1. sustainable organisation performance
stewardship, future-fit
A collection of Next Generation HR thought pieces
leadership
and governance
organisations
Part 2 – August 2012
building xxx xxx
capability
Lens on talent
building HR capability

2. sustainable organisation performance
stewardship, future-fit
Get involved ... leadership
and governance
organisations
Sustainable Organisation Performance is a three-year research programme
providing insight, thought leadership and practical guidance, focusing on the
following themes:
• stewardship, leadership and governance
• future-fit organisations
• building HR capability.
building xxx xxx
HR capability
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2 Lens on talent

3. sustainable organisation performance
Can we overrate talent as a source of
innovation? Another example of the future-fit
stewardship,
leadership organisations
and governance
‘too-much-of-a-good-thing effect’
Investment in talent or, as academics like to call it, ‘human capital’ (the skills, knowledge
and abilities that individuals bring to an organisation), has become the major agenda Graeme Martin is
item for HR practitioners and people management, especially in knowledge-intensive Professor and Chair
and creative industries. Such was the belief in a need for talented individuals’ role of Management
to create innovation and change that it sparked an industry in itself from the 1990s at the CEPMLP,
building xxx xxx
onwards. Consultants, CEOs and HR practitioners took up a call to arms to participate University of
HR capability
in the McKinsey-inspired ‘war for talent’. The basic premises underlying this Hollywood- Dundee. Prior
based metaphor were that individuals’ skills, knowledge and abilities were the most to this, he held
important sources of innovation and creativity in organisations, but that senior business professorial posts
leaders had paid insufficient attention in recruiting, motivating, developing and retaining at the University of
‘A-grade’ talent. Even worse, they did little to remove or replace ‘C’ performers. So what Glasgow and Heriot
was needed was a new talent mindset, which called for better search, performance Watt University,
management and reward strategies. and holds/has held
visiting professorial
Academics soon got in on the act by articulating, from an evidence base, what this new
appointments in
talent mindset should look like. A group of prominent US scholars, some of whom were
Sydney, Venice,
influential with the CIPD, invoked the ‘power law’, which, in its human capital variant,
Lyon, Denver
states that 80% of value is created by 20% of people. These academics have advocated
and Beijing. He
treating scarce and valuable human capital (and core jobs) distinctly, distinctively,
has authored
differently from other forms of human capital (and non-core jobs). In effect, they have
and co-authored
argued for a strict form of labour market segmentation, in which those people in the
seven books and
high-value-adding and unique segment are managed and rewarded very differently from
numerous refereed
those in other segments. This is not to say that other employees in an organisation don’t
journal articles on
add value, but that either they may be in plentiful supply or do not contribute directly
HRM, management
to the core activities of the business. In short, these were arguments for an ‘exclusive’
and leading change.
version of talent management, rather different from the more egalitarian perspectives
Graeme previously
held by some UK firms.
worked in
industrial relations
A parallel development occurred over the same time period in the field of leadership,
and personnel
again rooted in the individualistic, ‘psychologistic’ assumptions that have characterised
management,
the American (and to a lesser extent the British) business model. Transformational
and has consulted
leaders, whose job was to create innovation and change by devising a compelling vision,
for numerous
aligning others behind the vision and motivating and inspiring employees to achieve
organisations in
stretching goals through the application of emotional intelligence, became the mantra
many countries. He
of many firms. Such leaders are seen – controversially – as distinct (superior?) from
has also worked
transactional managers, whose work is essentially concerned with ensuring stability, that
with the CIPD
is, planning, budgeting and controlling. As a consequence, over the last few decades
for a number of
we have witnessed a ‘romance’ with leaders, leadership competences and individualistic
years, producing
approaches to developing them such as coaching and mentoring – which, when aligned
research reports
with exclusive talent management philosophies, become subject to the ‘too-much-of-a-
on topics such as
good-thing effect’, a well-known phenomenon predicting terminal illness for most HR
employer branding,
fads and fashions.
technology and HR
and social media.
3 Lens on talent

