Human Capital Leadership: Not "Best Practices" But “Next Practices”

Human Capital Leadership: Not "Best Practices" But “Next Practices”

by
Vijayan Munusamy & Michael Jenkins

Senior Researcher & Chief Executive Officer

In the previous article in this series, we examined the human bias and fixation with “best” practices and why they are “not good enough”. Now, in response to the three data biases that contribute to the development of “not good enough” practices, we discuss three shifts needed when thinking about human capital leadership. 

“I always say that trying to be best practice is a lousy strategy because the whole world wants to be best practice. Everybody is trying to be best practice. So, everybody’s achieving best practice, which means you’re all middle of the pack.”[i] 
-Sunny Verghese, Co-Founder & CEO, Olam International 

Shift 1: Think of “Human Capital Practices” as a competitive advantage.   

Organisations have traditionally competed on intellectual property, as is still seen in today’s technology start-ups. They have also competed on production processes and techniques, evidenced by the meteoric rise of Fordism and Taylorism through the 60s and 70s. Furthermore, they have competed on accessibility, evidenced by businesses that cater to a specific geographic location (regional and local markets).  

Our synthesis shows that there is yet another area that organisations can productively compete in, and that is Human Capital Practices.  

And this goes beyond the contemporary view of human capital as a competitive advantage in and of itself. In an era of increased workforce mobility, human capital is at best a “transient” competitive advantage, whereas human capital practices can be developed as a sustainable competitive advantage for organisations.  

Despite today’s knowledge economy and the acknowledged importance of human capital across the world, human capital practices themselves are greatly under-leveraged, and most organisational responses so far have barely amounted to anything much more than ‘lip service’. Hence, it is necessary for organisations to prioritise investment in human capital practices with the same sense of urgency that they habitually devote to other areas of the business (e.g. financial, branding etc.). 

Shift 2: Think of a stronger employee voice as a driver and enabler of “Next Practices”. 

In today’s digitally connected world, employee voices pertaining to company culture and work environments can easily be shared externally - and employees do share (e.g. Glassdoor). Companies can leverage this willingness to communicate views through innovative and employee-friendly data collection technologies (including features that guarantee anonymity) - in stark contrast to paper surveys that were common in previous decades. However, just having technologies isn’t enough: organisations need to create safe environments for employees to speak out and feel empowered to suggest next practices.[ii] It follows, therefore, that creating safe spaces should be a top priority for all leaders in all organisations. 

Shift 3: Think of “Next Practices” in terms of “Probabilities and Possibilities”. 

The alternative to “Best Practices” is “Next Practices”. Most organisations aim to be forward-looking and therefore, strategic goals often enthusiastically embrace forward-looking principles, in stark contrast to the human capital practices in those very organisations, which plod on unchanged. Human Resources is often the last division to actively engage in forward-looking thinking. This may be due to the traditional role of Human Resources as a supporting division rather than an active player in developing short-term and long-term corporate goals.  

While “Next Practices” are experimental in nature, they do create possibilities that would otherwise not be apparent or even possible. These are neither fool-proof nor are they certain. But, organisations do not operate in fool-proof or stable environments either. It is under such circumstances that “Next Practices” need to be adopted.  

“Maxis keeps its ears open to best practices, but ultimately believes that we must come up with solutions that best meet our culture and ambition.  Our collaborative way of working helps us come up with unique options, and this ultimately works well for us because we feel we own our solutions. And at times, there is a lot of value in purposely taking on a unique approach that differentiates us versus the others, even if these approaches are riskier.”[iii]

Diagram on Next Practices

[i] https://sba.asn.au/2018/01/11/welcome-sunny-verghese-new-chair-of-the-world-business-council-for-sustainable-development/ 

[ii] https://www.cipd.co.uk/Images/talking-about-voice_employees-experiences_tcm18-54482.pdf 

[iii] https://www.hcli.org/articles/people-strategy-maxis 

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