Fearless HR

The Shift to Intangible Value

"There is an increasing recognition that the soft stuff (Intangibles) is actually the hard stuff that creates value."- Fearless HR, page 19

The first common perception Forman address is the notion that “HR does not add value to the business.” However, Forman argues that: “the HR value proposition stems from creating a workplace and workforce that strengthens business outcomes, enhances productivity and fosters innovation” (12). Forman cites great work done by the likes of McKinsey, Jim Collins, Baruch Lev and others in saying that what some might view as the soft, intangible things that HR is responsible for actually has significant impact on the value and success of the business as a whole.

Work done by Baruch Lev, who is a professor, researcher and author, discusses the topic of intangible value—value that cannot necessarily be seen or touched. “Today, most people would suggest that intangibles account for 50 to 65% of a company’s market valuation. But focusing on the percentage differences between the two misses the point; the intangible number is still very large and it is malleable, controllable and can be improved” (19). The data is significant, and it shows that people are in fact an organization’s most important asset. They should be treated as such!

Aligning Business Strategy to Talent Management

"The purpose of talent practices is to achieve business results; it is not about the talent practices themselves but the results and impacts they produce."- Fearless HR, page 69

In gaining a clearer understanding of the value intangible assets produce for an organization, we begin to ask the question, how do we build that? Having a clearly defined talent development strategy, at all levels of the organization, is a critical component to building top level talent within the organization.

There is a caveat to this however, which Forman discuss—the organizational strategy is the driver of the talent practices you put into place. These practices need to complement and help to drive the strategy towards the results that you’re after, or there will be a big miss in terms of attaining results in the short term, and building the necessary skills to achieve results over time.

Once we have that strategy defined and the talent practices set—it then becomes all about executing the play. Forman provides number of tangible tools and models to leverage which you can find in the book, but the overarching framework is an emphasis on aligning talent development with organizational objectives. If your organization is treating HR as separate from the business strategy, it’s time to adopt a new approach.

Explicit Knowledge and Tacit Knowledge

"“Excellence in engineering leads to strong products… Excellence in finance leads to strong financial capabilities…. Excellence in HR leads to a great company.” "- Fearless HR, page 242

Few would argue against the importance of a strong professional network, and Forman re-iterates this from an HR perspective. What I found very interesting was his discussion of explicit knowledge vs. tacit knowledge. Each are defined as (175):

• Explicit knowledge – knowledge that can be written down and easily transferred. Most often this includes data, information, documents, records, and files.
• Tacit knowledge – resides within each person or team and is not easily codified. This includes such knowledge types as experience, intuition, lessons learned, rules of thumb, insights, wisdom, and know how.

As HR professionals, having a strong professional network to gain tacit knowledge from will help to drive their value as a strategic partner to the business. Here is where you get an inside track of what’s working elsewhere and learn about different ideas that you might have otherwise not thought of.

I would encourage each of us to be aware of the difference between explicit and tacit knowledge, and be clear on the value that tacit knowledge provides, which is often derived from your professional network.