How can organizations understand how they can leverage more value from human capital and manage people risk.

1. Human Capital: Value Creation and Risk
AAAAA+AA- AAA+AA-BBB+
An introduction to Organization Maturity Ratings

2. • Why is Toyota’s market capitalization c.3 X the size of GM?
• Why can’t all banks produce value per head like Goldman Sachs?
• Why hasn’t Rolls Royce made money on aero engines?
• Why are BP & other oil majors still at risk of large scale disaster?
• How did mis-selling arise at Lloyd’s after PPI & 5 years post GFC?
• How does Costco stock consistently trade at a premium to Walmart?
• How can Ryanair make even more profit and be a ‘nice’ company
too?
• How is a 40 year old clothing firm more interested in saving the
planet making so much money?
Key Human Capital Questions need convincing answers:

3. The paradox is that by not
pursuing profitability to the
exclusion of all else, the Great
Engine companies in their Golden
Age would achieve enormous
increases in value...whereas, by
single-mindedly pursuing
profit...these same companies
and their successors actually
created less genuine, lasting
wealth; indeed, they would often
destroy it.
Value orientation – short, long term;
narrow or broad based?
“
”

4. • …the extent to which an organization realizes its’ human
potential such that it maximizes the value it can create.
• Human potential in this context relates not just to an
organization’s people, but to all people connected with the
development, production and supply of an organization’s
goods and services.
• Value relates to value generated by reference to the
organization itself (i.e. productivity, quality, financial,
efficiency) and value generated by the organization in a
societal context (e.g. economic, well-being, environmental).
Oranizational & HR Maturity is…

5. “an assessment of the extent to which an
organization is designed around the goal of
maximizing its value, while controlling risk, with
emphasis on its ability to manage its human capital
to best advantage”.
What is an Oranizational Maturity Rating?

6. Profit is critical for a
healthy organisation but
value is much broader,
cleaner and sustainable

7. OMR
Stage 2
Good
Professional
Practice
Stage 3
Effective
Management
Stage 4
Human Capital
becomes integral
to business
operations
Stage 5
Transition:
operational
to strategic
focus
Stage 1
Personnel
Administration
Board & Executives
resistant/unaware of people &
human capital value up to this
point
Stage 6
Organisation
becomes a
whole system
Stage 0
No Conscious
People
Management
Maturity spectrum:
OMR ‘AAA’ Scale
©Paul Kearns/OMR 2013
LONG TERM - STABILITY
SHORT TERM –
UNSTABLE
A+to
AA-
AAA
BBBto
A
BBB-
BB+
BB
C
B

8. Value
Motive
Whole
system
Learning
Organization
Improvement
philosophy
People riskHuman
capital
ethos
Trust
Engagement
Cooperation
Performance
system
Communication
Business/pe
ople strategy
The Ten ‘Pillars’

9. Measuring or rating maturity
9

10. Maturity in practice: value outcomes
Early indicators
• Exec expectations of human capital & value now aligned
across the business
• Organization now adopting a new language around HCM
• 10 Pillars embedded into assessment of planned HC activities
• Maturity provides new framework for value based
assessments and decision making
• Mature thinking becomes conscious & senior execs now lead
on HC initiatives
• Practically NSW HR team now focused on the business rather
than blindly adopting "best practice”

11. How Maturity predicts value creation & destruction

12. Value vs supply
chain orientation
Embedded
societal value &
responsibility
Truly inclusive
workplaces
Best/sustainable
resource use
Learning,
knowledge &
innovation
High trust,
cooperation &
informed
decision making
Maturity drives
higher value,
lower risk &
‘good’ outcomes
“social, economic, environmental, and ethical
factors directly affect business strategy—for
example, how companies attract and retain
employees, how they manage the risks and create
opportunities from climate change, a company’s
culture, corporate-governance standards,
stakeholder-engagement strategies, philanthropy,
reputation, and brand management.” – David

13. Reaching Your Potential
The perfect, virtuous circle is one where the best values
of your people are reflected in the way you do business.
This means you provide the greatest value to all your
stakeholders and to society, who in return generate the
greatest value for you.
Maturity is about everyone aligning with the purpose of
the organization; wanting to realise its full potential and
wanting to be around in the long term.

14. Maturity & Value
creation

15. Thank you
www.omratings.com
Stuart.woollard@omratings.com
Improve your Organization’s Maturity
Increase your Organization’s Value
Enhance your Societal Impact & Reputation