Chapter 12: New Roles for Chief Executive Officers and Other Leaders

Overview

Earlier chapters in this book laid out the bedrock principles of human capital strategy and used a number of cases to illustrate their applications. Companies derive substantial benefits when those principles are implemented properly. When that happens, the drivers of employee productivity and barriers to human performance can be identified and addressed. Executives and managers have the facts they need to make good decisions about the people side of the business. In many cases the impact of decisions about human capital on both performance and financial results can be predicted with a high degree of certainty. Executives finally can make the most of a critical asset.

The approach described in this book—a new science of human capital management—has great potential for improving business results. That potential, however, may not be fully realized under old organizational arrangements. Traditional divisions of responsibility between functions may become impediments to managing human capital optimally. Human capital is a strategic issue that has no functional boundaries. The increased attention on the part of boards and investors to human capital issues should energize everyone. The data needed to find the human capital drivers of value, for example, are not the province of human resources (HR), finance, marketing, quality control, or any other single function. It is necessary to cut across functional boundaries to obtain, analyze, interpret, and act on those facts and relationships properly.

To realize the potential of this new approach to managing human capital it is necessary to obtain the participation and encouragement of leaders in all the major functions of an organization. Their involvement may require a change in roles for key people. This chapter examines those new roles, starting with the chief executive officer (CEO), and examines how leaders can make the most of a firm’s human capital strategy.