Human Capital Management 2011 © HireSmart All Rights Reserved.

Introduction to Human Capital Management The only vital value any enterprise has is the experience, skills, innovativeness and insights of its people. The success of any company will depend on its ability to understand how human capital links to its performance and its wealth. The most competitive companies will have the best strategies and methods for attracting, hiring, managing, developing and retaining top performing talent. Managers need training on how to apply human capital management (HCM) principles and methods to business strategy and performance. Today, we are going to learn about several new management tools and how others are using them to reach their business goals © HireSmart All Rights Reserved.

Major Contributions to Human Capital Management 1986 – The Know-How Company – Karl Erik Sveiby 1997 – The New Wealth of Organizations – Thomas Stewart 2000 – The ROI of Human Capital – JacFitz-Enz 2001 – The Human Value of the Enterprise – Andrew Mayo 2002 – Corporate Longitude – Leif Edvinsson 2011 © HireSmart All Rights Reserved.

The History of Human Capital Management Sveiby publishes "The Know-How Company" on managing intangible assets Amidon publishes “Managing the Knowledge Asset into the Twenty-First Century” Sveiby publishes "The New Annual Report" introducing "knowledge capital" Sveiby publishes "The Invisible Balance Sheet" Handy publishes “The Age of Paradox” Sveiby publishes "Knowledge Management" Stewart publishes first "Brainpower" article in Fortune Skandia appoints Leif Edvinsson as the world’s first Director of Intellectual Capital Stewart publishes second "Brainpower" article in Fortune St. Onge establishes concept of Customer Capital Stewart authors "Intellectual Capital" cover article in Fortune Mill Valley Group decides to host a gathering of IC managers SEC symposium on measuring intellectual / intangible assets Sullivan and Parr book, "Licensing Strategies", published Lev founds Intangibles Research at New York University Sveiby publishes "The New Organizational Wealth" Edvinsson and Malone publish a book, "Intellectual Capital” Stewart book, "Intellectual Capital“ is published Hoover Institution conference on measuring intellectual capital Sullivan book, "Profiting from Intellectual Capital", published 2011 © HireSmart All Rights Reserved.

Principles of Human Capital Management Building a powerful human capital strategy requires solid facts, measures, and processes for discerning where the firm will get the most leverage from its people. Recent technological advances have been the catalysts for the emergence of new approaches to human capital management. Business models and human capital strategies must match. Taking advantage of the observations and records of actual events maintained in your company’s HR information systems helps you discern how your business model and human capital strategies have been working for or against each other © HireSmart All Rights Reserved.

Principles of Human Capital Management There’s a floor to cost reduction but no ceiling to value creation. Find the key points of leverage for increased profits. View your human capital as a value-producing asset instead of a cost to be minimized, reduced, or reined in. New management tools now exists to help you analyze how key outcomes such as productivity are affected over time by human capital attributes and practices. These tools help you predict the return on your human capital investments. Identifying and focusing on what’s important will drive value © HireSmart All Rights Reserved.

Changing in HR Paradigm

2011© HireSmart All Rights Reserved. Recruitment Coaching & Mentoring Human Asset Profiles Career Development Plans Core Values Core Competencies Performance Improvement Selection Human Capital Strategy Performance Management Revenue Per Employee Cost Per Employee Profit Per Employee

Activities of Human Capital Management The quality and performance of our people is what sets us apart in an intensely competitive market! Recruiting and hiring the best available talent Developing and motivating people to reach their fullest potential Retaining talent (and the investments made in them) Minimizing risk and cost on the human side of the business Designing talent management information systems Implementing performance based compensation systems Developing your Employer of Choice Brand Designing coaching and mentoring programs Applying performance management technologies 2011 © HireSmart All Rights Reserved.

Finance Driven Business Model Money Drives Value - Budget Driven! Focus on tangible assets Valuation of physical and financial assets Use decision criteria for physical capital investments Manage costs Focus on the past (cost measurement) People are treated as expenses and salary costs Focus on present cash flow Focus on fixed budgets and periods Focus on short-term profitability 2011 © HireSmart All Rights Reserved.

Human Capital Driven Business Model People Drive Value - Event Driven! Focus on tangible and intangible assets Valuation of physical, financial, human and structural assets Use decision criteria for knowledge and human capital investments Process and customer cost focus Focus on the future (value creation measurement) People are treated as expenses and investments Focus on present cash flow and future revenue streams Focus on dynamic budgets and revenue streams Focus on short-term and long-term profitability, added- value and sustainability 2011 © HireSmart All Rights Reserved.

HCM Glossary Human Capital Strategy A business strategy that links the competencies, motivations and satisfactions of its employees directly with drivers of value for customers, which in turn drives profitability for the enterprise. Human Capital decisions are guided by data-driven, results-oriented planning and accountability systems. The keys to a successful HCM strategy are process efficiencies, effective use of information technology and business metrics. Talent Management Identifying mission-critical values, competencies and talents needed in the current and future workforce. Clarifying the methods that will be used to recruit, hire, develop, manage and retain a high performing workforce. Performance Culture A diverse, results-oriented, high performance workforce, with a performance monitoring system that effectively differentiates between high and low performance and links individual / team / departmental performance to organizational goals and strategic objectives. Compensation is directly linked to performance © HireSmart All Rights Reserved.

HCM Glossary Human Capital The sum of a company's employees including their skills, competencies, talents, creativity and know- how. Within each employee is the knowledge the company seeks to utilize. Intellectual Capital The sum of a company's ideas, inventions, technologies, knowledge, computer programs, patents, trademarks, designs, methods, systems, processes and publications. When codified, defined, written or committed to media form, the company's intellectual assets can be moved, leased, or sold. When these intellectual assets (IA) are legally protected we call them intellectual property (IP). Structural Capital The sum of a company's tangible assets including financial assets, buildings, machinery and equipment, manufacturing facilities, distribution channels and sales outlets. Customer Capital The sum of a company's customers including their names, contracts, contact databases, loyalty, satisfaction, references, testimonials and future revenues © HireSmart All Rights Reserved.