the terms of reference where the HCM function makes a strategic shift

· Outlining a role for HCM in the gamut of corporate planning and execution

The people management function over the years has seen four phases of deliverables:

Ø OPERATIONALLY REACTIVE (administrative efficiency the mentality of an office administrator )

Ø OPERATIONALLY PROACTIVE (functional excellence to “toe the line” aiming at problem prevention ).

Ø STRATEGIC HCM (where systems and best practices are rolled out with a trial and error approach )

Ø BUSINESS CENTRIC HCM (where the realities of the marketplace decide our agenda.) In the fourth phase of maturity the prime issues are:

· Does HCM respond proactively to the early warning signals of the business environment?

· How does our execution excellence at its best to benchmark with the competitors or industry members’?

· Does HCM add to the talent inventory organization capabilities to go ahead of the competition?

Michael Porter the Guru of Competitive Strategy says “… Highly successful organizations are those that conceptualize how to differentiate themselves from competitors, not just replicate best practices…”The primary source of production in our economy has shifted from physical to intellectual capital. So technology in the form of machinery and equipment is not the differentiating factor. Ability to use it effectively is.

One of the ways surely could be leveraging human capital by the superior quality of people and work culture. HCM champions may loudly claim that the quality of people is the cutting edge of the company’s competitive strategy. . Various studies show that up to 85 percent of a corporation’s value is based on intangible assets. Strategic assets in the new age economy are a set of capabilities and resources intrinsic to an organization ; which create a lasting competitive advantage difficult to imitate HUMAN CAPITAL IS THE FOUNDATION OF ALL BUSINESS VALUE CREATION

Research reports say hi-performance companies adopt progressive people management practices very quickly as different from low performance companies with archaic people management systems. Winning companies who embrace the HCM 4.0 Model devote considerably more resources to HCM strategic agenda. Indeed, the most striking difference is the vision of leaders to make the system comprehensive and not a patchwork quick-fix job.

DRAFTING AN ACTION PLAN

HCM 4.0 is system embedded within the larger system of the firm’s strategy implementation. Hence managing and measuring the relationship between these two systems is the crux of performance excellence. This new paradigm can mark the beginning of a golden age of HCM.

The reality is organization at times thunderstruck by unprecedented challenges. Special HCM capabilities are needed to face the dire challenges of rapid growth; expansion across geographies ; turmoil by mergers, acquisitions, or joint ventures to integrate different organizations’ work systems. There is scarcity of talent in mission critical positions. These organization problems are the very opportunity for HCM to prove it worth!!!

Human capital management perceived two decades ago as a strategic initiative has now got to be ingrained in strategic business processes. HCM 4.0 must be more engrossed with longer-term people issues and macro-concerns about structure, quality, culture, values, commitment and matching resources to future need. The CHRO must consider those HCM attributes that are crucial to the implementation of your firm’s competitive strategy.

So HCM 4.0 is not merely the adoption of appropriate HR policies and practices but also the way in which these practices are deployed. Thus HCM 4.0 secret formula is…. work processes and capabilities which cannot be duplicated or copied by rival firms. The reality is the quality of people differentiates the winners from the losers in the business- technology can be copied but the processes of implementation is the real cutting edge of competitiveness. The HCM 4.0 stellar role is to combine the talents of employees like an orchestra conductor and be agile to use it to glean market opportunity with maximum efficiency.

FINAL WORD

HCM as a function has the privilege of being one of the only functions to touch every part of an organization, from the highest authorities in the board to people on the shop floor. Every change is achievable only through a proper planning followed by execution with respect to the organizational needs and objectives. The HCM 4.0 new role requires active involvement in all pre-planning work, which includes how they are being executed, the impact they will have on the business, what is the expected outcome and how can those successes be measured.

ith best wishes

Dr Wilfred Monteiro