There is no knowledge leader I admire more than I do Ed Lawler. In this book, he makes what I consider to be his most important contributions thus far to our understanding of how to gain and then sustain a competitive advantage by finding, hiring, and retaining the right talent with the right structures, systems, processes, and practices in place. Only then can organizations "perform so well and change so fast that they string together a series of temporary advantages." Lawler asserts (and I agree) that "fewer and fewer companies can be successful by practicing an old-school bureaucratic [structure-centric] approach to management." What does he recommend to decision-makers in most (but not all) organizations? The human capital centric (i.e. HC-centric) business model. What does it look like? "To begin with, it is important to understand what its core is. Above all else, an HC-centric organization is one that aligns its features (reporting systems, compensation, division and department structure, information systems, and so on) toward the creation of working relationships that attract talented individuals and enable them to work together in an effective manner." As Dave Ulrich observes in the Foreword, "While talent is necessary, it is not sufficient. Successful management in today's business world requires attention to both talent and teamwork, individual ability and organization capability. Lawler captures both."
Ulrich goes on to suggest that the Star (business) Model identifies the organization features about which choices need to be made - about strategy, competencies and capabilities, structure, processes, rewards, people, and identity -- to create an HC-centric organization so that its systems are aligned and integrated. Otherwise, they cannot drive and implement the given strategy.
Unlike in a bureaucratic, structure-centric organization,
1. "Business strategy is determined by talent considerations, and it in turn drives human capital management practices.
2. Every aspect of the organization is obsessed with talent and talent management.
3. Performance management is one of the most important activities.
4. The information system gives the same amount of attention and rigor to measures of talent costs, performance, and condition as it does to measures of equipment, materials, buildings, supplies, and financial assets.
5. The HR department is the most important staff group.
6. The corporate board has both the expertise and the information it needs to understand and advise on talent issues.
7. Leadership is shared, and managers are highly skilled in talent management."
However, every organization is a "work in progress." Although these seven attributes may describe an organization today, but that by no means ensures that they will be true of it tomorrow. Hence the meaning and significance of Lawler's reference to stringing together "a series of temporary advantages." They can be achieved only if there is sufficient talent and if the right structures, systems, processes, and management practices are in place to develop and retain that talent while attracting whatever other talent may be needed. The extent to which an organization is and remains HC-centric will determine the extent to which it will not only achieve but sustain a decisive competitive advantage.
What Lawler provides in this volume is a combination of information and counsel that will help decision-makers to determine whether or not their organization should be HC-centric. Then, if the choice they make is affirmative, Lawler's book will guide and inform their efforts to design, build, and then manage such an organization. Throughout his narrative, Lawler correctly reminds his reader of the difficulties of doing that. "Structures need to change, and practices need to change, but even that is not enough. People inside and outside the need to change the way they think about the organization. The organization needs to become recognizable from all angles as HC-centric." People change organizations, books don't. (The author or co-author of more than 40 books himself, Lawler is well-aware of that.) Moreover, unless there is high involvement in the transformation process, at all levels and in all areas of the given enterprise, the ultimate objectives cannot be achieved. And as Marshall Goldsmith insists, "what got you here will not get you there." That is the essence of Joseph Schumpeter's concept of "creative destruction." That is why, after Reggie Jones selected Jack Welch to succeed him as CEO of GE, he told him to "blow it up."
In this context, I am reminded again of the fact that, like species, businesses are involved in a process of natural selection. Those that do not adapt to changes are doomed to deteriorate and eventually perish. Talent is needed to design, implement, and sustain an HC-central organization. Moreover, as talent needs change, there must be a shared mindset within the given organization that enables it to recognize and then respond appropriately to those changes. Obviously, Lawler cannot provide a "blueprint" nor serve as the "general contractor." His book is best viewed as an "operations manual" for decision-makers as they decide whether or not to adopt the HC-centric business model -- or perhaps what he characterizes as a "global competitor approach," also thoroughly explained.
However, Lawler acknowledges that either approach is not the right choice for some companies, notably those "that operate in industries where the work is relatively low-skilled and low-value-added...The work in these industries makes it very difficult to create an environment where individuals can add significant value, and therefore where an HC-centric approach to management is likely to be successful." For them, a "bureaucratic, structure-centric approach" will probably be sufficient...at least for a while. But in a world that becomes "flatter" each day, that won't be long.
Those who share my high regard for this brilliant book are urged to check out Lawler's earlier books, notably The New American Workplace (co-authored with Jim O'Toole) and Built to Change: How to Achieve Sustained Organizational Effectiveness (co-authored with Chris Worley). Also Dean Spitzer's Transforming Performance Measurement: Rethinking the Way We Measure and Drive Organizational Success as well as Enterprise Architecture as Strategy: Creating a Foundation for Business Execution co-authored by Jeanne W. Ross, Peter Weill, and David Robertson.