The Human Capital

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Barry Elz
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In any successful economy, we must work to harness our most important tool: Human capital.


BusinessDictionary.com defines talent as (1) a natural ability to excel at a duty or action or (2) a group of people who have a particular aptitude for certain tasks.

Albert Einstein spoke to talent in a more plain-spoken way, “Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will live its whole life believing that it is stupid.”

However you describe talent, it will be the defining factor in determining which regions globally grow and which cease to be relevant. As Jim Clifton, Chairman of Gallup, unveils in his recent bestseller, The Coming Jobs War, “that of the seven billion people in the world, there are five billion adults of working age of which more than three billion say the most important desire in their lives, above food, shelter, and safety is the desire for a full-time job.”

Gallup defines a good job as “30+ hours a week for a paycheck.” The quandary that presents itself is that when the Gallup World Poll asked how many people have a “good job” as defined this way, only 1.3 billion do. So, the world is currently short about 1.9 billion real jobs—or “good jobs.” The U.S. comes up short when it comes to “good jobs” as that metric is in stark contrast to official unemployment figures. In May 2016, the U.S. Bureau of Labor Statistics reported seasonally unadjusted unemployment at 4.5 percent. Gallup’s Good Jobs rate for the same period, the highest it’s ever been, was just 45.5 percent. That means 54.5 percent of adult workers in the U.S. do not have a “good job.”

It is those cities, states and regions that focus on building and engaging talent that will be those that earn the right to compete in the global economy; those places will be where people go to find “good” jobs. Those that fail to embrace the future are doomed to irrelevance.

Clearly Gallup’s polling shows that Americans agree. Gallup asked respondents to think about talent as “the knowledge or skills people develop or obtain through education, work or other life experiences.” Nearly eight in 10, or 78 percent, of U.S. adults agree: “If the U.S. fails to develop a more talented workforce, it will fall behind other countries.” An overwhelming majority, or 87 percent, agree that “the federal government should make it a high priority to increase the talent of our nation’s workforce.” Eighty-nine percent agree with the statement: “Cities that commit to increasing talent among their citizens are more likely to have stronger economies, better quality of life and greater prosperity than cities that do not.”

It even becomes clearer when the data for cities is considered. When asked whether “they agree that cities committing to increasing talent among their citizens are more likely to have stronger economies,” the polling audience showed unmistakable consensus of all respondents with 91 percent of whites and 88 percent of nonwhites agreeing, and 90 percent of Democrats and 89 percent of Republicans agreeing.”

People clearly understand that the jobs war is not between nations or continents but will be fought and won or lost on the local level: Chicago versus London; New York City versus Amsterdam; Southwest Michigan versus Stuttgart; Rhode Island versus Utah; and so on.

While American’s clearly understand that developing a strong and engaged talent pool is critical, there is little understanding of what is required to make this a reality. One example of execution is the state of Rhode Island which is focusing on becoming the first Strengths-Based State, by launching “Make RI Stronger,” a multi-year initiative to dramatically improve both the Rhode Island workplace and the Rhode Island psychic.

After discovering that “one out of every five Rhode Islanders did not like his or her job” and that “only 18 percent of its residents regarded it as one of the best places to live” in Gallup’s 2013 State of the American Workplace Report, Leadership Rhode Island swung into action. The nationally renowned leadership development organization developed strategies to focus on helping Rhode Islanders discover their innate talents and to show them how to develop and use these unique talents in their workplace and in their lives.

“With a history of poor civic leadership and corruption, Rhode Island found itself with the poorest engaged workforce in the nation, which has created a fatalistic view of the future and driven people and investment away from the state,” explains Mike Ritz, Executive Director of Leadership Rhode Island.

Companies looking for new locations or considering expansions tend to shy away from disengaged workforce. Why? Unhappy workers are more likely to call in sick and max out their vacation days. They tend to turn in resignations more often. Even worse, they deliberately act in ways that are harmful to their employer. Gallup points out that this is not “an employee problem;” it’s “a leadership problem” and it’s costly. According to Gallup, this behavior “is costing companies and organizations approximately $3,400 per $10,000 in wages. That’s $17,000 for each full-time employee earning $50,000 per year who is actively disengaged.”

