Closing the HR Capability Gap

Effectiveness of HR Strategies

Human Resource (HR) strategies are not always seen as effective in the business community. A study of 1317 senior executives by McKinsey and Co. revealed that 42% of organisations believe their HR strategy is ineffective (Fig 1). The most common reasons cited are that the HR strategic plan is not integrated into the business’s needs and HR cannot justify HR investments (Fig 2).

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Figure 1 – Effectiveness of Strategic Planning

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Figure 2 – Common Reasons HR Strategies Fail

In my experience, the typical scenario of these failed HR strategies involves one of two personas:

  • The subservient Human Resources Manager concerned almost exclusively with administrative HR matters rather than strategic options
  • The assertive bordering on aggressive Human Resources Manager who often has come from outside the organisation and, wanting to make their mark on the organisation, creates an strategy based on their past experiences rather than the environment and issues facing their new organisation.

The outcome of each scenario is a gap in HR capability to create and execute a HR strategy that supports the corporate strategy. If you have inherited such a situation, then closing the gap in capability will take time and money. Here are some thoughts on how to prioritise the closing of the gap.

HR Strategy Checklist

In order to develop a strategy that is integrated into the business needs, it is necessary to map the organisational strategy to the HR processes, for example, to the employee life cycle as I outlined in the article Creating a Human Resources Strategy for the Employee Lifecycle. This cannot be done in isolation and requires support and engagement. This is preferably gained through a workshop with the relevant business executives. It also requires an agreement between the executives and the human resources department. The agreement should be based on data, preferably of the risk assessment and evaluation of the HR activities which are most likely to adversely or positively impact the corporate strategy. Follow the checklist below to get alignment in your strategy and an understanding of your capability and capacity gaps.

HR Strategy checkpoint Y/N?
Have you engaged your business leaders about the strategic direction of the organisation?
Do you understand the business’s short and long-term strategy and alternate options?
Have you identified the HR activities that are critical to achieving each business strategic objective?
Have you taken the business leaders through a risk assessment and evaluation of the HR activities at most risk of preventing getting the business objectives “right”?
Have you critically assessed the current state of your team’s capability and capacity?
Have you identified the strengths and weaknesses of your current efforts?
Is the HR strategic calendar aligned with the business planning calendar?

Capability gap business priority matrix

Once the capability and capacity gaps are identified, using a workshop with business executives, map the business priorities against the HR capability and capacity to deliver against those objectives. Use the matrix (Fig 3) to determine the investment strategy for each capability.

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Figure 3 – Business Priority HR Capability/Capacity Matrix

The six options open are:

  • Invest in capability and/or capacity to support the business objective
  • Invest in capabilities which will give rise to high returns on investment
  • Maintain funding at current levels
  • Ties investment to specific outcomes making individual managers responsible for the outcome
  • Divest in the capability or capacity.
Don’t let your organisation become one of the 42% that believes that their HR strategy is ineffective. With planning, patience, and the support of your executive team, you can ensure that your HR plan is fully aligned with the business’s needs.

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