Human capital is heating up. According to Debbie McGrath and HR.com, the demand for labor is increasing and investors are protecting and growing their current investments, infusing HR vendors with millions of dollars of capital. We’ve also seen more human capital acquisitions and mergers in the past 12 months than we’ve seen in the past four years.
But how does a company survive (much less succeed) in such an ever-changing and confusing industry such as human capital?
We found some great ideas in GE's CEO Jeffrey Immelt's 2003 annual letter to the shareholders where he talks about what companies must do to succeed in todays complex business environment. Although many HR vendors are not publicly traded companies and do not necessarily compete globally, their customer's (and in many cases, their competition) do and every HR vendor can learn from Mr. Immelt's advice. An overview of his thoughts includes:
"Future economic growth will be uneven. To succeed, companies must navigate major global trends that will have significant impact on valuation. These include:
- An increasingly interdependent global economy wracked by excess manufacturing capacity and the resulting price pressure. This is why unemployment remains stubborn and margin growth is tough to achieve. Winning companies will invest in innovation and build new revenue streams from their current capabilities.
- A new economic order of global competitiveness and growth. Competition from places like China and India has evolved beyond low-cost manufacturing labor to include highly competitive engineering graduates who earn less than production workers in the developed world. Winning companies must think globally, but understand local consequences. Only competitive companies can serve investors, employees and stakeholders during this dramatic phase of globalization.
- A move to consolidate distribution channels, which creates value for consumers but makes it difficult for manufacturers to maintain margins. Winning companies will have strong direct sales forces, low costs and value propositions that tie their own profitability to their customers’.
- An opportunity to build growth platforms based on unstoppable demographics. Winning companies will sustain long-term growth by betting on high-growth markets to which they can bring unique technical and management capabilities.
- A more volatile and uncertain world. The underlying insecurity created by 9/11 and the stock market bubbles will not end soon. Winning companies will keep the confidence of customers, investors and employees by maintaining financial and cultural strength.
The best growth strategies take companies to places where only a few can follow. We are another year along with our five-initiative strategy to create high-margin, capital-efficient growth:
- In this environment, GE can outperform by executing our strategic imperatives: sustain our strong business model; strengthen our portfolio; and drive our growth initiatives. These are the imperatives on which we executed in 2003.
- Technical Leadership (Technical leadership produces high-margin products, wins competitive battles and creates new markets.)
- Services (Services only work if they make customers more profitable)
- Customer Focus (Align your sales force with customer needs; develop world-class marketing; drive sales force effectiveness; and serve customers with excellence.)
- Globalization (Through globalization, you can multiply the effectiveness of your ideas.)
The result of these initiatives will be a company that can achieve organic growth at twice the GDP with high margins and returns."
- Growth Platforms (conceptualize the future, identify “unstoppable” trends and develop new ways to grow.)
If you're interested, you should read the entire GE 2003 annual letter to the shareholders.
You should also be capitalizing on the new growth in human capital by aggressively promoting your products and services today. Now is the time to evangelize your company to the HR world.