How is Rhode Island responding? Rhode Island’s strategy includes hundreds of organizations representing business, education, government, not-for-profit and the faith-based community—all working to stop the state’s brain drain. The first obvious target is soon-to-be-graduates. College Leadership Rhode Island sets out “to turn emerging leaders into stewards of change on their campuses, in their communities and for Rhode Island. They learn from and engage with local leaders who are committed to making the state a better place to work and live.” Class sizes range from 25 to 35 college students in their sophomore, junior and senior years as well as graduate students and graduates less than a year out of school. Colleges too are getting in the game. For instance, Providence College will begin providing talent coaching and evaluation to its entire student body in fall 2016.

“I see the strengths in myself and in others. That inspiration is what gets people to work together more effectively and to reach their dreams,” Ritz says. “If we could get everyone in the state, all one million of us—to know and use their strengths, how powerful that becomes. Incredibly powerful.”

Companies that harness that power see their bottom lines trend upward. At April 2016’s Oracle HCM World conference in Chicago, Oracle CEO Mark Hurd shared his confidence that a company’s employee engagement is the key to productivity. At the technology conference, Hurd skipped the IT talk. “Engaged employees are the key to success,” he says. Don’t cut expenses when it comes to employees’ happiness.

“Instead of cutting expenses … It’s engagement that drives productivity,” he said. “It’s sound business. A higher engaged employee will do more work, better work, care more about the business and more about your customers. Engagement is the key to productivity. The higher engagement I have, the better.”

Hurd continues, “If the baseline of employee engagement is 70 percent and that improves by just a few percentage points, that higher productivity turns into millions of dollars.” Companies can drive real growth by empowering employees to do what is right for their customers. Gallup agrees, “The moment an employee connects emotionally with a customer is a source of untapped power that has profound implications for a company’s productivity and profitability. When organizations know how to prepare front-line employees to make the most of these moments, they engage customers—who in turn spend more, visit more often, resist competitive overtures, promote their brand to others, and forgive the occasional service blunder.”

Gallup has been able to quantify the results: When organizations successfully engage their customers and their employees, they experience a 240 percent boost in performance-related business outcomes compared with an organization with neither engaged employees nor engaged customers.

You can’t just hire people. “Last year, Oracle hired 20,000 ‘good’ people,” corrects Hurd. Oracle’s dedicated hiring team sorted through 500,000 resumes and performed 60,000 interviews to get down to those 20,000. The Redwood City, Calfornia-based company, specializing in developing and marketing database software and technology, cloud engineered systems and enterprise software with $38.23 billion in revenue in 2015, has to get those 20,000 people to work quickly to keep its internal engine moving. “We have to train them, onboard them and prepare them to go to battle. We have to do it well and do it fast. Integrate them into the machine and get them to perform,” says Hurd.

Getting to where Oracle is with respect to human capital doesn’t happen overnight. It starts with a commitment to investing in human capital, then putting procedures and policies in place supporting that commitment. Partners who understand how to unleash the power of talent can support the journey, like Gallup, Talent Plus and HUMANeX Ventures, offer consulting services starting with employee hiring. Companies like Consumers Credit Union and Zeigler Auto Group, both headquartered in Kalamazoo, Michigan, agree employee engagement starts with what Hurd calls finding the “good” people.

At Kalamazoo-based Consumers Credit Union, Chief Human Resources Officer Shawn Premer doesn’t always seek the most impressive degree or resume in her quest for talent. She’s looking for passion and leadership material.

“What type of degree they have really doesn’t matter. It’s about the person. What we look for is servant leadership—someone who is definitely focused on their own goals and development, but yet someone who will also go out of their way to grow and develop others.”

As a result, Premer says the firm has employees among its 18 credit unions in Southwest Michigan with degrees in music, the arts, several with teaching degrees, working their work up the jobs ladder. Its director of training doesn’t yet have a college degree.

“We will hire for our culture 100 percent of the time,” Premer states. “We find that’s the best way to grow and develop talent is to develop it within.”

And at Harold Zeigler Automotive Group, Director of Talent Development Mike Van Ryn runs on a similar philosophy.

“We are looking at attitude and whether they are going to fit our organization and values, more than what it says in their resume,” says Van Ryn, who was a teacher and principal himself before making the jump to the corporate world. “You might have someone that doesn’t have the degree and they can come in and have tons of talent.”

He points to Ariah Wilburn, 26, who graduated in 2012 with a bachelor’s degree in dental hygiene. It was long her intent to pursue that vocational path. She worked part-time for Zeigler as a cashier in high school. And when she initially had trouble finding a job in dental hygiene, Zeigler offered her a full-time job as a business development representative. She was promoted a couple more times after that, then again to her current job as a recruiter for nine dealerships.

