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Survey after survey has found that executives believe finding and developing the right talent should be one of their top priorities, and that their company's human capital is one of their most important assets. Yet few corporations are designed to operate in ways that recognize the importance of human capital. Most companies understand how to leverage financial capital, machinery and equipment, but when it comes to human capital, it is a very different story. Jobs are designed to follow a simplified, standardized approach to the execution of work processes, and individuals are controlled through well-defined hierarchical reporting relationships, budgets and close supervision. Rather than encouraging people to be important contributors, most of the systems in organizations are designed to control their behavior. If we really took human capital seriously, we’d run companies in a very different way. Yes, we would treat people well and say they are important, but we would do much more. We would design organizations so that people are a source of competitive advantage. Hiring some highly talented individuals won’t do it! Training programs won’t do it, either! Even being a best place to work won’t do it. Making human capital a source of competitive advantage requires much more than making some quick fixes to a control-focused organization. It requires attracting and retaining the right people as well as organizing and managing them effectively. Attracting and retaining the right people is not easy, but most organizations can get it done if they devote enough resources to it. Actually developing and employing organizational structures and operating systems that lead to an organization's human capital being a source or the source of competitive advantage is another story. It requires the right managerial behaviors as well as the right design of most of an organization's major operating systems in order to create a Human Capital centric (HC-centric) organization. What does a company that's truly built to leverage its human capital look like? First, it has corporate board members armed with sufficient expertise and information to advise on human capital and organizational effectiveness issues. In fact, the board would regularly receive the kind of detailed information about the condition of the organization's human capital as it does about its financial situation. Second, it would develop executives who practice shared leadership and are committed to developing leaders throughout their organization. Third, it would consider the human resources (HR) function its most important staff group. HR's ranks would be filled with individuals who understand the business as well as know the intricacies of human capital management systems. Finally, it would have information systems that report accurately on the strategically important competencies and capabilities of the organization and of each employee.

Survey after survey has found that executives believe finding and developing the right talent should be one of their top priorities, and that their company's human capital is one of their most important assets. Yet few corporations are designed to operate in ways that recognize the importance of human capital. Most companies understand how to leverage financial capital, machinery and equipment, but when it comes to human capital, it is a very different story. Jobs are designed to follow a simplified, standardized approach to the execution of work processes, and individuals are controlled through well-defined hierarchical reporting relationships, budgets and close supervision. Rather than encouraging people to be important contributors, most of the systems in organizations are designed to control their behavior. If we really took human capital seriously, we’d run companies in a very different way. Yes, we would treat people well and say they are important, but we would do much more. We would design organizations so that people are a source of competitive advantage. Hiring some highly talented individuals won’t do it! Training programs won’t do it, either! Even being a best place to work won’t do it. Making human capital a source of competitive advantage requires much more than making some quick fixes to a control-focused organization. It requires attracting and retaining the right people as well as organizing and managing them effectively. Attracting and retaining the right people is not easy, but most organizations can get it done if they devote enough resources to it. Actually developing and employing organizational structures and operating systems that lead to an organization's human capital being a source or the source of competitive advantage is another story. It requires the right managerial behaviors as well as the right design of most of an organization's major operating systems in order to create a Human Capital centric (HC-centric) organization. What does a company that's truly built to leverage its human capital look like? First, it has corporate board members armed with sufficient expertise and information to advise on human capital and organizational effectiveness issues. In fact, the board would regularly receive the kind of detailed information about the condition of the organization's human capital as it does about its financial situation. Second, it would develop executives who practice shared leadership and are committed to developing leaders throughout their organization. Third, it would consider the human resources (HR) function its most important staff group. HR's ranks would be filled with individuals who understand the business as well as know the intricacies of human capital management systems. Finally, it would have information systems that report accurately on the strategically important competencies and capabilities of the organization and of each employee.

For at least the last decade, it has been hard to pick up a business book, article, or corporate annual report without seeing statements that stress the importance of human capital. Surveys of executives confirm that many believe finding and developing the right people should be one of their top priorities. However, it is one thing to stress the importance of human capital; it is another for organizations to be designed to reflect the importance of human capital. This article looks at four areas where human capital should have a major impact on design: corporate boards, leadership, the human resource (HR) department, and information practices. In all of these areas there is a large gap between how most organizations operate and how they should operate in an organization that is built for human capital. Corporate boards should have both the expertise and the information needed to understand and advise on talent issues at all levels of the organization. They should focus on developing managers who can provide leadership. The HR department should be the most important staff group. HR should have the best talent, the best information technology resources, and it should be a valued expert resource to the firm when it comes to strategy, change management, organization design, and talent management. There is an old saying that what gets measured gets attended to. The implication of this for human capital is very straightforward. Human capital will be a central focus of an organization only if the organization has measures that are as relevant, rigorous, and comprehensive as the measures of its financial assets and physical capital.