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Why do leadership development programs fail to meet
their goals of building consistent values and competencies
across business units? Why does a best-in-class recruiting
initiative neither attract nor retain the employees
with the kinds of skills the organization needs for
the future, limiting the firm's opportunities? What
are the reasons a new performance management system
can create destructive competition between employees
instead of incentives to improve cooperation?
These under-achieving efforts reduce an organization's
performance and create
skepticism about future efforts. Many employee development
and performance improvement programs fail because they
do not have the demonstratable support of the senior
leadership team, are not integrated with other organizational
initiatives, do not meet the motivational needs of the
employees, and do not contribute to the organization's
future direction. Many organizations are now recognizing
that human capital management can assist them in integrating
their efforts to improve performance and to provide
an environment and incentives consistent with them.
Depending on its external conditions, mission, business
cycle, funding levels, and other factors, the challenges
an organization faces shift over time. Due to these
changes, an organization's human capital challenges
and strategies for meeting these challenges also must
shift. If a company enjoys an increase in business,
its human capital efforts may include improving recruiting
programs, accelerating high-potential leadership initiatives,
and implementing incentive programs consistent with
reaping the benefits of the increased business. If a
government program's costs are accelerating or its support
is declining, its human capital programs may reflect
this through developing the competencies to redesign
and restructure the program, identifying alternate career
paths or detailing positions for employees, or pursuing
flexibilities in retirement programs.
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This article was published in the Winter
2003/2004 issue of Perspectives.
Please refer to our Terms
of Use policy regarding acceptable use of
content on the ICF International Web site.
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One of ICF International's U.S. federal clients faces dramatic
changes in its mission and strategy due to security issues
and increased outsourcing of its functions. Though we started
helping the organization with its management challenges through
training, coaching, and other strategic support, ICF International
has used a human capital approach to help the organization's
leaders look at its agency's initiatives more holistically.
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Human capital management is not about changing the
names of things we are already doing in human resources
(HR) and elsewhere. It is about acknowledging, anticipating,
and acting on the human impacts of those actions. Human
capital management provides a systems approach to improving
the performance of an organization and its employees,
by integrating initiatives that impact their performance,
including restructuring, business process improvement,
and new IT systems introductions, as well as more traditional
HR programs, such as recruiting, retention, and performance
management.
Human capital management takes the view of employees
as individuals-the combination of skills, competencies,
motivation, capabilities, interactions, energy, experiences,
and institutional memory that create value for the organization.
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Gary Becker, the Nobel-prize-winning economist, acknowledged
this in his book Human Capital: "...expenditures
on education, training, medical care, etc., are investments
in capital. However, these produce human, not physical or
financial, capital because you cannot separate a person from
his or her knowledge, skills, health, or values."
In our work with government and private-sector organizations
over the past five years, we have learned that organizations
with effective human capital management take the following
actions:
- Engage organizational leaders regarding the potential
of managing human capital more holistically
- Identify leadership support for assessing and acting
on the human impacts of organizational action
- Create the human capital linkages to the organization's
mission and strategy
- Build a human capital plan consistent with those
linkages
- Rally support for the plan
- Implement and monitor the human capital initiatives
- Publicize the lessons learned and benefits
- Revise the initiatives to better match the organization's
direction as it changes over time
Through this approach we are helping organizations link strategy
with program planning and workforce planning, integrate budget
and performance management, and augment motivation, reward,
and performance management systems to help employees see how
their work and their career development advance the goals
of the organization.
Human capital management is about investing in employees
to improve the performance of the organization in the short-
and long-term. These investments can include improving management
and leadership, assessing and anticipating workforce requirements
and capabilities, creating better systems and tools, and building
marketable skills, as well as fostering the organization's
energy and commitment to career development. Through these
investments, an organization can create strong bonds between
employee actions and desires and its performance.
Learn more about ICF International's human
capital strategies.
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