Achieving workforce excellence via human capital management (page 1 of 4)

Even though people-related costs average over sixty percent of total corporate expenditures, many organizations pay only 'lip service' to this concept. However, leading firms have embraced the need to better manage their human capital and build a more excellent workforce to drive bottom-line organizational results. Oracle believes that achieving workforce excellence should be the ultimate goal of the HR function, regardless of company size, industry segment, or geography. Achieving workforce excellence requires HR to transform from a predominantly administrative department to a function that develops and delivers programs to improve worker efficiency, effectiveness, and productivity. Effective HR transformation requires adoption of a comprehensive Human Capital Management (HCM) strategy to drive new programs development, process redesign, and technology implementations.

Workforce Excellence Characteristics

If workforce excellence is the goal, then what does an excellent workforce look like? While there are many ways to describe workforce excellence, we believe the following characteristics are paramount:
• Suitable for the job: Excellent workforces have undergone substantial assessment activities (by HR, line management and executives) to ensure jobs are being performed with 'best fit' workers, and that any remaining skill gaps are being addressed through development events (e.g., learning, mentoring, on-the-job training). Ongoing performance management continually fine-tunes the alignment between worker skills and job requirements.
• Engaged/committed: A skilled worker that matches job requirements is only one piece of the puzzle; if the worker is not motivated to perform, results will likely not meet expectations. Firms with excellent workforces have found a way to clearly communicate business objectives, and engage workers at all levels of the organization to meet (and at times beat) those goals. Effective performance management and reward programs (e.g. compensation and benefits) are of particular importance in ensuring high levels of worker engagement.
• Flexible/adaptive: Organizations are constantly responding to changing economic and regulatory conditions, as well as leveraging new opportunities. Firms with excellent workforces have an in-depth view of worker skills and competencies, and can more easily re-allocate resources in response to changing conditions, often avoiding expensive layoff/re-hire cycles that sap morale, productivity and profits.
• Productive: Excellent workforces leverage their skills, commitment and flexibility to achieve and exceed productivity goals set by executive management.

A well-articulated HCM strategy is crucial to enable the organization to develop and deliver cost-effective programs that address all of these, while continuing to perform basic HR activities flawlessly. Proper HCM execution will enhance workforce excellence characteristics, and thus drive bottom-line business results.

Benefits of HCM

HCM is a business strategy whose objective is that every worker, regardless of type (e.g., employee, contractor) or job level ("from the storeroom to the boardroom"), contributes to overall business performance. While the HR function usually drives HCM strategy, significant collaboration with line of business (LOB) management and executives is the most important critical success factor. Successful execution of HCM strategy has yielded major bottom-line business results. For example, Watson Wyatt's Human Capital Index (HCI) identifies 43 specific HR leading practices that together can deliver as much as a 47% increase in market value for the organization.