In the last decade, Human Capital Management has become widely recognised for its central role in enabling organisations to achieve their strategic goals. Leaders frequently talk in terms of their ‘people strategy’ in the same breath as their business strategy – a powerful acknowledgement of the fact that success in any industry (even in areas that appear purely technical, mechanical, commoditised or financial) ultimately hinges upon people.
Now that this fundamental principle is established, the key question is ensuring that the specific people solutions we implement are truly moving us as effectively as possible towards our strategic goals. This question is more subtle than it at first appears.
Organisations are very good at capturing data. Who among us cannot, if required, rattle off statistics about turnover rates, time-to-hire, leadership effectiveness ratings, employee engagement, promotion rates, applicant-to-hire ratios, tenure, employee demographic trends and the like? We are surrounded by these figures and our people solutions, if well thought through, are directed towards making a measurable improvement in them. The belief is that by improving these metrics, we are being both efficient and effective – thus moving us towards our company’s strategic objectives.
But there are missing links in this argument, which few organisations fully address. What is the optimal level of these metrics? Which of them matters most? If our strategic focus changes, what new mix of metrics should we focus on? If we are not achieving the results we had hoped for, what initiatives should we introduce? If all organisations care about similar people metrics, what do we need to do differently to achieve a competitive advantage?
Underpinning all of these questions is one key issue – what is the ‘value chain’ for your specific organisation that links people solutions to your business strategy? Uncovering this formula depends on a few key components:
1. Linking strategic goals to people metrics – clear data to show how specific people indicators are actually associated with different types of business goals
2. Identifying ‘key job families’ – understanding the roles that contribute disproportionately to the performance of the enterprise (so that we can focus our efforts/resources where they will be most productive)
3. Linking people metrics to business solutions – once we know what metrics we need to prioritise (and the job families on which we are focusing), it is important to have clear data to show how specific solutions will give us the specific outcomes we need.
By building on our work with organisations across the world, implementing the full gamut of HCM solutions, we have developed a methodology to allow us to establish these links.
The components of this ‘value chain’ will be different for every organisation and every set of strategic goals, but the methodology that enables us to uncover the chain itself is very powerful. It allows organisations to have a much clearer idea of how business solutions drive the right people metrics, which in turn can deliver the required business outcomes. This enables the solutions to be continuously enhanced and fine tuned.
In a forthcoming column, we will explore examples in which this approach has been adopted. In all of them, we will see how organisational performance can be optimised with precision by understanding the exact ways in which your people deliver the pillars of your strategy.
If you are interested in learning more about this work, we would be delighted to hear from you!
About the author
Ed Hurst Managing Director at Kenexa Australia. For further information phone (03) 9602 3899 or email email@example.com