What is the Human Investment Model?

Once you understand your company’s business, go-to-market model, and strategy then you are ready to determine how you can add strategic value to exceed the CEO’s expectations and wants. So, what does the CEO want?

While the answer will differ with each CEO, here are a few typical answers:

1. Every employee, team, and organization aligned to exceeding the company’s goals.
2. Every employee to be the right fit for the company, in the right seat, and adding value to the company.
3. Every employee to be a team player, successful, and growing.

Or to phrase it a different way, how can the company communicate their strategy to every employee, make sure every team is aligned with that strategy, and be sure every employee is adding value to their team as each team contributes to company success? Or to put it another way, how can the individual be on the right bus, in the right seat, going in the right direction, and adding value to their team in alignment with the company strategy and goals?

  

Notice that every other typical HR function is redefined as these questions are answered.

1. Recruiting – Only hiring coherent team players for the right role as defined by the new strategy. Our assessment partner can help.
2. Health Care and Related Benefits – Designed for the new model of employee within the business plan of the company. Frequently offering additional choices that are paid by those employees who want them.
3. Compensation – Rethought depending upon the new structure, automation, and outsourcing strategies versus the global marketplace.
4. EEOC Regulatory and Legal Compliance – Annual review, often by outside counsel, of all proposed changes and processes in light of compliance and best practices.
5. Employee Issues – Will never go away but can be reduced by Human Investment suggestions we will discuss later.
6. Training  – Redefining training requirements that fit the HI model and the Integrated Success™ model that uniquely fits your company
7. Employee Development – Open and encouraged for everyone – on their dime. Targeted for high potentials based upon matching their career success motivation to company success. This is discussed further under Jobpreneurship™.
8. Outplacement – Focusing on helping those going out the door learn Jobpreneurship™ for getting their next job and for creating greater career success in the next job.
9. Payroll – Automated using new technologies and communication capabilities
10. Employee Communications – A redesign that includes company messaging, employee interest, and team successes.

So, how do we recommend you start? Experience suggests that, unless it is consultant led by CEO direction, each person can start from where they are today.

If an employee, start to learn how you can add more value to what you do. Consider starting with Jobpreneurship™ 201 which will show you how to develop greater career success and how to help mentors to help you.

If the head of a department, you can contact us for suggestions.

If you are the head of HR, you can decide whether to pursue strategic improvements or to begin with small tactical improvements that can make a noticeable difference. We encourage you to contact one of our partners to see what may be right for you.

Next week we will begin discussing how HR or company leadership can begin moving to HI to achieve greater company success.

How Do You Start a Human Investment Function?

The first step, by either the C-Suite, HR executive, or Line executive, is to separate the strategic focus from the tactical focus.

It does not matter whether you are discussing product development, marketing, sales, Finance, IT, or any department. The challenge is always creating time to focus on the strategic by automating, layering, outsourcing, or segregating the tactical. Otherwise, the “Tyranny of the Urgent” (author unknown) along with limited staffing will typically limit the ability to think and act strategically.

In traditional HR, the lines are even more challenging. Why? Here are typical tactical projects that HR has to deal with every day:

1. Recruiting
2. Health Care and Related Benefits
3. Compensation
4. EEOC Regulatory and Legal Compliance
5. Employee Issues
6. Training
7. Employee Development
8. Outplacement
9. Payroll
10. Employee Communications

Why are these really tactical? Because every item can be outsourced to a third party. Whether they should be outsourced or insourced is a different set of business questions. The reality is that businesses are increasingly outsourcing HR roles. So, what is strategic? In other words, what would get the interest of C-Level management?

Every CEO is looking for help from those who:

1. Understand their business – their go-to-market model and how each team fits into making the company the highest value and most competitive in the marketplace.
2. Contribute to creating innovation, best practices, and teaming that tie into their strategy.
3. Take ownership (accountability and responsibility) for their function to integrate and contribute to the company’s strategic success – profitable company market share growth.

Everything else is detail – and tactical.

So, do you understand each P&L of the business? Do you know how each P&L fits into the company’s success and priorities?

