maturity & risk
DESCRIPTION
People are the single biggest risk for a business yet we are only just beginning to understand how to assess, measure and shape our organizations with this in mind.TRANSCRIPT
Human Capital: Value Creation and Risk
AAAAA+AA- AAA+AA-BBB+
An introduction to Organization Maturity
Stuart WoollardCEO OMR Group & Council member, Maturity Institute
How much does human
capital matter?
Understanding how human capital drives value & risk:
The paradox is that by not pursuing
profitability to the exclusion of all
else, the Great Engine companies
in their Golden Age would achieve
enormous increases in
value...whereas, by single-mindedly
pursuing profit...these same
companies and their successors
actually created less genuine,
lasting wealth; indeed, they would
often destroy it.
(The Puritan Gift, Kenneth & William Hopper)
Value motive – short, long term;
narrow or broad based?
“
”
Profit is critical for a
healthy organisation but
[societal] value is much
broader, cleaner and
sustainable
Adding Value: quantification
6
€+ =
Increased Output (O)
Reduced Cost (C)
Increased Revenue (R)
Increased Quality (Q)Value of business now
Value of Business in
1, 2, 5, 10 years
ADDED VALUE
€€
The Measurement Challenge: how people link to value & risk
• Maturity assesses the extent to which an organization is
designed around the goal of maximizing its value, while
controlling risk, with respect to all its human capital.
• Value relates to the organization itself (i.e. productivity,
quality, revenue, cost) and value generated by the
organization in a societal context (e.g. economic, well-
being, environmental).
• Human capital relates to an organization’s people and all
people connected with the development, production and
supply of an organization’s goods and services.
Maturity, Value & Risk
Measuring or rating maturity:
9
“Art is about learning to see and to observe. And the sciences are about seeing and observing.” –Ed Catmull, Pixar
Value Motive
Whole system
Learning Organization
Improvement philosophy
People riskHuman capital ethos
Trust Engagement Cooperation
Performance system
Communication
Business/people strategy
The Ten ‘Pillars’
OMR
Stage 2
Good
Professional
Practice
Stage 3
Effective
Management
Stage 4
Human Capital
becomes integral
to business
operations
Stage 5
Transition:
operational
to strategic
focus
Stage 1
Personnel
Administration
Board & Executives
resistant/unaware of people &
human capital value up to this
point
Stage 6
Organisation
becomes a
whole system
Stage 0
No Conscious
People
Management
Maturity spectrum:OMR ‘AAA’ Scale
©Paul Kearns/OMR 2013
LONG TERM - STABILITY
SHORT TERM –
UNSTABLE
A+
to
AA
-
AA
A
BB
B to
ABB
B-
BB
+
BB
C B
How maturity affects HR value & risk influence
Becoming mature: getting beyond “best practice”
HR (GM) functions
HR’s Performance/value
2 3 4 5 6 7 8 9 101 2 3 4 5 6 7 8 9 10
Including
Mature
(Value
oriented)
firms
changes the
scale
“Best
practice”
scale
Maturity predicts value creation & destruction
Value vs supply chain orientation
Embedded societal value &
responsibility
Truly inclusive workplaces
Best/sustainable resource use
Learning, knowledge &
innovation
High trust, cooperation &
informed decision making
Maturity drives higher value, lower risk & ‘good’ outcomes
“social, economic, environmental, and ethical
factors directly affect business strategy—for
example, how companies attract and retain
employees, how they manage the risks and create
opportunities from climate change, a company’s
culture, corporate-governance standards,
stakeholder-engagement strategies, philanthropy,
reputation, and brand management.” – David
Blood 2007
Maturity in practice: value outcomes
Early indicators:
Exec expectations of human capital & value now aligned
Organization now adopting a new language around HCM
10 Pillars embedded into assessment of planned HC activities
Maturity is new framework for decision making
Senior execs now lead on HC initiatives
HR team now business focused rather than "best practice”
