by Meridith Levinson

How to Identify Human Capital Centric Companies During Your Job Search

May 06, 20088 mins

Knowing if a prospective employer is human capital centric can make all the difference in your job search and in your career. USC's Edward Lawler explains how job seekers can determine if a prospective employer truly cares about its employees.

When you’re hunting for a new job, it can be hard to tell if a prospective employer truly cares about its employees or if the company treats them as interchangeable parts. All employers will tell you they view their human capital as their most important asset, but do their actions reveal a different mind-set? Are they just quoting Jack Welch to get you to sign on the dotted line?

Knowing a prospective employer’s true attitude can make all the difference in whether you decide to work there and in your career. If you find out a company has a history of conducting mass layoffs any time it misses its quarterly financial targets, you should realize that the company views its labor force like Silly Putty: something it can squeeze and stretch thin at will. If that’s the case, you may be the victim of one of those staff cuts not long after you start.

Edward Lawler, a management and organization professor at the University of Southern California’s (USC) Marshall School of Business, has spent years studying what he calls human capital centric companies. In his new book, Talent: Making People Your Competitive Advantage (Jossey-Bass, 2008), he defines human capital centric organizations as those that get their competitive advantage from their employees. Thus, those companies are committed to attracting, recruiting, developing and retaining top quality talent. Human capital centric organizations, he writes, “are designed and managed—from the boardroom to the front line—in ways that optimize talent attraction, retention and performance.”

Because human capital centric organizations place so much emphasis on the importance of their employees, they can be among the best places to work. However, says Lawler, they’re not right for every job seeker.

“Human capital centric organizations put their own set of demands on people that not everyone may find comfortable,” he says. “The human capital centric organization is likely to be more stressful, more demanding and to require a higher level of commitment to the job and to the company than a more bureaucratic organization.”

What’s more, not every human capital centric organization is equally employee friendly.

Lawler distinguishes between two types of human capital centric organizations:

  • High involvement ones, which are characterized by their participative management and decision making structures and their commitment to their employees’ professional development, and
  • Global competitors, which offer challenging work at high salaries in return for little in the way of job security.

Consequently, says Lawler, job seekers need to understand with which organization they’re dealing when interviewing for jobs. To help them determine if a prospective employer is human capital centric and whether it’s a high involvement organization or a global competitor, Lawler lists some characteristics of each, and he suggests questions job seekers can ask of prospective employers during the interview process.

Characteristics of Human Capital Centric Organizations

They’re obsessed with talent. Lawler says human capital centric organizations are caught up in the entire human capital management process, from recruiting through employee development and performance management.

The business strategy hinges on talent. Lawler says the employee is the product in human capital centric organizations. “Once a business strategy is established, talent is front and center in terms of implementation,” Lawler writes in his book.

Performance management is a top priority.Human capital centric organizations have systemic processes for assessing employees’ performance against business goals, and they use IT to do so. Discussions about training and career development are part and parcel of performance management activities.

Their board members are experts in human capital management. “The board spends at least as much time on talent issues at it does on financial and physical asset allocation and management,” writes Lawler.

Their hiring processes are rigorous. Lawler says candidates for jobs with these companies should expect the recruiting process to take a long time. They may face interviews with many of the company’s employees, including the peers with whom they may be working.

Job descriptions can be vague or open-ended. Lawler says human capital centric organizations are more willing to adapt jobs and job descriptions to particular candidates, especially if the candidates have unique skills or expertise.

They offer employment contracts. Lawler isn’t talking about the traditional, legal documents that executives get when they join a company that establish their compensation structure and separation agreement. The employment contract to which Lawler refers is “a statement as to what the organization expects of its employees and what employees can expect in return.”

For example, says Lawler, a company might write in such an employment contract that it expects the employee to be committed to keeping his or her skills up to date, to perform at a high level and to take a leadership role in certain situations even if the employee is not a manager. In return, the company might offer training and professional development; honest, regular feedback and career growth opportunities inside the company.

They don’t hold back technology. Human capital centric organizations give employees access to the technology they need to do their jobs. Information systems don’t “suppress innovation, restrict experimentation or hinder the transfer of knowledge,” writes Lawler. IT departments include end-users in decisions about new technology, and they conduct satisfaction surveys to ensure they’re providing the company with the software and services it needs.

Performance reviews are rigorous. “Once they get in, employees should experience better and more helpful performance reviews,” says Lawler.

Employees share in the company’s financial success. Lawler notes that human capital centric organizations often have compensation programs and profit sharing plans in place that motivate employees to do their best.

Characteristics of High Involvement Organizations

They invest heavily in employee training and career development. Lawler says high involvement organizations see career development as a joint activity between the employee and the employer. Thus, employers are willing to fund internal and external training initiatives.

Retention rates are high and turnover levels are low. Lawler says employees’ jobs tend to be more secure at high involvement companies. Because high involvement employers value their employees so much, they want them to stick around for the long term.

Power and decision-making authority is distributed throughout the organization. Employees work in teams where they control the work they do and how they do it, says Lawler. They’re encouraged to make decisions and to step up to the leadership plate even if they’re not in management.

Leaders embrace a participative style of management. They want feedback from colleagues and subordinates. They seek to build consensus.

They protect their employee-friendly brand. In the event a high-involvement company has to do a layoff, they’re careful about how they do it and take measures to cushion affected employees from the blow by giving them a stipend, helping them find a new job or offering training, says Lawler.

Characteristics of Global Competitors

They’re more likely to source talent externally. Lawler notes that global competitors tend to recruit senior managers from outside the company rather than promote from within. They also use contract and temporary employees extensively to “minimize their long-term commitments to employees” and to scale their staffing levels up or down according to business need. They embrace outsourcing and offshoring.

Most jobs inside the company are less stable. Lawler writes that global competitors have a small, core group of employees that are long-term members of the organization, but most employees don’t enjoy that high level of job security. Because these companies are subject to the mercurial vicissitudes of global competition, they make no promises about job stability. Lawler says these companies’ attitude toward their employees is, “You’re only here as long as you have the right skills and perform at a high level.”

Employees are expected to pursue training on their own. Lawler says global competitors promise to give their employees interesting work and to pay them well, but career development is the employee’s responsibility.

Questions to Ask Prospective Employers

Lawler recommends that job seekers ask the following questions to the hiring manager, HR manager or existing employees to determine whether a prospective employer is human capital centric and if it’s high involvement or a global competitor.

  1. What do you do to support employees’ careers?
  2. What’s the employment relationship like? Do you expect employees to be here long-term?
  3. What are your retention rates and turnover numbers?
  4. What reward systems are in place for employees? Are raises tied strictly to performance?
  5. Do employees have any choice in how they’re compensated?

Do you work for a human capital centric company? Is it high involvement or a global competitor? What questions would you add to the list? Share your feedback in the comments section below.