Do you understand your function’s role in contributing to each P&L success? Are you focused on how you can creatively add value and contribute the C-Suite definition of success?

Are you willing to do what it takes to make your function a strategic value add – even if it means shrinking your organization, outsourcing services, and sourcing outside help as needed? Are you willing to redesign your organization to automate or eliminate roles in order to reallocate resources that contribute to the company’s success?

The CEO has to be willing to retool, redesign, rethink, redirect, and restructure to meet the rapidly changing global marketplace. If you wish to be on his or her strategic team, you have to understand the current business and the CEO’s vision of tomorrow’s business strategy. You then have to be willing to also retool, redesign, rethink, redirect, and restructure your function in alignment with the CEO’s direction. The real opportunity is when you can enter into this level of discussion and make the changes that add even more value than the CEO expected.

That is why we created the Human Investment model. The first step in starting a Human Investment organization is to understand the difference between strategic and tactical. The second step is to develop the strategic Human Investment model that fits your unique company and then design each tactical team to support that model. Next week, we will suggest a model template to help you.

For non-HR functions, you can utilize our model even if others choose not to participate.

 

How To Explain the Human Investment Model

The Human Investment model is similar to your own personal investment plan.

In a simplified explanation, you decide:

• What is the description of where you would be willing to invest your money? For HI, what is the role, experience, behavioral profile, education, etc. that you believe you need to fill a position that the company will pay (invest) their money into?
• What is the return you expect on the investment of your money? For HI, what is the work and value that you expect to get from the investment of company money (salaries and benefits) into the hired employee?
• What are the reasons why you might decide to add to your investment? For HI, what are the reasons why you might invest in training, coaching, promotions, bonuses, equity, etc. with an employee? Once the profile has been benchmarked and is effective, how many others with the same profile should be added to the team?
• At what point will you decide it is time to terminate your investment? For HI, what are the conditions when you should terminate your investment (salary) with the employee? Should you wait for a turnaround? Should you inquire about actions being taken that might help the investment be worth keeping? Are the conditions such that you should immediately take your losses and sell (terminate)?

If you are the individual employee, what is your value? Are you a fit for the company? How can you increase your value? What is the business model of the company? How can you add value and alignment to where the company executive team is going?

If you, as an individual, are not willing to add value, then why should the company continue investing in your salary and benefits?

If you, as an individual, are not willing to team with others in alignment with the company, then why should the company keep you?

Any investment is either a fit for the investor or not. Any investment that is not producing a return on the investment should be replaced by another investment that does.

Isn’t that how you manage your personal investments?

Isn’t that how a good company should manage their human investments?

If so, then HI managers and line managers, are to be investment portfolio manager teams. They work to ensure the investor’s portfolio has the right mix of profitable investments – and change the mix or investments in alignment with the direction of the investor, who is the CEO and his or her team. Here the HI manager is an advisor to the line manager who has the ultimate decision authority. The HI executive, who reports to the CEO, provides the measurements of how well the line managers are doing with their human investments.

If the HI managers and line managers are doing a poor job of investment portfolio management, then they are not adding value or creating an incremental return for the investor. Inferior investment portfolio managers should be replaced by superior portfolio managers. In the investment world, portfolio managers are measure against external portfolio managers. HI and line manager employment should be dependent upon the results of their portfolio.

To put it another way, a major difference from the financial investment world is that the role of HI is to assist employee managers to obtain optimum performance and to help executive teams measure the performance of the teams under them. Each employee manager is ultimately responsible for the performance, value, and alignment of their subordinate investments. Each manager ultimately reports to their manager with cumulative results, or lack of results, impacting the performance of the executive and their value review.

That is why we start with Leadership, then move to the organizational groups (investment teams), and then help employees (individual investments) grow or find a better fit in a different company (someone else’s portfolio). Our Leadership model is called Human Investment Leadership™.

In a global economy, the use of the HI model may make the difference between the company surviving and thriving.

How To Get CEO Sponsorship of the Human Investment Model

Since the Human Investment Model can transform a company, a HR professional or a management subordinate might believe that they can simply explain it and the CEO (or decision maker) will buy into the concept. Don’t hold your breath.