4. sustainable organisation performance
For, underpinning both of these trends (some might say fads) was a privileging of individual skills and knowledge
over more diffuse and necessarily complex but accurate attributions of innovation and creativity to groups and
stewardship, future-fit
context. However, recent events following corporate scandals such as Enron and the fall-out from the global
leadership organisations
financial crisis, in which HR has been described as an un-indicted co-conspirator, have called into question this
and governance
focus on exclusive talent and transformational leaders. Well-respected critics such as Boris Groysberg, Gary Hamel,
Henry Mintzberg and Barbara Kellerman have written extensively from an evidence base on the ‘myth of talent
and the (lack of) portability of performance’ and the need for a ‘Management (or Leadership) 2.0’, which focuses
less on artful, visionary leaders and more on leadership as a process and on the inextricable ties between leaders
and followers. Moreover, recent academic evidence on successful innovation also reflects a shift from this talent/
human capital approach to one based on social capital. These perspectives emphasise not only people but also
the context that enables creativity and innovation to happen by showing how creative people are embedded in
networks of expertise and influence, how such people form strong bonding ties within and between groups to
exchange ideas and how they need to engage in mutually supportive relationships based on trust.
building xxx xxx
HR capability
One good example of the contribution of social capital to innovation is evidenced in a recent McKinsey report
(2012), which has shown how innovations in strategic thinking are created by ‘crowd sourcing’. By drawing
on existing social capital, organisations such as IBM, 3M and Aegon have involved thousands of employees in
contributing to new products, processes and strategic outcomes using social media networks. In so doing, they
have generated further social capital by embedding dynamic innovative capabilities into these firms.
However, this illustration would not have been possible without investments in organisational capital. This is
sometimes referred to as the non-human capital left in an organisation ‘when people walk out of the door at
night’, including captured knowledge and experiences in databases, technologies such as social media (see above),
patents, manuals, organisational structures, routines, processes and even organisational culture. The principal role
of organisational capital is to link the other two capitals to form processes that create value for customers. It is
also important because it provides employees with the motivation and opportunities to develop and use their skills
for the collective good.
Recent research has demonstrated how different people management configurations – comprising employment
relationships, managerial values, ‘high performance’ work systems and leadership models – shape human capital
and innovation. We suggest they are also drivers of the other two capitals and, through them, more sustainable
innovation. So by drawing on our previous work (Martin et al 2011) and on the literature on intellectual capital,
which refers to investments in organisational learning, we propose the framework in Figure 1 for analysing
‘the future of HR’ and its links to innovation. This framework maps the relationships between firms’ people
management strategies, relationships and processes; human, social and organisational capital; and the necessary
levels of intellectual capital to produce sustainable innovation in organisations.
Thus, for example, we might expect that high expectations of all employees and high inducements/supportive
social and organisational capital for them (an inclusive talent management approach) would result in widespread
innovative behaviour in organisations, as was evident in the earlier ‘crowd sourcing’ example. We might also
expect to find high expectations and high inducements and support for only certain high-value-adding employees
(an exclusive talent management approach) would lead to restricted pockets of innovation, as was evidenced in
the recent 2012 CIPD Learning and Talent Development survey. Even worse, however, is where high expectations
are combined with low inducements/lack of supportive social and organisational capital for all employees or
where low expectations are combined with low inducements/support. Unfortunately, this low road to growth and
innovation is one that characterises too much of British industry.
4 Lens on talent

5. sustainable organisation performance
Figure 1: People management, different forms of capital and innovation (based on Martin et al 2011)
stewardship, future-fit
leadership
Human capital organisations
Individuals’
and governance
knowledge, skills
and abilities
Innovations
Social capital Intellectual in products,
People Bonds, bridges capital processes Sustainable
management and trust Investments in and systems competitive
configurations organisational and dynamic advantage
learning innovative
Organisational capabilities
building capital xxx xxx
HR capability
Knowledge banks,
technologies,
structures, culture,
and so on
So, if this analysis is anywhere near the mark, what are the ‘killer’ questions that senior HR professionals have to
answer with respect to their talent management policies and innovation? Here are my four candidates:
1 Is there an over-emphasis on selecting and developing talented individuals and ‘stars’ in your organisation and an
under-emphasis on the team that helps make them? To what extent do senior managers commit the ‘fundamental
attributional error’ of explaining and rewarding innovation based on individual attributes rather than on the
interaction between these individuals and the social and organisational context in which they operate?
2 Is there an unhealthy ‘romance’ with selecting and developing leaders in your organisation rather than focusing
on leadership as a process, which recognises that leaders and followers create each other – that you can’t have
good/bad leaders without having good/bad followers?
3 To what extent does your organisation invest in and measure social capital? Are staff at all levels encouraged
to ‘step outside’ to build external networks for the purposes of learning as well as building internal bonds with
each other? On this last issue, how much emphasis is placed on creating and sustaining high-trust relationships
in your organisation?
4 Are there high expectations and high inducements for all employees in the organisation with respect to
innovation, and are there the necessary levels of supportive organisational as well as social capital for
widespread involvement in innovation?
A collection of Next Generation HR thought pieces
The CIPD has produced this collection of thought pieces to build on the themes introduced in the Next Generation
HR research (2009). Specifically we have asked a number of leading academics and experts to write a provocative
thought piece that applies a ‘Next Generation HR’ lens to a specific HR discipline. This thought piece, Lens on
talent, is written by Professor Graeme Martin. Others in the series include:
Lens on engagement, by Professor Katie Truss. Spinning plates and juggling hats: engagement in an era of austerity.
Lens on reward, by Vicky Wright. Insight-led reward management.
5 Lens on talent

6. sustainable organisation performance susta
Building HR capability is one of the three themes in our Sustainable
Organisation Performance research programme. The other two
themes are future-fit organisations and stewardship, leadership
and governance. Within each of these themes we will research a
range of topics and draw on a variety of perspectives to enable us stew
stewardship, future-fit le
to provide insight-led thought leadership that can be used to drive
leadership organisations and go
organisation performance for the long term.
and governance
sustainable organisation performance
sustainable organisation performance
ble
ion stewardship,
stewardship, future-fit future-fit building
nce building leadership
leadership organisations
organisations
xxx HR capability xxx
and capability governance
HR governance
and
Issued: August 2012 Reference: 5943 © Chartered Institute of Personnel and Development 2012
ding building xxx xxx xxx xxx
bility capability
HR
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