The Holy Grail...Human Capital Development Aligned to Strategy...

For a long time our profession seems to have had an identity crisis. We wanted to be strategic business partners but we couldn't get there. IBM's 2009 report titled "Getting Smart About Your Workforce: Why Analytics Matter," showed key strategic human capital (HC) challenges that Human Capital Management (HCM) leaders face and their perception of importance vs. effectiveness in overcoming them to impact business results. One of those areas with a significant gap in importance vs. effectiveness (48% in last weeks graphic) was the definition of "knowledge, skills and capability requirements to execute business strategy."

In my honest opinion, the HCM leader's capability to act on this particular human capital challenge is more important than other importance-effectiveness gaps the report identified. Why? Because as HCM leaders...if we can't define organizational capability requirements (That is really what our customers want...not HR speak like knowledge, skills and competencies...we can do that internally) to execute the business strategy...we are in essence lost. No "seat at the table" is forthcoming. So we have to execute on this one human capital challenge gap with the agility and adaptability the organization requires to function in the global complexity. And we have to do it...flawlessly.

At the Defense Intelligence Agency, we faced a similar challenge as DIA merged with ten worldwide Combatant Command Directorates of Intelligence. Treating the merger as a major change management project as Combatant Command civilian employees were integrated within DIA, the DIA learning team decided that for a successful merger, we needed a simple approach. The approach was to define the individual Combatant Command capabilities that would allow the team to look at common, core, and critical capability requirements across the Combatant Commands.

Pioneered by Dr. Reza Sisakhti of Productivity Dynamics and used by successful companies like IBM, Cisco, and HP, we were able to focus on three mission critical job roles at the Combatant Commands to drive our efforts...Intelligence Analysts, Collection Managers and Intelligence Planners.

The process involved two simple steps...

1. Engage strategic leaders and determine each Combatant Command's mission, strategy, strategic initiatives in place or planned, and the challenges faced in executing the strategy.
2. Identify top performers in the organization. These top performers are top performers because they are able to overcome challenges and achieve results. What behaviors make them successful at executing the strategy and overcoming challenges?

With this data, the team was able to start alignment of available learning at DIA and at the Combatant Commands in direct support of mission strategy execution. From a change management perspective, ten Combatant Commands with different functional and geographic responsibilities were able to see the knowledge and skills necessary to execute their mission strategies for the three identified roles were the same. The only difference was the application of these human capital capabilities in their respective environments.

The decision to take this simple, but proven approach in a massive change effort was risky. But the payoff was a group of global learning professionals at the Combatant Commands and DIA that are considered the vanguards of enterprise integration by senior leaders within the Defense Intelligence Enterprise. It has ushered in a new level of collaboration and innovation that led to the team's recognition in 2009 by Chief Learning Officer Magazine with a Learning-in-Practice Gold award in Division I for Global Learning.

So the message this week HCM leaders...focus on defining knowledge, skills and capability requirements to execute business strategy and take a risk...it could lead to a huge payoff for your organization and HCM.

CFO = Value Integrator...CHCO = ?

IBM released their 2010 Global CFO Study last week. Another quality product that points to some interesting things that CHCOs, CHROs, CTOs, and CLOs should know and understand in working across organizations specific to Financial Capital and Human Capital. My perspective is this...we need to understand explicitly what is happening in the broader organizational enterprise to continue to support it and enable decision advantage in respect to human capital investment decisions.

The first thing that jumped out at me is this statement in the CFO study:

"Our research, however, also points to a bright spot – one group of Finance organizations with a particular combination of capabilities stands out from its peers. These organizations – which we call Value Integrators – are more effective in every area assessed, with significant advantages in managing enterprise risk, measuring and monitoring business performance and driving insight from information integrated across their companies and governments."

As HCM leaders, we should play a role in understanding enterprise risk in respect to human capital decisions across the global enterprise. The human capital investments required to identify, acquire, build and retain human capital pertaining to business decisions to enter new growth markets or expand mission capabilities involve human capital management (HCM) risks. For example, can we develop the human capital capabilities required to move into that area (global or functional)? We also play a role in measuring and monitoring business performance based upon the human capital investments we ask the organization to make...we should be able to make those value-add linkages. Finally driving insight from information integration is a domain for us. How do we take the myriad of human capital information and data available to provide decision advantage to our organizations in making HCM decisions?

So with CFOs as "Value Integrators," I see a similar role and opportunity for HCM leaders. To continue to learn as a profession, we need to read these type of studies and understand them and their implications to our profession. How can we learn from this to position our HCM leaders in these same organizations as a similar "Value Integrator?"

Larger Role for CFOs

The study also indicates that CFOs are playing a larger role as an advisor and decision-maker in the organization not only in their traditional areas, but also influencing other enterprise-wide decisions. If you look at the embedded graph in more detail...it lays out a number of areas where the CFO is playing this role to include:

- Enterprise Cost Reduction Management
- Selection of Key Performance Indicators
- Capital Asset Manager
- Risk Management
- Prioritization of Resource Management
- Strategic Revenue Planning
- Business Model Innovation
- Information Management Strategy

I think our profession can be the trusted advisor on HCM aspects of these areas in enabling decision advantage. While we play a direct role in some of these areas, we likely have our own HCM areas to influence enterprise-wide decisions. Some of these areas might include the following;

- Human Capital Reduction Strategy - Provide decision advantage so the right talent is maintained at the organization in high risk environments.
- Merger & Acquisition HCM Assessment - What Human Capital capability and capacity does the M&A bring?

CFO as Decision-making Hub

"Value Integrators – more than any other group – are equipped to advise at an enterprise level. They are positioned to evaluate business opportunities and risks in an end-to-end context and recommend difficult trade-offs among units, markets and business functions. A U.K. CFO explained the opportunity this way: “With the data we have and our deep understanding of the business, Finance can become the decision-making hub of the company.”

As this U.K. CFO states...the CFO should be the decision-making hub for finance decisions. Can we imply then that the CHCO should be the decision-making hub for HCM decisions? My position is YES! But to get there we have to develop sound strategic human capital business models and performance measures that allow us to tie our activities to the business.

CHCO = ?

If the CFO is the Value Integrator...what will the CHCO be to the organization? Talent Integrator? Business Enabler? I don't know...plenty of indications that a seat at the table is unlikely unless we change our HCM business model to reflect how we enable business strategy directly. This would support making the case for CHCOs to be the hub for human capital decision-making.

IBM's 2010 Global Human Capital Survey will hopefully answer that question this year. Whatever the answer though, we have to be ready to act as a profession and drive ourselves to get there.