By Preston C. Bottger

Executives around the globe have responded to the economic crisis by
reviewing their systems for managing human capital. The smartest of them are
not simply asking questions about their current investment and how it could
or should change, but reassessing matters in strategic terms. They recognize
that effective people management systems - those which put the right people
into the right jobs at the right time and for the right costs - have a
central role in supporting the firm's business model.

Investment in human capital must focus on the critical factors in the firm's
business system: its products, customers, competitors and internal
structures. Leaders are concentrating the efforts of their high-talent
people on maintaining cash flow by making and selling products and serving
customers. Importantly, they are also finding the best ways to develop their
people despite the economic turmoil. As the crisis evolves we are seeing
executives take some very pragmatic decisions in how they use their human
capital to handle immediate business needs while also supporting longer-term
individual development. Careful analysis of the company's cash flow and its
customers' needs, followed by strategic redeployment of human capital will
allow businesses to find and implement the best possible solutions. And, in
a crisis, coaching talented performers as they are working on critical tasks
is the best possible investment in human capital development.

Coach and develop

However, the nature of these key investment challenges vary according to the
type of person involved: executive stars, functional experts and unsung
heroes.

Executive stars are candidates for very senior leadership positions in the
future. They are often rotated quickly through several different divisions
and functions to gain experience. The main challenge in managing their
development is to give them an appropriate assignment - one that stretches
their competencies while at the same time allowing the unit to benefit from
and draw on the star's previous experience and current contribution of
energy. In the crisis, trade-offs need to be made between the need for
immediate action and the person's development needs.

Functional experts are people who make a great individual contribution with
their professional knowledge, intellect and creative capabilities. The
challenge when developing them is to keep them fresh and energized. In
non-crisis times this means varying their assignments and giving them time
"off-line" to expand their learning, perhaps by visiting other firms and in
professional conferences. Again, in hard times trade-offs need to be made.

Last but not least, unsung heroes are the middle managers and professionals
who are not destined for senior management but whose work keeps the show on
the road. Their development presents two types of challenges. First, leaders
must help unsung heroes to digest the news that they cannot expect to be
promoted. Secondly, where members of this group have already privately
accepted their mid-level career, leaders must ensure that they remain
engaged in the critical work of dealing with the crisis. One method is to
maintain and even increase their involvement in the resolution of
significant and complex issues and in special work that is beyond their
specified job scope.

Retain and sustain

Alongside the demands of developing human capital lies another significant
challenge: retaining it. During this crisis we are seeing some high-talented
people leave their current companies for rivals that seem more agile and
better equipped to deal with the emergency. So how can executives prevent
the departure of talented people?

To begin with, smart executives show talented people that they are valued
and spell out the reasons why they should stay where they are rather than
move on. And, while bonuses are limited by the economic environment,
effective leaders are finding other ways to motivate their people. In this
emergency, smart human capital leaders are quickly discovering what matters
most to those whom they cannot afford to lose - and providing it.

It is also important to recognize that even the most talented, energetic
individuals can burn out. Obviously, sustained hard work is required from
everybody during this crisis, so managing people to prevent negative
overload is key. How to do this again depends on the talent category. For
stars, it might mean a bit less variety and a change of pace that will allow
them to replenish their energy and reflect on where they are going.
Specialists, on the other hand, may benefit from more variety, including
developmental assignments that extend their expertise into adjacent areas.
Finally, unsung heroes will find it helpful to be rotated out of potentially
exhausting systems.

Smart human capital leaders are quickly discovering what matters most to
those whom they can ill afford to lose and then providing it.

Professor Bottger teaches on the Program for Executive Development as well
as the Leading the Global Enterprise and the Orchestrating Winning
Performance program at IMD, a top-ranked business school.

This article draws on material from chapters 4 and 12 of Leading in the Top
Team: The CXO Challenge, edited by Professor Bottger and published by
Cambridge University Press, 2008