Key Enablers to Effective Human Capital Planning

Often, we are asked by clients what it takes to successfully develop and implement a Human Capital (HC) strategy that really “makes a difference” and doesn’t end up sitting on a shelf.  Most public and private sector executives are well aware that HC-related issues are among the foremost challenges their organizations will face over the next several years.  To address these challenges head on, high-performing organizations develop HC strategies to identify their approaches to selecting, developing, and retaining the right people – in the right jobs – to support the current and future business strategy.  Described below are four key enablers to implementing a successful HC strategy.
 
Ownership and Accountability at all Levels
One mistake that many organizations make is positioning HC as an “HR responsibility.” Don’t get us wrong, we believe that HR plays a pivotal role in the development and execution of the strategy. However, if the HC strategy is owned solely by HR, the likelihood of success is significantly diminished.  HR should be the conductors, in-house expert consultants, and among the main drivers, but the primary ownership of the HC strategy has to rest with managers.  The best HC strategies reflect the voice of the organization’s management team.

To accomplish this, managers from across the organization must be engaged at every stage in developing and implementing the strategy. Managers are best equipped to identify the organization’s current and future challenges and determine the most appropriate HC strategies and tactics to address the challenges. HC strategy must be explicitly tied to the overall business strategy and mission. In addition, if managers “see themselves” in the strategy, they are far more likely to own and implement the strategy.  Each manager in the organization must understand his/her role in implementing the strategy and be held accountable for HC-related objectives in performance plans.  In our experience, the most successful organizations cascade business and HC strategy top-down to each employee. All employees are held accountable for developing the required competencies for current roles and focusing on growing competencies to eventually progress to future roles that align with business strategy.

Effective Governance
To foster strong accountability, an effective governance structure consisting of senior-level line and support executives should be established to ensure that human capital decisions are effectively owned and implemented throughout the organization. Example activities conducted by governance bodies include meeting regularly to measure consistency and progress against HC strategy and performance metrics, discussing HC issues and risks in the context of the business strategy, and identifying ongoing opportunities to drive HC best practices throughout the organization. In our experience, organizations that establish formalized governance structures foster higher levels of accountability, generate better ideas and solutions, and experience higher overall buy-in to organization-wide HC change.  According to one Chief Human Capital Officer within a large federal government agency which uses a HC governance body to vet ideas and develop policies, “Getting buy-in is one of the most important things you can do, both from our peers CFOs, CIOs, Program Managers] and from employees.(1)” The level of governance and corresponding structure should be designed to fit in with the organization’s culture and be simple enough to add value and be effectively leveraged.

Integration with Strategic Planning and Budgeting Processes
World-class organizations manage human capital as a portfolio with as much value to the corporation as financial or tangible assets. For example, in its HC strategy, a world leader in the specialty glass and ceramics industry acknowledged that it has a finite portfolio of human assets and associated dollars to invest in those assets. As such, the company’s strategy focuses on making informed portfolio investments and shifting priorities to realize the most value from its people portfolio. This type of decision-making enables the company to define various HC strategies and investments “across the people portfolio” based on each segment's (e.g., business unit, level of employee experience, or a specific role) relative value to the achievement of business strategy.  These decisions are included as part of the overall strategic planning process.  Our experience shows that achieving this integration is critical in ensuring the alignment between HC and business strategy.  Ongoing strategic assessments (e.g., quarterly program and/or account reviews) should be conducted to measure progress against business strategy and budget.  These reviews should include a specific focus on human capital, thus allowing the leadership team and HR to collaboratively identify the number, type, and qualifications of HC needed to execute on the business strategy.  Integrating HC with the ongoing strategic planning process enables organizations to continuously assess whether modifications to the HC strategy are required to maintain alignment with the business strategy and financial outlook.  Unless directly integrated with the company’s regular business planning process, a focus on HC will most likely never become institutionalized as an organizational priority and the likelihood of achieving the HC strategy is severely diminished.

Skilled Managers
A key outcome of an effective HC strategy is retention of top talent.  In our experience, the foremost enabler of an employee’s loyalty to and retention within an organization is a constructive and rewarding relationship with one’s manager.  To develop effective human-capital related skills, managers require focused training and development.  An organization is more likely to achieve higher levels of performance when good core management skills (e.g., people development, communication) are present. According to a study conducted by the Partnership for Public Service, “Good supervision matters to team performance. Supervisors affect organizational performance.” Attributes of effective managers that drive higher levels of performance “include the ability to listen and show understanding, identify development needs, promote teamwork, address work related conflict, and respect supervisees (2).” These are all skills that can be fostered via an effective leadership development program.  We recommend actively measuring the level of satisfaction of the relationships between managers and direct reports throughout the organization.

Summary
Implementing HC strategies that successfully contribute to the achievement of business strategy and mission is a top priority of world-class organizations.  We hope to have given you some food for thought on enablers to put in place to support your HC strategy.  If additional enablers have worked effectively in your organizations, please share them with us. We pledge to continuously pass along our experience and new insights to you, our clients, colleagues, and friends.

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