the accenture human capital development framework...
TRANSCRIPT
Susan Cantrell, James M. Benton,Robert J. Thomas, Meredith Vey and Linda Kerzel
White PaperThe Accenture Human Capital Development Framework:Assessing, Measuring and Guiding Investments inHuman Capital to Achieve High Performance
Introduction
2
How do companies outperform the competition? Accenture’s extensive research into the
distinguishing characteristics of high-performance businesses reveals that the most successful
organizations continually balance, align and renew three building blocks of high performance:
market focus and position, distinctive capabilities and performance anatomy. In addition,
we have found that these organizations are able to achieve remarkable levels of employee
performance and productivity through the creation of a “talent multiplier,” one of the elements
of performance anatomy that represents better results per dollar of investment in their
workforces.1 Although few executives would disagree that better human capital management
pays off in better business performance, most have difficulty empirically justifying this belief.
Companies spend 25 percent to 45 percent of their revenue on human capital, yet executives
have no clear way of prioritizing their investments based on the business value likely to be
yielded by those investments. Even more frustrating: few executives have the means to develop
insights into how different kinds of human capital management actions and programs affect
overall workforce and business performance.
To help organizations assess the return on their human capital investments,Accenture introduced a new assessmentand analytic tool: the Accenture HumanCapital Development Framework. TheAccenture framework was developed bydrawing on best practices and Accentureexperience in the fields of human resource(HR) development, learning and knowledgemanagement, workforce productivity,along with state-of-the-art measurementtechniques. With the framework, an organization can better assess its corehuman capital capabilities (such as leadership, workforce performance andtalent management), identify the humancapital processes that will likely improvethem, and then prescribe the specificprocess interventions that will improve the capabilities—as well as overall businessperformance. Implementation of theframework in dozens of organizations hasgenerated a number of useful—and oftensurprising—insights about measuring andmanaging people assets for high perfor-mance. We invite you to share them withus throughout the pages of this report.
The challenge of measuringhuman capital assets
People are our most important asset, or sosays one of today’s most popular businessmantras (see Figures 1 and 2). The statementis sincere but, as the saying goes, actionsspeak louder than words. The history ofactual investments in an organization’speople is troubled at best. Wall Street traditionally rewards not those companiesmaking prudent investments in the learning and capability building requiredto remain competitive in the future, butcompanies that trim such investments tomeet quarterly earnings forecasts. Such an attitude is short-sighted, at best. Ourresearch suggests that organizations that did not cut human capital initiativesduring the recent economic downturnoutperformed those organizations that didcut such initiatives. Yet many companiespersist in treating human capital as anexpense that is to be cut in difficult times.
The challenge executives face when it comes to investing in their people is rarely one of will or intention. Most often, inconsistency in the treatment
of people boils down to not having the right tools and the right knowledge tosupport effective decision making. Somemay argue that executives do track theimpact of people investments on businessperformance, pointing to such analyses aseconomic value added (EVA™) and returnon investment (ROI). However, while suchtechniques are an effective barometer of an organization’s financial health at a particular moment in time, they tell uslittle or nothing about how an organiza-tion’s people are performing.
Many organizations use spending or headcount ratios such as training budgetper employee or HR staff per employee to gauge their investments in people. Are these metrics effective? Not by themselves. Our research reveals that such metrics have no statistical relation-ship to either the financial performanceof a company, the effectiveness of anorganization’s human capital programsand practices, or to key human capital capabilities like workforce performance,proficiency, or adaptability.
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Leadership
Workforce Proficiency
Workforce Performance
Employee Engagement
Workforce Adaptability
Executives affirm the importance of people
“The more you share profits with
your associates (employees)… the more
profit will accrue to the company.
Why? Because the way management
treats the associates is exactly how the
associates will treat the customers. And
if the associates treat the customers
well, the customers will return again
and again, and that is where the real
profit… lies, not in trying to drag
strangers into your stores for one-time
purchases based on splashy sales or
expensive advertising.”2
Sam Walton, founder and former president, CEO and Chairman of Wal-Mart
“At the end of the day, we bet on people,
not strategies.”3
Lawrence Bossidy, CEO of Allied Signal
Yet few know the precise return on their people investments
“If I ask ‘Are we bringing in the right
people, and is human resources an
enabler of our mission, vision, and
goals?’ On that scorecard, I give high
marks to the HR function. But if I ask
‘Is human resources the cockpit of a
world-class organization, able to look
at human information real time so that
we can make resource decisions and
trade-offs based on data-based evidence
concerning likely business yield of
human capital investments?’ No. We
aren’t there yet, but we need to continue
moving in that direction so we can truly
earn the status of employer of choice.”4
Bill McDermott, president and CEO of SAP America
Figure 1. To what extent do you believe human capital capabilities are important to achievingyour business strategy?
