Undervaluing the Human Element

If you’ve heard it from one CHRO, you’ve heard it from a hundred: Our people are our greatest asset.

A new Korn Ferry Institute study suggests that most CEOs also appreciate the hard-working employees within the organizations they lead—just maybe not quite as much as they value technology.

More specifically, the recent survey saw 63 percent of 800 business leaders from multimillion-dollar global organizations saying that technology will be their greatest source of competitive advantage in five years. In addition, 67 percent said they believe technology will create greater future value than human capital will within their firms, and 44 percent said the prevalence of robotics, automation and artificial intelligence figure to make people “largely irrelevant in the future of work.”

As if that wasn’t hard enough for employees to hear, consider that people didn’t crack the top five in terms of assets that CEOs predict will be most critical half a decade from now. Technology ranked No. 1, followed by research and development, products/services, brand and real estate (offices, factories and land, for example.)

“CEOs have a significant blind spot in the way they perceive people,” according to the Korn Ferry Institute study, “tending to undervalue human capital.”

These “distorted perceptions” demonstrate the extent to which the individual is being pushed to the periphery of tomorrow’s workplace—and the danger in failing to recognize the potential of employees to generate value, the report continues.

In placing a greater emphasis on technology and tangible assets, chief executives “may be demonstrating, in a big way, what experts call tangibility bias. Facing uncertainty, they are putting a priority in their thinking, planning and execution on the tangible—what they can see, touch and measure.”

In the report, Korn Ferry Search Vice Chairman, CEO and Board Services Alan Guarino cautions against taking that approach while overlooking human capital.

“Leaders are placing a high emphasis on technical skills, technological prowess and the ability to drive innovation in their new senior recruits—elements critical for modern organizations,” says Guarino. “However, the financial reality proven by this study—that the value of people outstrips that of machines by a considerable distance—must give CEOs pause for thought.”

The ability to lead and manage culture—”so-called ‘soft skills,’ ” says Guarino—will become “critical factors of success for companies in the future of work, as they seek to maximize their value through their people.”

Who knows the organization’s people better than the HR executive? And, if what Guarino says is true, one could look at this study’s findings as a tremendous opportunity for the HR leader to help the CEO see the tremendous worth of human capital, and to help make the organization’s workers an irreplaceable, invaluable part of tomorrow’s workforce.