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Human Capital Management
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Most organizations state that people are their most important asset. However actions speak louder then words and when it comes to human capital management many organizations fall short, with little understanding regarding how to formulate, successfully execute or measure human resource strategies and programs.
Successful human capital management relies on the following factors:
1. Understanding key drivers for the business
2. Effectively linking HR strategy to business strategy
3. Role of the HR function in the organization
4. Effective implementation of human capital management programs
5. Effective management of organizational culture
6. Data driven decision making with human resource metrics
We'll take a look at these six critical success factors.
Understanding Key Business Drivers
Success with human capital management starts with understanding your business:
a. Key goals and strategies
b. Competitors' strengths and weaknesses
c. Industry factors and economic trends
Understanding the business is the first step toward becoming a business partner. In the HR world the term business partner may have become cliché, but unfortunately too many HR teams focus on operational issues and never take human resources to a strategic level. HR teams at a strategic level add value to the business by supporting key strategic efforts.
Link HR strategy to Business Strategy
The development of a human capital management strategy starts with studying the organization's strategic plan and developing an understanding of how human capital management can contribute to its success. Does the company need to grow in a region, therefore necessitating the need to quickly hire new talent? Is technology taking on a greater strategic importance increasing to the need to retain key employees? Do industry trends mean the workforce needs new skills?
Linking HR strategies and programs to business needs will help the HR team map out a human capital management plan. Each business strategy should have supporting human capital management strategies. Each human capital management strategy should have supporting HR programs and executables.
Let's look at an example:
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Business strategy:
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Increase productivity through technology implementation |
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Supporting HR strategies:
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-Retain key staff responsible for technology implementation and support
-Fill skills gap with training
-Hire top talent with technology knowledge
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Supporting HR Programs:
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-Increase key talent base salaries to 75th percentile of market
-Implement technology training so all staff receive a minimum of 3 hours of training
-Prioritize recruiting to hire technology talent – goal that 30% of new hires are rated a minimum of exceeds expectations |
This is the beginning of a human capital management strategy map. A similar outline should be developed for each key business strategy. Once these important broad strategies and objectives are identified, detailed action plans should be outlined for each supporting HR program.
Role of the HR Function
Look in the mirror and assess HR's role in the organization. What is your relationship with your manager? Peers? Other departments? These relationships will need to be strong and include discussions at a strategic level in order to effectively execute on your human capital management initiatives.
If your role assessment leads you to the conclusion that the gap between your current role and necessary role is too great to effectively implement your human capital management strategies, then the first course of action is to clarify and strengthen your role. It's usually best to start this discussion with your boss, providing a clear outline of your vision for your role along with a business justification to give the discussion credibility.
Effective Implementation of Human Capital Management Programs
You have a great human resources strategy and you've clarified your role, now it's time to execute. Leading change can be a significant challenge and this is where your strong relationships with other leaders and staff in the organization will serve you well.
In addition implementation of your human capital management programs will be facilitated by business justification through effective human resource metrics. Effective HR metrics provide business justification for your actions and measure progress. See the section below on Data driven decision making with human resource metrics.
Effective management of organizational culture
Understanding and proactively managing organizational culture is a key to long-term success. The HR team can lead the organizational culture discussion, including facilitating a gap analysis between the desired culture and the current state of affairs. To create change within human capital management means clearly understanding culture and how to work within it to move programs forward.
Data driven decision making with human resource metrics
Human resource metrics help facilitate human capital management. HR metrics provide an unbiased perspective on the current state of human capital management in the organization and over time help to monitor progress toward important objectives. They in short facilitate the important human capital management success factors outlined above.
Human resource metrics also provide a perspective regarding the health of your organization. Comparing your HR metrics or an HR scorecard to HR surveys and HR Benchmarking results allows you to benchmark your important human capital management measures.
Next Steps
Stephen Covey once wrote, "Put first things first." Taken as a whole completing all of the human capital management initiatives outlined above can be a daunting task. Breaking them down and taking them a step at a time makes them manageable and will make you effective.
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