The history of HR (human resources) is not just rooted in individually-focused psychology. It is also rooted in the disciplines of sociology, economics and anthropology, all of which tend towards a systems perspective; accounting and considering all of the behaviours of a system as a whole, in the context of its environment.

The talent paradigm has gained considerable momentum in the HR field. Talent management consulting practices have proliferated, with talent-management functions operating within HR departments. Similarly, HR departments in US-based organisations have renamed themselves to focus on talent. The trouble is that “talent” focuses on optimising individual contributions.

The more that individuals are emphasised over the team and group composed of those various teams, the more the focus is on a person over the organisation, the more that HR will lose the its impact – as a strategic enabler of and for organisational performance.

HR Insights

Among the insights in Adam Smith’s Wealth of Nations is that economic organisations come into existence because of their ability to coordinate labour, to make the whole greater than the sum of individual laborers’ parts. The essence of organisations is coordinating and enhancing the effectiveness and efficiency of individual efforts.

“Talent” focuses on ensuring that companies have the individual talent necessary to achieve their purposes. While a critically important agenda for any organisation, by focusing primarily on individual contributions this paradigm succeeds in making the organisational whole equal to the sum of the parts.This overlooks the central contribution of organisations to making the whole greater than the sum of the parts. It is the integrating and leveraging functions of the organisation that creates a sustained competitive advantage – among the few things totally within the control of business leaders.

See: Who Do You Think is Talented…Or Not?

Labour economists know that over time, major competitors will hire roughly the same raw talent. In hiring and selection processes, organisations win some and  lose some. The critical issue is not the individual talent that you have; the competitive advantage resides in how organisations deploy their talent once they have it.

This is an organisational issue. Organisations should not be complacent in striving to recruit the best talent. But if HR focuses primarily on talent, its ability in creating a sustained competitive advantage for their company is limited by their approach.

HR’s Task?

The tools, practices and processes that create effective organisations are substantially different from those that optimise talent. For example, if optimising talent is the agenda, then an HR department will probably hire HR professionals with individual-oriented psychology backgrounds.

If optimizing organization is the agenda, then HR departments are more likely to hire HR professionals with backgrounds in business and economics. The latter two disciplines are focused on making the organisational whole greater than the sum of the parts. To be truly effective, most HR departments need to balance the individual and organizational focuses.

HR must ensure that the foundation of talent is established, to put HR in the game. But the game — a marathon — is won by creating competitive organisations that can beat the competition. With this focus, HR can then create sustained competitive advantage.

HR practitioners and workers should seek to extend their awareness outward, beyond the self of the individual, to embrace the self of the group. The goals of the group and the larger organisation are transcendent and part of enlightened self-interest. Embracing them enables excellence in work performance.