Human Capital Foundations: 3 Components - Part 1
In the age of disruption, everyone wants to know “What’s Next?” What trends and technologies are ahead? What’s going to change next in my industry, my company, my job? Because people are connected to every business objective, “What’s Next?” questions are common in human capital discussions: What’s next in recruiting? What’s next for job boards and social sourcing? What’s the next big innovation in employee training, development and retention?
While all of these questions are worth asking, the answers will only matter if a business has first done its most important people-centric job: build a solid human capital foundation.
The fact is whether the future looks bright or threatening, businesses rely on people to see them through it. People play starring roles in every solution and are a company’s #1 competitive advantage. In order to move on the “What’s Next?” a business has to first ensure its human capital foundation can withstand and evolve with the changing needs of a dynamic workforce.
Checking the Foundation: Alignment, Assets and EVP
When was the last time your business reviewed human capital and the systems, approaches, people and tools that make it work? For many businesses, the answer is never, which means the workforce and everything it does is operating on a foundation that doesn’t meet the needs of the organization. If you want to evaluate the strength of your human capital foundation, focus on assessing and strengthening three key elements: alignment, assets and EVP.
Human Capital Alignment
People goals (acquisition, performance, development, advancement, retention) cannot be put into place without a clear understanding of overall business goals. Too often human capital teams operate in a vacuum. They focus narrowly on their day-to-day work and goals without marrying them to the broader objectives of the business. Here’s an example. Only a few weeks ago, I was consulting with an HR leader who was determined to focus on employee engagement but was not concerned with addressing the serious challenges the company’s sales team was facing in reaching its goals. The HR leader’s instinctive response, “sales are not my job,” was a clear sign that human capital was out of alignment with the business. A struggling sales team affects the entire business organization and its ability to operate, grow and expand. When sales people are struggling that’s not just a sales and new business issue. It’s also a human capital issue that can impact retention, job satisfaction, teamwork and morale.
Human capital leaders need to look at how well they are aligning strategy and programs with the goals of the business. Is human capital echoing the current and future needs of the business and aware when people are struggling to meet those needs? If human capital teams are operating independently and are detached from the business strategy, it’s important to assess and realign quickly. Human capital leaders need to be as fluent in the business needs and goals as anyone in the C-suite, from CEO and COO to CFOs and CMOs. Many times, human capital leaders ask me why they haven’t earned a seat at the executive table and more times than not it’s because this essential alignment is not in place. True and effective business leadership begins with a thorough knowledge of the business just as truly effective human capital programs and solutions begin with alignment to business objectives and strategy.
Human Capital Assets
Post Great Recession many businesses saw their human capital funding, programs and teams cut back and many remain that way today. The result is a landscape of businesses that are missing or overburdened by key elements of their human capital operation. To know what human capital assets are working and where there are opportunities to get additional support, review this short but important inventory check list to identify what’s needed.
- Processes: Are processes across the human capital function efficient and effective? Where are you succeeding and where are you struggling?
- Employee Experience: Is the human capital team easy for employees to work with? What kind of employee experience do people have and how can it be improved?
- Policies: Do employees know what acceptable behavior is? Is there an employee handbook guiding baseline behavior within the organization?
- Technology: What technologies are being used to address human capital needs? What manual human capital programs, projects and processes would benefit from technology automation?
- Team Structure: How is the human capital team structured and is it working for the business?
Once you have reviewed this short and important inventory of processes, people, experience, technology and structure, you will have identified where your foundation needs to be fortified and where it’s succeeding.
Employer Value Proposition (EVP)
Your employer value proposition (EVP) is what inspires and motivates people across a business and unites the entire organization. It’s also a key factor in recruiting and retaining emerging talent today. As this Wall Street Journal article points out, millennials are shaking up corporate norms with unexpected workplace values, such as that the fact that “64% would rather work for $40,000 doing something they enjoy than make $100,000 doing something that bores them (study conducted by the Intelligence Group, 2014).
What your EVP says about your business matters. It matters to your employees and your ability to motivate and retain them. It matters to your human capital teams and every hiring manager working to attract and recruit talent. If it’s weak, so is this key element of your foundation. If it’s outdated, it’s time for a refresh that speaks to the employees you have and the emerging generations of workers who will take your business forward.
Creating an EVP is an important business exercise in which you take the overarching reason your company is in business and add it to the elements that make your company unique. Combining those factors, you build a value proposition that connects with employees and speaks to the importance of their contributions. The resulting EVP should be a uniting force that builds greater connectedness and helps employees see their role in the company’s grand mission. If the EVP is strong, your human capital foundation is that much stronger. If it’s weak, work has to be done to identify and communicate messages that matter to the people who make your business work.
Forward with Foundation
To move forward, every business needs to start with a powerful foundation that will support its growth and aspirations. Human capital, when it is aligned with business objectives, rich in strong people and process assets and guided by a unifying EVP, offers that critical foundation. It may be the place you start but a strong and thoughtful human capital foundation is also what will carry your people and your business forward. Once you have that, you can begin to explore “What’s Next?” which is the subsequent topic in this series and our opportunity to look at what to do once your human capital foundation is in place.