How people management evolved
As we move from the knowledge age to the innovation age, the way we manage talent must evolve as well.
After starting as hunters and gatherers, humanity has evolved from the agricultural age (starting around 10,000 BC) and the industrial age (250 years ago) to the knowledge age (50 years ago). During the past decade, we have jumped up a further level into the innovation age.
In this new age, the critical means of production are not tools (hunters and gatherers), land and domesticated animals (agricultural age), energy and machines (industrial age), or even data and information management systems (knowledge age). They are know-how (knowledge, skills and experiences), concepts and ideas.
Likewise, the key competitive advantage of a business will no longer be economies of scale (industrial age) or economies of scope (knowledge age), but the ability to use know-how to create novel, original and meaningful innovations.
Innovation always begins with ideas that flow from the brains of individuals, who then cooperate with others to transform these into innovations. Unsurprisingly, the innovation age elevates the importance of people. Today, let's explore how "people management" has evolved and may develop further in the innovation economy.
In the industrial age, companies began to mass-produce standardised goods using energy-powered machines. This new economy required lots of hands, first to dig the coal needed to run the machines, and then to operate the machines. Many farm labourers became low-skilled mine or factory workers. Workers were easily replaceable as their tasks were standardised and straightforward.
Workers' sole motivation to show up at the factory gate was the desire to make enough money for their families to get by every day. Typically, workers were paid their meagre wages at the end of the day (and later at the end of a week or month) for the hours they had worked or the output they had produced.
As the concept of scientific management developed in the late 19th century, "personnel" emerged as a sub-unit of finance and accounting, whereby "bean counters" focused more on hours, outputs and wages than on the needs of people. This perspective expanded with the emergence of the human relations movement in the mid-twentieth century.
Subsequently, HR management became a separate corporate function responsible for hiring, administering, paying and firing workers (notice how this name indicates that industrial workers were seen as a production resource similar to input materials).
In the relatively static, predictable business world of the industrial age, a steep management hierarchy directed the efforts of a vast number of workers following a command-and-control style.
THE KNOWLEDGE AGE
In the knowledge age, companies devised new ways to more effectively process data, information and knowledge with information management systems. Compared to the low-skilled blue-collar workers of the industrial age, the well-educated and highly-skilled knowledge workers (management guru Peter Drucker's new name for white-collar workers) gained in relative importance.
White-collar workers were paid fairly good monthly salaries, and making money tended to be their primary motivation. On the other hand, automation starting with industrial processes and later administrative tasks led to "rightsizing" of the workforce during the 1980s and 1990s.
In the steadily changing and accelerating business environment of the 1990s and 2000s, "talent management" emerged as a new label for the people management function. It expanded to include activities such as acquiring, onboarding, managing, developing (through training, coaching and mentoring), motivating (often using KPI agreements and quarterly or annual review exercises) and finally "outplacing" these well-educated and paid knowledge workers to replace them with younger, cheaper, yet less experienced bloodstock.
THE INNOVATION AGE
In the innovation age, an organisation's success and survival depend on its ability to create and transform existing and freshly emerging knowledge into meaningful innovations. So, former knowledge workers need to evolve into co-creators and gain further in importance.
People management has yet another new name: Human Capital Management, indicating that humans are now seen as assets of a company (although they have yet to be listed on the balance sheet).
Progressive firms signal the increased importance of the human factor by creating a C-level role for the people function (called Chief People Officer or Chief Human Capital Officer). This person's job is to attract, align, develop and adequately reward agile, smart co-creators.
These new co-creators are first and foremost motivated to join organisations that make meaning (while making money is only of secondary importance). They cooperate in lean but keen teams led by the individual who is best qualified for a given project. Moreover, creative leaders embody authenticity, talent, skills, experience, passion and a track record of successful outputs.
The people management style in these innovative firms will be a mix of self- and team management focused on achieving monthly to quarterly output targets that contribute to the successful pursuit of a worthy long-term cause. Compensation in these meritocratic organisations is medium to high and linked to individual, team and company performance.
Interestingly, people management in the highly dynamic environment of the innovation age seems to resemble in many ways the egalitarian and cooperative, flexible and agile, skills-based and creative approach of primal hunters.
What insights did you gain? And what age is your organisation operating on with regards to its people management?
Dr Detlef Reis is the founding director and chief ideator of Thinkergy, the "Know how to Wow" Innovation Company in Asia and beyond. He is also an assistant professor at the Institute for Knowledge & Innovation -- Southeast Asia at Bangkok University, and an adjunct associate professor at the Hong Kong Baptist University.