New Economy Brings People Management Center Stage

New Economy Brings People Management Center Stage

The new economy is changing how business is conducted, and it will change how to recruit, select, develop, retain, and compensate the knowledge workers leading corporations into the future.

"The new economy is far from a fad. The most successful organizations in the decade ahead will be those that adapt and adjust to the new world, and human resources management is at the heart of the challenge," says Albert A. Vicere, professor of business administration, specializing in strategic leadership, in Penn State's Smeal College of Business Administration. "The new economy is bringing people management to center stage."

In the new-economy world, where organizations compete on the basis of core competencies and relationships, Vicere points out that human resources management practices will emerge as a key source of competitive advantage. Core competencies, by definition, are knowledge sets and technical skill sets.

"It seems, then, that until companies master the science of creating knowledge-management systems, core competencies will continue to reside in the minds of the people inside an organization. Relationships, by definition, are owned by people within companies and not by the companies themselves. That means that the new focus on core competencies and relationships brings people management to center stage, and positions talent-pool management as critical element of business strategy," says Vicere.

Vicere notes that the explosive growth of the search firm business is just one symbol of this shift. As companies seek out the best talent, competition is heating up, and raiding other companies for talent has become a commonplace event. He recently authored a piece, "New Economy, New HR," which appeared in the fall issue of Employee Relations Today . The piece offers eight suggestions for preparing an organization's human resources for the challenges of the new economy.

• Build your company brand . Building brand requires that a company tell its story: how it provides challenging work assignments, how great things can be achieved by good people, how effective feedback and relevant rewards are the norm, how the organization is teeming with effective people, who are committed to developing talent. "All of these elements are part of a great company brand. And remember, at its outset, the primary audience for a brand campaign is the employee base of the brand-building organization," says Vicere. "If employees are not aware of the brand character, and if they don't buy into it, the brand campaign will fail."

• Create a challenging work environment . Dare to be creative when structuring the work environment. Make sure project team members get the feedback they desire and the development plans they need to move ahead. Be open to moving people across business units and functions, and even across joint venture and alliance partners.

• Train leaders to lead . In the old economy, Vicere says, leaders were often, in reality, auditors. "They watched over things, approved things, kept things running smoothly. Today, that's not enough." They must facilitate, interpret, coach, teach, mentor, and develop."

• Communicate, communicate, communicate . Organizations must view people as a resource, they must see leadership as a source of inspiration and challenge, and they must make the organization itself a cause that commands attention and commitment.

• Facilitate networks . "The key to the company's success is understanding the three critical resources of an organization: money, people, and information. If you allocate and reallocate resources toward exciting opportunities, if you seek out the best minds in the organization regardless of where they reside, if you put those minds to work on challenging opportunities, and if you share the knowledge they possess and help create across the organization, then you will prosper," says Vicere.

• Make shareholder value real . New-economy workers want to be challenged, pushed, developed, and rewarded. "They don't want someone else to be rewarded, so, don't tell them about shareholder value creation. Make them shareholders, and then they will instantly grasp the impact of the value their contributions create, and the company will reap the rewards of both their knowledge and their commitment," says Vicere.

• Think "tools and flexibility." New-economy workers grew up in the new economy. That means e-mail, beepers, cell phones, chatrooms, software, flexible hours, etc. Account for that in the creation of assignments and work environments.

• Be real . "Words don't matter. What gets measured is what people will focus on. What gets rewarded is what they will do," says Vicere.

"Companies must rethink and refocus their HR systems to accommodate the essence of the new economy and new-economy workers. It also requires that organizations redefine the requirements of leadership and, further, that they hold leaders accountable for real leadership in the new economy," says Vicere.