The Future of Leadership

The Era of Human Capital by Edward E. Lawler III

The growth of knowledge has changed the nature of individual work. Today’s companies must seek new competitive advantages in human capital, organizational bandwidth or key core competencies. To achieve any of these three advantages, you must have the right people in the right positions effectively carrying out their duties. This will end the old hierarchical structure of most businesses. Even in the workplace, democracy is inevitable. Companies that spurn egalitarian approaches can’t attract the right talent, rarely produce the correct core competencies and cut their own organizational abilities. Today, a firm must offer a brand to potential employees.

The bureaucratic model of organizations - including job descriptions, organizational tables, reporting structures and office procedures - is built on the idea that jobs are the fundamental unit of business. This notion is doomed because it does not give proper emphasis to human capital. Instead, today’s organization should focus on its need for knowledge and skills. This becomes the essential molecule of the organization. The core description, then, becomes a description...