Most CEOs become CEOs because they think they know better than their subordinates, especially functions they consider as tactical. It does not matter whether they are right or wrong. It is their business. Being at the top means they are the decision maker. You might be perceived as presumptuous, offensive, and naïve. There are better ways of helping the CEO to understand and sponsor Human Investment.

The first way is to find a trusted business advisor, management consultant, or executive coach who the CEO uses today. These people are viewed more as peers, friends, and “outside opinion makers” by most CEOs. It is more effective to help them understand the model, buy into it, and share the model with the CEO as coming from them. Will you get the credit? Probably not, but you may get the results you want. You might also get the advisor to suggest to the CEO that you might be someone who can help him or her implement the HI model.

Why are advisors so important? CEOs are often lonely people. Rarely are they able to fully open up to their direct reports much less with the entire company. Whether being influenced by peer CEOs or outsiders whom they trust, it is the advice of others that helps them maker wiser decisions that impact everyone in his or her company. These advisors and peer CEOs have been tested to be worthy of their trust over time and with other issues. At a minimum, most CEOs will thoughtfully listen to their outside advisors.

The second way is to find a trusted direct report from inside the company. These people are often by the side of the CEO and frequently give input and suggestions. Any suggestion that represents a new idea or a change in business practice contains the risk of failure, distraction, or cost. Therefore, the best approach is to build a consensus among the CEO’s trusted reports who jointly suggest either strategically or tactically pursuing the Human Investment model. When this happens, the leadership team is agreeing on the team sharing the risk of failure and agreeing on accepting responsibility for helping the initiative succeed.

The third way is to tactically test the model within your own department. Since the cost of implementing Human Investment solutions is so affordable, most managers have the delegation of expenditure authority to initiate a limited tactical test to see if the pillars of the model can actually make a difference. Proven demonstrations of success become powerful selling points for program expansion because the risk of the unknown has been eliminated and value to the company can be shown.

Next week we will discuss a simple way to explain the Human Investment Model to others.

Why Pursue the Human Investment Model?

Companies have to increasingly compete in a highly competitive global marketplace. Those companies who cannot compete risk going out of business.

Divisions, Organizations, Departments, and Teams who are not adding value to the company’s competitive success are being automated, consolidated, eliminated, moved to lower cost locations, or outsourced. That includes accounting, IT, payroll, recruiting, and anywhere that “does the job” but is not providing best in class services with the lowest total cost and highest total value. These trends should be used to wake up staff on their need to jump on board the jet before it takes off.

Previously, internal support organizations could afford to let product development, marketing, and sales worry about funding everyone’s salary and bonus. Today, every source of cost savings, every person’s contribution and value, and every dime must be considered. If someone does not carry their weight, global competition requires you to remove them or outsource them. If someone is adding incremental value aligned with company success, then they will be the ones gaining notice and future opportunities.

Human Investment is how every department can make a fully aligned, running on all cylinders, mean, green racing machine. However, it will take a radical cultural shift that reaches to every nook and cranny in the company.

Companywide Strategic Human Investment must start at the CEO level with his or her full support. In large companies, that “CEO” can also be a subsidiary GM or a divisional president. If they are not supporting HI, then assume HR staff will begin to see all kinds of consultants, service companies, and outsourcing companies knocking on their door to “fix the problem” unless they are the one starting the process.

How companies pursue HI will typically vary by company size. For start-ups and small companies, the CEO needs to consider being the HI leader. For medium sized companies, the CEO or a direct report (C-Level) should be the HI leader over tactical HR staff and integrate daily HI strategies into individual assignments. For larger companies, the addition of a strategic HI leader at the C-Level will create a major competitive advantage and enhance company value. The strategic HI leader would typically have traditional HR functions and staff reporting to him or her.

It is important to note that we are talking about a new leadership role that is currently missing in most companies. This role is the lynchpin to leveraging the value of the total organization for company success.

Next week we will discuss how an existing HR function can get CEO sponsorship of the Human Investment model that they can help implement.

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