The phrase Human Capital Management in itself often raises questions and implies a collection of  activities that involve people, money and control. The widespread use in government of the phrase is a good sign that organizations aspire to realize the possibilities of managing their people to their highest potential.

Unfortunately its true intention has only been realized in a few organizations as the majority still struggle with the structural and procedural barriers that prevent the ultimate outcome of aligning your people with  your strategies to drive organizational results.

Let’s break apart this concept and explore how these three terms combine to create a game changing and hopefully winning strategy.

On the way to meet with a client recently, I noticed a sign leading to her offi ce labeled “Personnel”. Note: this client’s title was Director of Talent Management. I pointed at the sign and asked, “How long has this been here?” Glancing towards me with a puzzled look, she said, “I don’t know what you mean.

We changed our name, but we will always be the Personnel Department.” This story symbolizes the biggest barrier faced by organizations attempting to manage their human capital. Too often it’s confused  with a strategy to manage personnel. The ability to categorize, manage and pay our personnel based on traditional knowledge, skills and abilities is not really a value-add function.

There are certainly still industries that rely heavily on manual labor and technical skills acquired through traditional learning. But the job growth in our economy and the looming gap in the workforce are based on unique clusters of skills and behaviors that distinguish the exemplary performance necessary to  accomplish a job’s most important results.

These are often referred to as core competencies and our ability to hire, develop and reward for them will be the ultimate competitive advantage in the knowledge economy. The leveraging of core competencies is the essence of the second word, “Capital.” Put simply, Capital is an investment that is expected to have a return greater than its cost.

A recent facebook post by a friend with his MBA from MIT read, “two guys next to me are arguing whether their engineer is capitalizable or an operating expense, should I just tell them?” There is a fundamental flaw in thinking that an asset is only something owned by an organization and is typically depreciated
over time.

People, are assets because of their ability to create wealth through their value added actions. That is why Organizations in the 1980’s and 90’s adopted a mindset often communicated by the slogan, “Employees
are our Greatest Assets.” The return can only be realized, however, with the appropriate identification and alignment of those mission critical core competencies that allow your organization to truly capitalize on the people we call our “greatest assets.”

So why is this so hard? Typically we determine core competencies based on the job, (meaning we have to fi t the people). As you fi nd out in any basic business course, “Management” is the act of planning, controlling, organizing and improving. When we add in the human factor these activities quickly become very complex. The role of Human Capital Management is to align and integrate the policies, processes and procedures that enable managers to hire, develop and reward for what’s most important. This means the ultimate measure of success is how well each of our processes diff erentiates for what behaviors are most important to drive organizational success.

In government diff erentiation is where the Human Capital Management transformation has encountered significant resistance. Historically HR processes were measured by their ability to produce consistency,
evaluating how well they differentiate is not exactly a welcome change in many organizations. But let’s  consider how this truly allows us to realize Human Capital Management.

Our primary people processes are selection, development and performance management. Ask yourself this; how well do each of these processes differentiate based on the mission critical core competencies
that your organization needs to accomplish its most important strategies?

Most organizations don’t or can’t. Far too often the silo structures of recruiting, training, compensation, employee relations and OD cause these systems to actually compete against one another.

So whether you are grappling with how to fi ll the empty talent pipeline, shift your organization
to accomplish new strategies, or simply get a higher return on what is likely your biggest investment, the key lies in not only identifying what truly differentiates performance, but aligning and integrating your HR systems to ensure they differentiate for those mission critical core competencies.

Timothy S. Griles (Tim) is a Sr. Consultant with Zelos, a Corporate Partner of the Alliance for Innovation,
and founder of Human Dynamics Consulting, LLC a boutique consulting firm focusing on aligning people and processes to drive business results. Tim shared more information about Human Capital Planning in a recent Alliance for Innovation Webinar, view at https://www2.gotomeeting.com/ register/584874954. Tim can be reached at Tim.Griles@zelosinc.com.