The Human Capital Vision (Bradley W Hall,Ph.D)

The important question to answer here is: What does success look like?

In the mid-1990s, Taco Bell, then a PepsiCo company, was one of the hottest companies on earth. In the middle of its success, John Martin, Taco Bell’s CEO, assigned seven of his highest-potential middle managers to a two-year, full-time, multidisciplinary team to rein- vent Taco Bell’s business model. Martin’s vision was “250,000 points of access by the year 2000.” He defined a point of access as “wherever someone can buy a Taco Bell product.” Taco Bell’s new vision was clear, memorable, and measurable.

Given that Taco Bell had about 4,000 stores at the time, 250,000 seemed to be an unrealistic goal. However, the team energetically be- gan work and within a few short months had created a new process that increased store openings from 700 each year to more than 1,200. Martin thanked the team but told them that while that was very good news, the goal was still 250,000 points of access.

The team decided that it needed to think more creatively. At the time, cafeterias were the only place to eat in airports. “What if we put Taco Bells in airports?” the team members wondered. “Let’s call them SPODs” (special points of distribution). Soon, Taco Bell SPODs were popping up in airports, stadiums, and strip malls. SPODs quickly added more than 1,000 points of access each year. Again, Martin was grateful but unmoved. The vision was still 250,000.

The Human Capital Theory (Bradley W Hall,PHD)

The first question to answer is: How does HR create business value? 

Several years ago, while involved in a project with a large retail company’s HR department, I noticed that the labor law team was the largest corporate HR department. The company employed eight to ten times the number of labor lawyers per employee as its competitors, and four of its six corporate HR executives had been promoted from the legal department. Attorney telephone numbers were on the speed dial of every HR generalist, and daily decisions were routinely screened for legal exposure. HR generalists complained incessantly about the legal team obstructing their work, but the checking and approval process remained intact. What would you say was HR’s theory on how it added value to the business? 

A second company I supported had been a lead company in a regulated industry for many years. In this company, the focus of HR staff meetings was policy and policy enforcement. Before meetings and on breaks, HR generalists playfully sparred with one another on policy details. “. . . That’s right, but she only gets 30 days if she has more than two years of tenure at a company merged before 2001.” Peers looked on and cheered as one bested the other. How might you describe the human capital theory at this company? 

Today’s Approach to Human Capital Management (Bradley W Hall,Ph.D)

Today’s approach for improving workforce performance is failing. There are three reasons:
1. No one is accountable for year-over-year human capital performance.
2. Results require a system, not world-class programs.
3. Today’s HR model is misaligned to deliver business results.

Let’s look at each of these reasons.

No One Is Accountable

The head of manufacturing is accountable for year-over-year improvements in manufacturing productivity. The head of marketing is ac- countable for year-over-year changes in brand equity. The head of sales is responsible for revenue growth. But who is responsible for year-over- year improvements in the company’s most valuable asset—its people? Nobody. Line managers see HR as accountable, but HR sees itself ac- countable for programs that must be converted into business results by line managers. No one is in charge of human capital performance.