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Human Capital Strategy – An Approach to Creating a Human Capital Strategy Plan

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If you don’t have a Human Capital Strategy, all “talent” related issues become “operational”, and, to be quite honest, really miss the boat when it comes to realising very REAL Return on Investment (ROI) in investments in “talent”.  For one thing – all costs are “EXPENSES” – not ‘INVESTMENTS”.  Yet the return on these costs are realised far beyond the immediate financial year.

Many organisations now have some or other “Talent Management” focus – generally focused on key IT staff attraction and retention, and sometimes focused on remuneration.  Some organisations even have a “Talent Manager” who’s responsibility it is to put in place certain Talent Management processes, again generally focused on the above points.  But the big question is “Do You have a Human Capital Strategy?”

What is “Strategy”?

I suppose the correct place to start is “what is strategy”?  Strategy is defined as “the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations”.  Strategies exist at several levels in any organisation – ranging from the overall business (or group of businesses) through to individuals working in it – Human Capital Strategy.

Human Capital Strategy is ensuring that the organisation has the right configuration of competencies, attitudes and behaviours, in the right jobs, at the right time and with the right processes and measures in place – in order to delivery organisational strategy.  Human Capital Strategy is:

  • Linked to the business strategy
  • Based on identifying the competencies, attitudes and behaviours necessary to perform better than the competition and achieve business strategy
  • Anchored on understanding the external environmental factors that affect the ability of the organisation to attract and retain the identified competencies, attitudes and behaviours
  • Geared to ensuring that the business has the people capability to meet its current and future needs
  • Future focussed with clear links with succession planning (across all core jobs)

Creating a Human Capital Strategy

The real conundrum that organisations face is not how to put together a strong and effective strategic plan, but how to place the right people (competencies, attitudes, behaviours) against the plan to ensure full impact on execution.  Human Capital Strategy seeks to systematically close the gap between the current talent in the organisation, and the talent it needs to successfully respond to current and emerging business challenges.
A thorough strategic management process has three main components, shown in the figure below:

Strategic Analysis

Human Capital Strategic Analysis requires understanding the competencies, attitudes and behaviours required over the full term of the organisation’s Strategic Plan, understanding the competencies, attitudes and behaviours available within the organisation and in the marketplace, and examining alternative methods of “closing the gap”.  All too often this step in the Strategic Planning process is overlooked, or applied at the operational level instead of the strategic level.
In any “strategic” process, unless the “measures of success” are identified and measured, on a continual basis, the exercise becomes semantic and of little long term value to the organisation.  Unless you are able to measure and confirm the success, you will never know what is working and what it not – or even if you are achieving your strategic plan.

Strategic Choice

This process involves understanding the nature of stakeholder expectations (the “ground rules”), identifying strategic options, and then evaluating and selecting strategic options.  Each option will have an anticipated measure of success applied as well as the investment necessary to achieve the success.  Choices are made dependent on the required outcome, timeframe, expected return on investment, and the availability of capital.

Strategy Implementation

Often the hardest part. When a strategy has been analysed and selected, the task is then to translate it into organisational action.  Strategic action plans form the basis for implementation, and the outcomes need to be measured on a regular basis to ensure that the expected outcome is being achieved.  If not, then elements of the Strategic Action Plans might need to be changed.

Human Capital Strategy is recognised as one of the key areas to create competitive business performance.  If you don’t have a Human Capital Strategy, your organisation is missing out on a major opportunity.

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