The book Talent: Making People Your Competitive Advantage by Professor Edwards E. Lawler III discusses the Human Capital (HC)-centered approach to organization management. In recent decades, human capital has become the most important competitive advantage for most companies, and the ability to effectively organize and lead talent has become a crucial component of business success. The book provides a comprehensive framework for HR professionals, managers, and senior executives on how to create an effective talent management system and support the performance of the company’s human capital.
The first chapter, called “Talent Matters,” discusses the importance of talent in gaining a competitive advantage. In recent decades, the sources of competitive advantage have shifted from effective execution and reliable processes to the ability to innovate and change, with talent being the crucial component required for innovation. It has caused many companies to move from a bureaucratic to an HC-centric approach. Adopting an HC-centric strategy requires the company to change its design, structures, policies, and practices in order to be able to find, acquire, retain, and manage its human capital.
The second chapter, “Making the Right Management Choice,” explains the differences between an HC-centric and a structure-centric approach to company management and offers advice on how to make a choice based on the company’s goals. An HC-centric company can choose to be either a high-involvement organization or a global competitor. The high-involvement approach places emphasis on the nature of the work that individuals do, democratic management style, stability, profit sharing, long-term employment, and loyalty. The global-competitor approach focuses on new technologies, innovation, and the constant search for new talents, with less emphasis on commitment. The chapter provides a list of questions that can help guide senior managers when deciding what approach to adopt.
The third chapter, “Designing Organizations,” addresses the major features of an organization and discusses the differences between HC-centric and structure-centric businesses. The key five elements of any organization are strategy, people, structure, processes, and rewards. All five elements are interconnected and differ depending on the type of business. For an HC-centric organization, people are the most important element and need to be the center of every part of the management process.
The fourth chapter, “Managing Talent,” discusses the characteristics of an effective talent management system. They include promoting the organization as an attractive place to work at, tailored reward packages, hiring talents regardless of the cost, careful selection process, constant evaluation of the system’s effectiveness, and opportunities for career self-management. For high-involvement organizations, the emphasis is placed on long-term employment, while for global-competitor businesses, the focus is on the employee’s responsibility for their personal growth and development.
The fifth chapter, “Managing Performance,” discusses the characteristics of an effective performance management system:
- Explicit identification of what needs to be achieved and how performance will be measured.
- Effective motivation system.
- Timely assessment of performance against the goals.
- Skill assessment.
- Payment based on skills.
- Providing constant feedback to employees.
- The appropriate mix of rewards for individual performance, group performance, and organizational performance.
The sixth chapter, “Information and Decision Making,” stresses the importance of human capital information when it comes to making decisions about strategic planning, organization design, and management changes. An effective system should be established that has all information about employees, evaluates talent and management practices, measures the organization’s performance, and includes an effective communication program for sharing information with employees. The more the company knows about employees, and the more employees know about the business, the more successful the management can be.
The seventh chapter, “Reinventing HR,” explores the current state of most companies’ HR departments and explains the importance of reorganizing HR into a structure that would develop and implement an integrated approach to talent management. Instead of performing merely administrative functions, the HR department should gather and analyze information about talent, help to develop business strategies, and implement employee motivation practices. HR should play an active role in an organization and be staffed with individuals who have profound management expertise.
The eights chapter is called “Governing Corporations” and explores in detail what boards of directors need to do to contribute to organizational effectiveness in HC-centric companies. It is essential for them to have a good understanding of the company’s business strategies and management system and discuss them at their regular meetings. They need to have access to the metrics concerning the talent of the organization and use their power to influence the ways talent is managed.
The ninth chapter, “Leading,” focuses on leadership as one of the major determinants of organizational effectiveness. The author identifies several important skills required for effective leadership: expertise in performance and talent management, ability to make decisions and look into the future, and ability to create open communication. He claims that employees can provide a competitive advantage to an organization only if they are effectively led and managed, and the qualities of people holding senior executive positions are of particular importance.
The tenth chapter is called “Managing Change” and addresses the ways in which a company can act when changing from a structure-centric to an HC-centric approach. The author discusses four types of strategies that can be implemented depending on the initial structure of the company and the desired result. The prerequisites for a successful transformation are a strong case for change, effective leadership, and a well-developed business strategy.
Overall, the book provides a comprehensive plan of action for a company to shift to an HC-centric approach. It includes developing effective systems of talent management, performance management, and communication, establishing the board’s role in the new business model, creating a strong HR department, and placing a focus on effective leadership. Transitioning to an HR-centric approach requires a lot of effort, but it provides multiple competitive advantages for almost any business.
Lawler, E. (2008). Talent: Making people your competitive advantage. Jossey-Bass.