Figure 2. To what extent do you know the return on your aggregate investments inhuman capital?
Human CapitalCapability
Importance to Achieving the Business Strategy
Unimportant Slightly
Important
Moderately
Important
Important Very
Important
To a considerable extent 14%
To a great extent 2%
Not at all 14%
To a modest extent 30%
To a minimal extent 40%
Measurement of workforce performance initiatives is not routine
The Accenture High-Performance
Workforce Study 2004, an exclusive
and comprehensive survey of 244
executives in six countries, echoes
these findings. This study found that
only 20 to 25 percent of respondents
regularly and frequently measure
critical areas such as manager and
workforce proficiency, leadership
capability and employee engagement.
Only 30 percent measure time to
competence.
A similar deficiency exists in organiza-
tions’ ability to pinpoint how their
investments in human resources and
training are paying off. Only 40 to
50 percent of respondents’ companies
regularly measure the impact of HR
initiatives against employee turnover/
retention, productivity or quality. Only
8 percent regularly measure the impact
of such initiatives on employee satisfac-
tion, and only 14 percent regularly
measure the impact of such initiatives
on innovation.
Despite executives’ acknowledgement
of the critical importance of the work-
force, few of them feel confident they
are adequately measuring the effective-
ness of human performance programs
and initiatives (see Figure 3).
About half of the organizations that
implemented the Accenture Human
Capital Development Framework report
that they never (or only to a slight
extent) measure and continuously
improve their human capital processes.
No organization reported that they
did so to a complete extent. In addition,
only 15 percent of HR executives sur-
veyed reported that their HR programs
are quantitatively linked to workforce
performance metrics (e.g., time to
competency or workforce proficiency),
and over half say they rarely or never
link such programs to workforce
performance metrics. In fact, fully
78 percent of organizations have
no tools to track and report workforce
metrics at all.
Even fewer organizations measure
the impact of investments in training
on similar business results: only 30 to
40 percent regularly measure the impact
of training on productivity, quality or
customer satisfaction. Only 22 percent
regularly measure the impact of
training on employee turnover/retention,
11 percent on innovation and 13
percent on employee satisfaction.
Until these kinds of measurements
become commonplace, organizations
will continue to struggle in their
attempts to identify meaningful links
between workforce performance and
overall business performance.
4
Figure 3. To what extent do you measure and continuously improve your human captial processes?
Completely 0%
To a great extent 11%
To a moderate extent 42%
Not at all or to a slight extent 47%
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In short, such metrics may tell us somethingabout how an organization spends itsresources, but they tell us nothing aboutthe true effectiveness of an organization’speople processes. They do not provideexecutives with effective measurementtechniques to help gauge the performanceand business impact of people processesand programs.
Only a few organizations employ metricsthat assess the impact of human perfor-mance programs on key business results(see sidebar, “Measurement of workforceperformance initiatives is not routine”).For example, some organizations use toolsthat correlate information provided by aHR representative regarding the presenceor absence of particular human capitalprograms (e.g., employee stock optionreward programs) with financial results.Although such measurement techniquesrepresent a vast improvement over measurement of investment spend, theyfail to sufficiently probe into how well the programs are carried out or howeffectively and reliably they supportemployees. Other tools, such as Gallup’sQ12 employee engagement survey, havemade great strides in helping organizationsassess one important employee character-istic—employee engagement—and how itaffects business results. However, the toolfails to assess other important capabilitiesand identify the actions an organizationshould take to improve them.
Even these limited tools, however, arehaving a positive impact on companiesemploying them. Accenture researchreveals that organizations that take amore rigorous, metrics-based approach toassess the impact of people programs onbusiness results have far better businessresults than those organizations that don’tuse such metrics.5
The lack of reliable metrics in human performance has caused a curious phenomenon: ask different stakeholders
about the performance of their peopleprocesses, and you get very differentanswers. A recent Accenture survey of 244 senior executives revealed, for example, that HR executives tend to be generally satisfied with their progress in using people programs to improveworkforce capabilities. However, C-levelrespondents—and financial executives inparticular—are far less satisfied with theprogress of HR initiatives.6 Data collectedfrom implementations of the HumanCapital Development Framework reveals a similar finding. We asked the samequestions to a group of HR executives onthe one hand, and a group of employees,on the other hand. Fifty seven percent of the time, answers from the two groupsvaried significantly. It seems that HR personnel have a far rosier view of theeffectiveness of current HR processes(such as learning, career development,recruitment, and performance manage-ment) than do their customers.
