In recent years, Human Capital Management (HCM) has become as much a buzzword as ecommerce was in the mid- 1990s, when it burst onto the corporate scene promising to make millionaires of us all. The difference, though, is that attending to HCM now may save our millions, if not make us millionaires.
E&Y research (2006) claims that in the next three years, as the baby boomers retire, the number of US workers between the ages of 45 and 54 will grow by an estimated 21 percent and the number of workers between ages 55 and 64 will grow by over 50 percent. By the year 2030, it is estimated that people aged 65 and older will constitute about 20 percent of the country’s population, or one of every five Americans.
Our experience with Human Capital Management suggests that companies should initiate the following steps to avert the crises they are most likely to face over the next few years:
- Develop human capital metrics in conjunction with their overall strategy and vision.
- Attempt to link the metrics evolved for human capital with those being followed company-wide.
- Create a methodology to measure and benchmark the aforementioned metrics.
- Create a process to use these linkages to predict performance of the employees and make business decisions in keeping with the external business environment.
In addition to existing human capital, companies should also attempt to transfer the knowledge that the retiring employees possess:
- Create an information inventory of the employees. Begin by defining what this means in our industry and how can it benefit us in the long run, given the volatility of the business being conducted in these times.
- A governance team should be formed and made accountable to decide where the company is intending to be in the next 5-10 years. The team should also conclude what skill sets it will require to go that path, and whether the firm expects to lose that skill set in the next 5-10 years.
- The step enumerated above requires companies determine the groups or areas that are particularly vulnerable to retirements and to prioritize based on this assessment.
- The governance team, with the help of several line managers, should seek to identify the employees who have shown that extra ability to make intelligent decisions in the ever-changing rules of the business we operate in. This should be followed by a transition planning process.
- This entire process should be abetted by a performance management system to determine the productivity of all employees at all levels and ages.
The days of unilateral success are over. If we do not shift our focus to a more people-based management style, we may lose the competitive edge we have had for several decades now. IBI