Implications for Other Executives

So far we have considered the implications of the new science of human capital management for CEOs, CFOs, and senior HR executives. Those implications, of course, do not stop with these three managerial classes. In this section we briefly consider implications for leaders in two other functions: marketing and quality assurance.

Marketing

In many organizations the marketing function has a deep and detailed understanding of customer behavior. The attributes of the most profitable customers often are known: where they live, where they shop, how much they use the Internet, their ages, their estimated annual incomes, their expectations for the services or products they buy, and so on. These are very usable facts. Advertising uses them to make its messages better targeted, better crafted, and more effective.

Facts about the links between customer behavior and an organization’s human capital practices and workforce attributes are less known despite general acknowledgment that the way human capital is managed is critical to meeting customers’ needs. The head of marketing therefore should have a strong interest in the organization’s human capital strategy and become a partner in the strategy-making process. The marketing function is, after all, the function most keenly in touch with the ways in which customers are changing. Customer changes generally have implications for human capital. New skills, for example, may be required by customer-facing employees. If this is the case, the organization will have to acquire those skills in the labor market or develop them from within. That choice should involve the marketing function.

Quality Assurance

Although quality is every employee’s responsibility, oversight of quality often is delegated to a separate function or a specific set of employees. In health-care systems, for example, physicians typically occupy that role. In manufacturing companies, engineers often take on that responsibility.

Like the marketing function, the quality function maintains excellent data. Also like marketing, it has a clear interest in the human capital dynamics of the enterprise since some causes of poor quality can be traced to people and the way they are managed. Indeed, the root causes of quality problems often are found in rewards, training, employee selection, supervision, and other people practices. As a result, quality managers have an interest in setting human capital strategies, if only to ensure that the workforce embodies attributes that support quality and that employees are managed in ways that meet goals involving service quality.

In Chapter 6 it was explained how the head of HR at Quest Diagnostics obtained facts about employee turnover and its impact on critical measures of business performance. The quantification of that impact grabbed top management’s attention. Once the magnitude of the business problem was known, the likely returns on investments to solve the problem were reasonably predictable. Operational leaders enthusiastically embraced the need for those investments. After all, those initiatives, if successful (which they ultimately were), would boost the very measures for which they were held personally accountable: measures of operating margin, quality, and customer service. Faced with the facts, the CEO, the board, and the company’s operating managers all threw their support behind the programs. In effect, the HR chief had developed a fact-based business case for change that galvanized top management. Business Impact Modeling and Internal Labor Market analysis made it possible. Whatever the future holds, it seems clear that as those tools become more prevalent, decisions about human capital will become a larger part of every manager’s job.