Clearly, decision makers need a moreobjective basis for measurement andassessment, one that rises above competing opinions or points of view.Without common, objective metrics ofperformance that include multiple stakeholders’ points of views, executiveswill find it nearly impossible to reach ashared understanding of the state of anorganization’s human capital processesand capabilities, let alone make effectiveinvestment decisions. The stakes here are high: human capital is one of an organization’s most expensive assets, with investments comprising 25 to 45percent of a company’s revenue. One ishard-pressed to think of other businessinvestments made with so little guidanceand so little ability to measure return oninvestment.
What would be the ideal characteristics of an effective tool to guide human capital investments? Such a tool wouldhelp executives understand how humancapital contributes to bottom line financial results; It would determine optimal investment decisions; And it
would measure the benefits and progressmade from those investments, helpingexecutives decide if they are on the rightcourse, and helping them change course if necessary.
Linking human capital invest-ments to business performance:The Accenture Human CapitalDevelopment Framework
These characteristics are, in fact, the capabilities of the Accenture HumanCapital Development Framework, developed by the Accenture Institute for High Performance Business, in partnership with the Accenture HumanPerformance practice. With the AccentureHuman Capital Development Framework,organizations can move beyond subjectivityand intuition, and manage their invest-ments based on objective information. The Accenture Human Capital DevelopmentFramework enables organizations to diagnose their strengths and weaknesses inkey human capital processes, benchmarktheir performance against others, andtrack performance changes over time.More importantly, the framework enables executives to assess their capacity toachieve superior business results throughinvestments in human capital. (To under-stand how the framework differs fromother human capital measurement tools,see the sidebar, “What makes theAccenture Human Capital DevelopmentFramework unique?”)
Accenture has implemented the frameworkwith organizations in a variety of industriesaround the world (see sidebar, “Theresearch”). Based on a growing database,the framework has established empiricallinks between specific human capitalinvestments and business results. Thus, the framework not only assesses the currentstate of an organization’s human capitalhealth; it also provides guidance on priori-tizing investments and interventions thatcan improve human capital health, andthe health of the entire organization.
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What makes the Accenture Human Capital Development Framework unique?
Of the four tiers assessed within the
Human Capital Development Framework
(processes, capabilities, key performance
drivers and business results), the mea-
surement of human capital processes
is in many respects the most distinctive.
Unlike other approaches to evaluating
HR organizations or assessing the return
on human capital investments, the
Accenture framework focuses explicitly
on the maturity of an organization’s
human capital development processes.
Other types of evaluation assess an
organization’s approach to human
capital development by looking only
at levels of spending (e.g., training
budget per employee) or reports from
HR personnel about existing programs.
By contrast, the Accenture framework
uses a unique combination of three
assessment approaches to determine
each process’s maturity level:
The use of best practices (including
technology) in each process
The effectiveness of the process in
supporting how employees work
The reliability and repeatability of
the process
This latter approach borrows from
measurement techniques in the world
of quality in both manufacturing and
software development. For years,
engineers in manufacturing and
software development have made great
strides in improving their processes by
continually measuring such attributes
as whether these processes are supported
by people with the skills and abilities
necessary to execute the process,
whether the processes are supported
with clear and consistent policies, and
whether the processes are measured
and continually improved.7 The
Accenture framework has applied
these measurement techniques to the
domain of human capital. Our research
suggests that these attributes are among
the strongest predictors of process per-
formance and of the financial success
of an organization.
In addition to explicitly assessing
process maturity, the Accenture Human
Capital Development Framework is
distinctive in a number of other ways:
It is multi-tiered. Because the impact
of workforce performance initiatives
on business performance will not be
direct and instantaneous, the framework
includes intermediate outcome metrics
such as employee engagement and
other human capital capabilities, as
well as common business metrics like
productivity, quality and innovation.
Organizations can thus determine the
root cause of performance variations
and pinpoint the particular workforce
initiatives that may affect an outcome
they care more about than others.
It produces forward-looking, prescriptive
measures and recommendations. Many
diagnostic tools produce lagging and
cost-control measures. In contrast, the
Accenture framework produces forward-
looking, diagnostic measures that
enable organizations to identify specific,
actionable steps that can improve the
capability of their people and, ultimately,
improve business results.
Process assessment is based on
multiple perspectives. Metrics produced
by an implementation of the Accenture
framework are reliable because they
are based on survey responses from
a representative sample of HR personnel
and a large cross-section of employees
representing all levels of the organiza-
tion, from senior executives to shop
floor personnel. This also enables the
identification of measures for which
significant differences in responses
exist (e.g., managers vs. non-managers,
different levels of experience, different
roles or functions, etc.).
It is standard and repeatable. Because
the framework uses the same set
of measures in each implementation,
organizations may compare themselves
in several ways: across business units
in the same enterprise; against bench-
marks in the Accenture framework
database; or, against an earlier analysis
done on the same company.
