The human capital management cycle is the next major initiative organizations are taking to maintain and increase competitive advantage. The learning component of the cycle can be the most expensive, but it can also deliver the most impact.
by Site Staff
June 29, 2006
We keep hearing that companies need to leverage their most important resource—people—to provide a competitive advantage. But why? In manufacturing, products can be made by machines whose capability for quality and consistency is unparalleled, leaving only the impact people have in the design, development, manufacture, marketing and distribution of that product. Beyond manufacturing, the service sector relies almost wholly on its people. Physical assets are nearly irrelevant (as a differentiator) to success or failure.
So the right employees—with the right knowledge, skill and guidance to achieve the results the organization expects—are the most important thing an organization can “produce” to be successful. In order to be effective in producing the right employees, we need an integrated process of this cycle of finding, hiring, training, motivating, guiding and evaluating employees. This cycle, which today is commonly called human capital management (HCM), is the next major initiative organizations are taking to maintain and increase competitive advantage. There is a clear link between all these activities and a set of standards, tools and disciplines must be applied to make it an effective process. However, there are many disjointed tools, systems and processes being used today that prevent these links from emerging in the systems and processes currently employed.
So why focus on the link between learning and performance? Within this cycle, the learning component is expensive, and linking it to how employees actually perform (outcomes that are measurable at the business level) is important to making sure that the value is fully realized. Also, the learning and performance outcome is a key driver that helps focus the front end, recruiting and hiring. Finding, engaging and enabling a new hire to produce is expensive as well, perhaps more so than the training itself. However, the impact of collective employee performance and retention drives needs for new talent, so an accurate picture of what performance should be and how learning impacts performance and retention is key to creating accurate profiles for recruiting. It is also important in ensuring that recruiting is hiring for real talent needs and not compensating for a lack of ability to train required knowledge and skills into the existing workforce. So, although the front end might contain the most expense, the rest of the process has an enormous impact on the need to hire and enable employees to perform. Think of learning as preventive medicine, being less expensive than treating the condition (hiring to acquire skills).
The cycle involves three major phases, which are more or less aligned by the way HR and learning organizations tackle the problem today.
- Talent Management: Generally driven by competency profiles, recruiting and talent management efforts focus on higher-level information, identifying required skills and knowledge, and whether the potential employee can be “trained” to acquire the remainder of the requirements. This is true whether hiring new talent or managing the growth of your existing employees.
- Learning: This the most detailed part of the cycle, where knowledge and skill are broken down into learnable chunks, then organized into new-hire, compliance, career development, product training, etc. groupings. Learning typically employs curricula, certification and competencies. Competency is broken into proficiency levels and further into behavioral descriptors, with learning associated at one or more of these items. The amount of information and the available learning is vast. Some organizations have more than 10,000 learning titles, and competency profiles for a job can exceed 100 competencies, with libraries exceeding 3,000 competencies across an organization.
- Performance: Performance management and review usually employs competencies or goals. The methods are many, including core competencies and business goals, goals with competencies tied to them, business goals and professional development goals, etc. Most are designed to target and measure two things: how an employee performed relative to the organization’s needs, and how they performed (learned or demonstrated skill) toward a next career move.
What these three groups have available to them that can be leveraged, in a common system and set of best practices from hire to performance, are competencies and goals. So here we’ll introduce a way to view these tools. Competencies and goals are a great way to communicate information about employee skills, knowledge and demonstrated performance across this cycle. These same tools also can be used to evaluate how effective we are in delivering the knowledge and skills and whether the knowledge and skills delivered were the right ones to drive the right outcomes. However, each phase requires different views of these tools, which over time has driven creation of a different level of detail, organization and process for each phase of the HCM cycle. Many organizations have different competency profiles that are employed in hiring and learning, which might or might not be tied to performance review and management. In fact, many organizations have different competency profiles used in different parts of the organization for the same purpose, be it learning, recruiting or performance. This has the net effect of limiting the ability to transfer information effectively and minimizes the value of that information.
An example of the problems information transfer can cause is the Mars Climate Orbiter. The orbiter was presumed destroyed in September 1999 when it came within 35 miles of Mars as NASA ground controllers were attempting to put it into orbit. At that altitude, the craft, which was traveling about 10,000 mph, was torn apart in the atmosphere. The original target altitude was about 125 miles. The root cause of this mistake was an information transfer problem. The mission’s navigation team did not realize that the design team delivered information in English (miles/hour) rather than metric units (km/hr). The mix-up meant changes made to the spacecraft’s trajectory were actually 4.4 times greater than what was intended. Furthermore, the navigators realized in April 1999, six months before approaching Mars, that there was a problem synchronizing the data between the teams. But even though the two teams met to try to determine the cause of the problem, the error was never uncovered until the orbiter vanished, and a full investigation into the loss of the orbiter was completed.
