- Why is it that Human Capital Management (HCM) projects realise meaningful returns on investment in some companies and not in others?
- Why is it that HCM projects create significant benefits in some organisations and not in others?
The same processes, the same providers, the same initiatives – yet in some organisations it works, and in others not. The answer is Change Management!
Those organisations that realise meaningful return on investment and significant benefits have had a good Change Management process running parallel with the HCM project. Even “informal” Change Management processes will make a difference, provided that they are “good” Change Management processes.
What is a Human Capital Management project
A Human Capital Management (HCM) project is any project that that moves from traditional HR operational practices (administration, recruitment, compensation, benefits, etc.) to strategic HC practices (competency management, employee engagement, career management, succession planning, workforce analytics, etc.
That is, a Human Capital Management project is any project that shifts the emphasis from “Managing People” to “Producing Economic Value” through people.
Impact of Human Capital Projects
All changes to Human Capital Management create a degree of havoc in the lives of the organisation’s employees. Changes such as Organisation Restructuring, introduction of Career Pathing, new Job Descriptions, Remuneration Benchmarking, Performance Management, introduction of Talent Management, etc. etc.
Each of these changes is generally viewed with much fear and scepticism by employees. Their lives and livelihood are impacted, sometimes enormously, and they feel very threatened. Even more seriously, these changes impact on the way that people are managed. From managing “tasks” to managing “outcomes” is one such a change. Both management and employees struggle with HCM projects – they don’t understand them, and they don’t understand the impact on their traditional way of working, and, more importantly – they don’t understand why the change is necessary.
Many organisations seem to try to slip these projects in “under the radar”, with little or no Change Management used to minimise the problems and maximise the return on investment. It is assumed that managers and employees alike will just “get with the program” – with little help or support in understanding why it’s necessary and “what’s in it” for them.
Between the lack of understanding of both “management” and “employees” and the fear of the consequences of the change, few HCM projects have a chance of success without a good Change Management plan.
How does HCM Change impact Employees?
When introducing HCM, the first impact is on Job Descriptions. Yet, when employees learn – via the grapevine or, even worse, via a reluctant manager – of this initiative, their first reaction is – how will this affect me? does it mean that my salary will change? will I still have a job?
HCM change DOES impact employees – they may well find that their job has been regraded, they might find that they are doing a different job, they will definitely find that the way that their job and performance is viewed post implementation is different.
It is critical to the success of the project to allay these fears and ensure that the changes are well managed with constructive engagement with employees throughout the process.
How does HCM Change impact Managers?
Probably one of the greatest impacts of HCM change is on management. Managers have to learn to manage differently – and this is not easy for most. Most managers are reluctant participants in the Performance Review processes of old. But Performance Management under the HCM banner is very different. Management needs to be trained in the new processes and guided through the process to be able to embrace the benefits.
Gone are the “old”-style Job Descriptions. New Job Descriptions are more “outcomes” based and contain less detail. They are more focussed on the deliverable than the tasks needed to deliver. But there is more emphasis on the competencies required for the job. Most managers have never before had to work with “competencies”. They need to be trained and guided into the process.
Organisation restructuring always means changes in processes. Yet so little attention is given to these process changes, and management is not trained in mapping processes – especially cross-functional processes that are critical in most organisations today.
As with any Change Initiative, it is important, at the start, to understand the impact that the initiative is going to have on employees, on managers, and on processes. The risks associated with this impact need to be assessed and understood, and mitigating action plans put into place to reduce the likelihood of occurrence of the risk scenario.
When the risks are documented, a Change Management Plan can be created. The plan needs to take into account:
- The phases of the HCM project
- Who will be part of the Change Management Plan
- How the plan will be rolled out
- How the Communication Plan will be rolled out
- The risks and mitigating actions necessary
- Formal reviews along the plan milestones
Typically the Change Management Plan will commence prior to the actual HCM project. This will include any training necessary to bring some of the key players up to speed and a good communication plan. The Change Management Plan will follow the needs of the HCM implementation plan – sometimes a bit ahead, sometimes a bit behind, but always supporting the objectives of the HCM project.
As the project moves forward, there needs to be a review and feedback mechanism to gauge the “climate”, identify problem areas, and implement corrective actions. It is also very important for the Change Management plan to ensure the successes, especially early successes in the HCM implementation, are recognised, the benefits realised are publicised, and the success celebrated.
Because HCM changes impact so widely on the lives and work of employees, it is critically important for an effective and constructive Change Management Plan to run in parallel with the HCM implementation to monitor the reactions of the effected employees, and to take action, when necessary, to mitigate any negative sentiments in order that the HCM project may achieve the objective and successes that other organisations experience.
By Gail Sturgess – TalentAlign