Van Ryn says a talent-first, values-first model has helped the firm manage its rapid growth from nine dealerships in two states in 2012 to 23 dealerships in four states today and from 400 employees to 1,200.

Consistent monitoring of internal systems augments overall team engagement. Monitoring can be done with help of consulting firms like those mentioned above or through internal assessments designed to raise awareness of quality management policies and systems. As employers enter what some view as competitions and others more aptly recognize as self-improvement tools, the process of responding to questions analyzing human resource policies and implementation help employers self-reflect on their own workforce and provide them with a reality-check from confidential employee surveys administered by the sponsoring entity.

Types of assessments include the Malcolm Balridge National Quality Award, American Business Awards also known as the Stevies, Best and Brightest, Michigan Performance Excellence, Working Mother, 100 Best Companies and Outsides’ Best Places to Work. Some programs even begin the assessment process at the regional level like the National Association for Business Resources’ Best and Brightest program which accepts nominations through these geographic areas—Atlanta, Chicago, Dallas/Fort Worth, Detroit, Houston, Milwaukee, San Francisco, West Michigan—and then elevate elite winners for consideration nationally.

Jennifer Kluge, president and CEO of the Michigan Business and Professional Association and president and CEO of the 101 Best and Brightest Companies, notes that companies recognized for their exceptional practices have several things in common, “Strong cultures are driven by the C-suite down. The CEO usually is personally driving culture and engagement of employees and it’s their mission to appreciate employees for work well done. As a result, human resources has a seat at the strategic planning table and employees’ needs are addressed in all corporate strategy. They treat the employee as a “whole” person, concerned about their overall wellbeing versus their experience on the job. They look at data/survey results to ensure they move the needle.”

Kluge points to a few notables. “FONA International (creators of sweet and savory flavors for the food and beverage industry) out of Chicago has high employee engagement scores and retention scores given its family culture driven by its CEO. They have an on-site chaplain. ABIS Inc. (a software provider) out of Houston has a very engaged CEO who ensures a culture of positive energy with customized work stations, wellness fitness, wellness on-site food delivery, and a lounge for music and dancing. United Shore Mortgage in Detroit has a fabulous work environment with ping pong, basketball courts, and valet car service which is especially nice during winters. The trick here is they engage employees to actually use these perks instead of collecting dust.” It should be noted that Consumers Credit Union and Zeigler were ranked among West Michigan’s 101 Best and Brightest Companies to Work For in 2016.

With companies like Consumers Credit Union and Zeigler Auto Group dedicated to innovative talent development in Southwest Michigan, the region’s potential for becoming a talent-focused region is there with post-secondary schools testing the talent waters. At the Kalamazoo Valley Community College Student Success Center, students tap into in layered and customized talent improvement tools designed to help them find and develop their strength and then match that to the work place. Piloted in 2007, its foundation is a 177-question test administered early in school to gauge strengths and interests. Students also link to a comprehensive website with portals to help them further grow and apply their talent. They are supported along the way by counselors and advisers to guide their journey through school toward the work place.

“That’s the most important part,” says Ken Barr, Jr., Director of Student Strengths Development for the center. “If you never had that dialogue, it would be like reading the Spanish book, the first chapter and never interacting with anyone. Students have support throughout their entire academic career. Students discover in a very specific way what their natural gifts are. It’s transformational in the way students see themselves.”

Places that focus on the talent of their population in conjunction with the economic prosperity of the region can impact the quality of life of the citizens. And according to Gallup, communities and regions that focus on employee engagement withstand, even thrive in, tough economic times. While the social and community impact are critical for the long term viability of the region, a focus on engaged talent affects the bottom line of those that participate. According to Ann Arbor-based researcher John Baldoni who is a consultant, coach, author, speaker and global practice chair of Leadership Development at N2 Growth, talent-focused regions can expect:

  • 22 percent productivity increase
  • 65 percent lower turnover
  • 25 percent less sick days
  • 48 percent fewer accidents
  • 41 percent safer for hospital patents
  • 10 percent more profitability

The global quest for brain power leaves regions like Southwest Michigan with the challenge to produce talent for the future if they want to sustain and grow. And the recent evidence is clear: other regions, even states like Rhode Island, are developing dynamic, talent-driven economies at a pace that is out of the gates ahead of Southwest Michigan.

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