Although seemingly unrelated to what we are discussing here, the relationship is relevant. In our example, two teams working on the same thing, using two different design metrics, destroyed $125 million of equipment and years of work, and they were just confused between metric and English units. In our world, staffing, learning and performance evaluation are all using goals and competencies. But with different profiles for any given job and different metrics, levels of detail, differences in competency definition from business to business and between HR groups, what information transfer problems can occur, and what are their impacts? Let’s explore a couple of the most obvious areas, and focus on how, as learning practitioners, we can help align our information transfer through an integrated and effective process.
- Recruiting and Onboarding: Much effort in learning teams is devoted to providing curricula to onboard new hires with the objective of enabling them to perform at acceptable levels as quickly as possible. If performance objectives (goals) cannot be clearly tied to the knowledge and skills (competencies) required, how can we expect recruiting to find the right person? If the profile for recruiting is using different competency definitions than our learning plans, how easy would it be to hire someone who had the skills we plan to train, but who might not have the skills we need to hire into the organization? How simple could it be for a new hire to become frustrated, extract as much knowledge and resume builders from the company as quickly as possible, and then leave for greener pastures? Using industry-standard metrics of a 40 percent load on salary to calculate real costs of labor and a minimum of three months before a hiring error is uncovered, plus initial training costs, recruiting errors are very expensive.
- Training and Performance Review: If we assume that new-hire training produced an employee with the basic knowledge and skills, we need to consider their growth and knowledge and skills acquisition for the actual goals they will be given once in the line organization. Here, rather than a misalignment of competencies and goals, we can suffer from an overabundance of information, which leads to unnecessary (and wasted) training or loss of valuable time while employees try to acquire the right knowledge and skill wading through a mass of highly structured information that they only need a piece of to be effective. Here our cost driver is opportunity cost. Each day spent in training is a lost opportunity to create value for the company, and misdirected training is a total waste. Well-directed training that is too comprehensive detracts from available value-producing days as well, and inability to find training at all requires employees to figure it out on their own, which drags down everyone who is required to help them and limits their value until they achieve acceptable performance on their own.
So what is the solution? An obvious need is an application that allows the competencies and goals to collect and maintain the level of detail and information required to make each useful but with the ability to display different views and levels of detail to help each step in the process be effective. This tool also must allow a single profile to be kept for a role, person, job description etc. so that each phase of the lifecycle uses the same information set, but at the appropriate level of detail.
Given a better set of tools to use the objects, we need to revisit our processes. In general, all of our processes were created with our original goals in mind but have drifted over time. We don’t need to scrap it all and redo it from the ground up, but rather re-tool and redefine steps to link and take advantage of the capability in newly available systems.
So what is the next step? Most of us have well-established systems in place to run our training programs. The next step is to think about how they can logically and effectively link back to recruiting and forward to performance management and realign our tools to be ready for the process integration.
Linking forward to performance management, is there a clear tie between our competency libraries and training programs and the goals assigned to employees through performance management and review? Can the required information be rolled up to a reasonable level for performance reviews? Can a line manager or employee quickly and conveniently find the right training to support specific job goals and take the right piece over the whole program? Are there “standard” profiles of goals and competencies, both for easing a manager’s burden of creating them for employees and allowing learning to establish repeatable learning programs? Can review and evaluation programs support remedial needs? Can a manager who is developing performance objectives for an employee find and point the employee to the right training by searching through logically organized competency groups, curricula and certifications?
Linking backward, can the competency profiles and learning programs be tied directly to hiring profiles? Can you tell which skills and knowledge should be hired for and which can be trained? Can line managers and employees conducting hiring interviews ask relevant, consistent questions to uncover a prospect’s knowledge and skills and fairly evaluate his or her potential to be a good performer? Can our learning programs adapt to new-hire needs to provide the right skills in an effective way, or do we spread the whole program evenly over every employee?
Keeping in mind that this discussion necessarily focuses on the impact we can have from our perspective as a learning organization, we must both recognize that other groups need to step up to the task as well and that we probably bear the greater burden given our extensive use of the tools and pivotal position in the HCM cycle.
Few individual systems (software, method, process, etc.) do all of this today and won’t ever do it the way each company wants, so be prepared to make compromises. But what is the metric for negotiating win-win solutions? It’s ease of use for the business. At the end of the day, everything must focus on enabling the line organization to produce. It might sound a bit strong, but as HR and learning professionals, we serve the business. Our purpose is to find and provide qualified people to produce the outcomes the business defines as necessary. Regardless of how important HCM is—and it should be most of the effort that goes into managing the infrastructure that creates our products and services—it is still a part of running a successful business. Be prepared to make it easy for the business to define needs for people and for learning, and be ready to work the details, hire and train the right people, give the business an easy way to measure performance, and make it all happen from a consistent profile, so you can get feedback from the business and all parts of the process on how well it worked.
Max Meadow is the director of strategic services for Saba. He can be reached at firstname.lastname@example.org.