Q&A with Edward Lawler
Author of “Talent: Making People Your Competitive Advantage” (Jossey-Bass, April 2008)

1. Q: Why did you write this book?

A: I wanted to focus on using talent as a basis for designing and creating effective organizations. There is a lot of material on how to manage talent in an organization, but no book has focused on how to design an organization using talent as the source of competitive advantage.

2. Q: The topic of managing and procuring “talent” in the business sector is becoming a hot issue. What separates your book from others that discuss this topic?

A: My book focuses on organizations as a whole, not just on a few human resource (HR) systems within them. The fundamental argument is that when a business’ strategy is to use talent as a source of competitive advantage, it is not enough to just have the best talent. Organizations must be built to utilize and manage talent effectively.

3. Q: Why is there a void of talent in today’s business structure and why is human capital so critical to the success of an organization?

A: A perceived lack of talent in today’s business environment exists partly because most American organizations do not effectively develop the talent they have, forcing them to fill critical positions from the outside labor market – rather than promoting from within the company.

Compounding the problem is that the nature of work has changed substantially, so the right talent is often not available either internally or in the market. This is particularly true in the managerial area where new skills are needed. For example, today, we have virtual management situations proliferating, not to mention the movement away from the imperial executive and CEO to a more shared leadership model. Implementing new approaches to management often requires different skills. But there has been little training done to prepare managers for the new leadership roles that exist today.

A second reason is the rapid development of technology and the need to find the right technical talent. It all has to do with the kind of knowledge work that increasingly dominates the businesses in developed countries. The key asset in today’s corporation is no longer machinery, equipment, natural resources, or financial capital. It is people who know how to run, manage and organize other people and the tangible assets that an organization possesses. Talented people are a scarcity item today, and as a result, having well-developed and managed talent is a powerful source of competitive advantage.

4. Q: What steps should a company take to better structure itself to be talent-centric and who should be responsible for implementing these steps?

A: Senior executives shoulder the responsibility to create a talent-centric organization. However, the easiest way to establish one is to start from the ground up; indeed, today, most successful
talent-centric organizations are designed that way because the founder believed that was the best way to manage.

In order for an organization to change its focus towards talent, the company needs to develop a process that starts with a clear strategic business reason for being talent-centric. The company also needs to establish training and development programs that support talent-centric management.

5. Q: What are the potential consequences if corporate America fails to see human capital as its most important asset?

A: Quite simply, but alarmingly, the U.S. will no longer have the world’s leading economy. In order for the U.S. to maintain its edge, it needs to constantly increase the value added by its people and organizations. In order to be a high-value-added business society, it takes leading-edge talent and organizational capabilities. This can only be achieved with educational and immigration systems that produce the right talent. Organizations, in turn, have to see talent as their major source of competitive advantage and be designed to nurture, develop and effectively utilize the world’s best talent.

6. Q: What kind of intangible benefits (e.g. employee attitudes, working relationships, turnover/retention rates) do companies enjoy from investing in human capital and how can organizations measure the related ROI?

A: Talent-centric organizations perform better because they have less turnover, more motivated and knowledgeable employees, and better working relationships with their talent. As a result, they are faster to market, more innovative, and integrate their services and products more effectively.

A key measurement is the condition and ability of talent in an organization, but this isn’t enough. It is important to also assess an organization’s capabilities and how they relate to financial performance.

7. Q: Most CEOs do not have an extensive human resource background. With this in mind, what role can a CEO play in structuring its company around talent?

A: Creating a talent-centric organization is a business strategy move, so the CEO must play a key role in effectively utilizing the company’s talent. However, if a CEO doesn’t have a strong background in HR, he or she needs an outstanding HR vice president who possesses an extensive knowledge of organizational design and change, and can assist with developing an effective structure. However, leading an organization’s human capital is not an HR responsibility alone and, even if the HR vice president is very talented, the direction and leadership still ultimately needs to come from the CEO.

8. Q: How can HR departments better address organizations’ needs to be talent-focused?

A: In addition to helping senior management commit to fostering talent, HR personnel need to be actively involved in placing talent factors front and center when strategy decisions are being made. Additionally, it’s also imperative they have the kind of metrics, analytics and skills that typically exist in the finance and marketing departments, enabling them to accurately and consistently monitor the condition of the organization’s talent and how effectively managers are developing and managing it.

9. Q: How can corporate boards structure themselves to more effectively procure talent?

A: Boards should have at least two members with outstanding knowledge in the area of human capital and business strategy, and human capital issues – such as succession planning and metrics that show the condition of the organization’s human capital and organizational capabilities – should be regularly discussed at board meetings.