I’ve previously posted on my Human Capital Management Strategy, Talent Management Strategy and Workforce Planning processes, but I haven’t written about how these processes can be combined. This is partly because doing so may seem a little nit picking (these terms are generally used indistinguishibly). But I believe the differences are important (according to Peter Cheese’ data, organisations that score in the top quartile of business results score an average of 3.4 for maturity of Human Capital Strategy, compared to just 1.8 for those organisations in the bottom quartile).
And although I have a lot of time for InfoHRM and their Workforce Planning process that I described in my last but one post (remember that I tend to be most critical over areas that I largely agree with), I think HCM Strategy involves more – and provides more benefit.
For InfoHRM, WFP is the maths behind Demand –Supply = Gap. And HCM Strategy is about the actions taken to deal with the gap:
It’s all very well thought through. But for me, HCM Strategy is about the type of place an organisation wants to become. It’s a higher level of strategy / planning than WFP and needs to come first if an organisation is going to maximise the value it gains from its people:
Human Capital Planning
This is about choosing the sort of human capital or organisational capability that’s going to make a difference to a particular organisation; doing a diagnosis of the current level of capital; working out how it can be best created and setting objectives for this (in the top row in the HCM Value Matrix).
It’s about deciding on the type of place an organisation wants to become; what it wants to provide to its people; what sort of people it needs and what it needs its people to deliver etc. And it’s a vital step in meeting Richard Boyatzis’ challenge about accumulating rather than liquidating human capital which I think is essential is an organisation is going to create value and provide competitive advantage through their people.
It doesn’t need to be performed every year necessarily but I’d suggest it should when facing major changes in the environment such as the one we seem to be entering at the moment ie recession to jobless growth.
Note that I’ve put Human Capital Planning at the same level of business planning in my slide, above to emphasise that the business plan should be informed by the Human Capital Plan as well as the other way around.
Another important aspect of my approach is that the focus of energy is inside the organisation – on the things the organisation can already do well and can be developed into differentiators (ie its mojo / organisational capability)
- Richard Boyatzis on human capital accumulation
- My HCM strategy development process
- Organisational capability and strategy
- Organisational capability and the inside-out approach
This process is about identifying the talent groups that require particular attention within the strategy. These people may be high performers (‘A’ players), but they may be other people / groups too (see my last post on differentiation).
One important part of this process is the identification of Employee Value Propositions (EVPs) for each of these groups.
This is a really vital step in HCM strategy development, and lies at the heart of the Human Capital Strategist programme that I deliver for the Human Capital Institute (in UK and Europe). I also think Dick Beatty describes its value well. But I believe it needs to come after Human Capital Planning as the identification of talent groups needs to be informed by organisational capability, not just critical business processes. But it needs to come before Workforce Planning because the identification of talent is an input, allowing WFP to focus on what’s really important, rather than an output of this process. (There may however need to be some iteration of this, for example if WFP throws up critical constraints in the supply of various groups which then may also need to be considered to be talent).
- Six varieties of talent management
- Differentiation for Workforce Planning
- Dick Beatty on differentiated metrics for a differentiated workforce
- McKinsey’s War for Talent: ten years on
- More about the talent problem
- Human Capital Strategist certification
This process is about a more granular level of planning, diagnosis and strategy development, and as much as possible should be data based. (I don’t believe you need to get into numbers earlier on in the human capital strategy development process, and I’ve been involved in several cases where doing so has obscured rather than clarified strategy making.)
- My Workforce Planning process
- Lacey All, Starbucks on Workforce Planning
- Mary Young, Conference Board and Workforce Planning
Another input into Workforce Planning is more traditional HR Planning. This looks at how people can be used as Human Resources to help meet an organisation’s mission, BHAGs, business plans and objectives. It leads to the setting of objectives in the middle row (adding value) in the HCM Value Matrix.
It’s it at this level that HR needs to be business first, HR second (at the left-hand side of the slide, I think we need to be HCM professionals first).
HR Process Planning
The third level of planning looks at HR processes and how these can be improved, based on best practice, benchmarking etc (rather than how these fit the particular needs of the organisation). These requirements become objectives in the bottom row (value for money) in the HCM Value Matrix.
At each level of Human Capital Planning, Talent Planning and Workforce Planning, an organisation should develop then iterate objectives for their HCM Strategy. Once they’ve completed this analysis it makes sense to develop measures to support these objectives. This process provides an HCM Scorecard based upon the HCM Value Matrix.
InfoHRM note that scenarios help manage change and risk by developing alternative views of the future based on events outside the organisation’s control. This helps the organisation rehearse how it might adapt to future events today (what if?).
I agree with the importance of scenario planning but believe it needs to start at the beginning of the strategy development process (ie in Human Capital Planning) and be iterated at all three levels
Note, whenever I work with organisations this process ends up looking very different from the one I’ve described here. I’m not actually a big supporter of methodologies, at least in this sort of area.
But the process I’ve described is the ideal one I’ll have at the back of my mind when I’m talking to a potential or new client. And we’ll then develop something that will work best for the particular client based upon this insight, but also the client’s particular strategies, external environment, internal context etc.
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