It is comprehensive. The framework
assesses a broad range of processes that
affect workforce performance. Its main
focus is on improving an organization’s
“return on people,” not simply measuring
a specific organizational function (such
as human resources) against business
objectives. The fact that it measures
a large number of processes enables
organizations to compare performance
across processes and make trade-offs
in process investments.
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The research
SAP and Accenture partnered to
implement the Accenture Human
Capital Development Framework in
eleven companies and two government
organizations. These initial implementa-
tions of the framework occurred in
late 2003 and early 2004 (see a list of
the companies in Figure 4). In total, 60
organizations participated in the initial
round of implementations; five of the
organizations were entire enterprises,
and 55 of the organizations were business
units or divisions within the enterprises.
As part of the initial implementation
of the framework, the Accenture
research team spent six to 10 weeks
in each organization collecting data
in a number of ways:
Interviews with human resource
executives and business leaders
Web-based surveys administered to
human resource personnel and a large
cross-section of employees
Worksheets used to collect factual
data from the finance and human
resource functions
In total, the research team interviewed
more than 78 business and HR leaders
and administered more than 3,500
Web-based surveys to employees and
more than 150 Web-based surveys to
HR executives. Human resource and
financial data was collected for each
organization and analyzed and compared
to benchmarks produced from publicly
available data sources. (For example,
Compustat or Worldscope was used for
financial data and the Saratoga Institute
was used for HR data.) Interview data
was coded and used to help interpret
an organization’s results.
Business results in the statistical
analysis were represented in the initial
implementations as an organization’s
two-year average capital efficiency
relative to an industry peer group.
Capital efficiency is the ratio of total
annual sales to the capital invested
in the operations of the business by
shareholders and creditors. Also
referred to as “capital utilization,”
capital efficiency is a measure of
management’s efficiency in driving
sales off a fixed capital base.
For each participating organization,
the research team used the data to
produce scores for each element in the
framework and corresponding bench-
marking quartiles (first, second, third
or fourth) based on scores from all
the participants. Statistical analysis
of cross-company data was used to
determine relationships among the
elements. Data from the organizations
that provided financial information,
for example, was used to produce the
insights and conclusions about the
human capital processes most closely
linked to business results.8
Figure 4. Who participated in the initialimplementations of the Accenture HumanCapital Development Framework?
The companies and government agenciesthat participated in the initial implemen-tations of the Accenture Human CapitalDevelopment Framework represent a varietyof different industries, geographies andsizes. The organizations (either a businessunit or an entire enterprise) that imple-mented the framework range in revenuesfrom US$200 million to US$6 billion.Financial and human capital performancealso varied significantly across organizations.Organizations that implemented theframework include:
• SAP• Spherion, an American staffing and
recruitment company• A Canadian utility company• Harley-Davidson Motor Company, an
American motorcycle producer• Briggs & Stratton, an American
industrial equipment company• A Swiss financial services company• Sinclair Knight Merz, an Australian
engineering and construction professional services company
• A global engineering and construction professional services company
• Eskom, a South African utility company• Raymond James, an American financial
services company• A Spanish utility company• A large US federal government agency• A large Asian government agency
In addition, two companies – AmericanStandard, a diversified American manufac-turing company, and an American regionalbank – implemented an early version ofthe framework as part of an initial test ofthe framework in 2002. Although theirdata is not included in the benchmarkingdatabase, the results from these analyseswere used to develop the version of theHuman Capital Development Frameworkused by the organizations listed.
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An implementation of the framework—which typically takes six to 10 weeks—focuses first on data collection. Data are collected from employees, business leaders, HR executives, and finance andHR information systems. Data collectiontechniques include personal interviews,Web-based surveys and worksheets usedto collect factual data from the financeand HR functions.
Based on this objective data, Accenturethen works with an organization to assess,benchmark, and determine the relationshipsbetween elements at four distinct levels,or tiers (see Figure 5):
Business results–the financial measures of organizational success, such as capitalefficiency, revenue growth, return oninvested capital and total return to shareholders
Key performance drivers–the intermedi-ate organizational outcomes, such as customer satisfaction and innovation, that are typically captured on a balancedscorecard
Human capital capabilities–or the mostimmediate and visible people-relatedqualities that human capital processesproduce, such as workforce performance,employee engagement and workforceadaptability
Human capital processes–the specificpractices and activities such as performance appraisal, workforce planning and learning management thatorganizations undertake to develop theirhuman capital capabilities
The 14 human capital processes and sevenhuman capital capabilities in the AccentureHuman Capital Development Frameworkwere carefully chosen and defined basedon published research findings, Accenture’shuman performance consulting experienceand Accenture research into the key humancapital activities and assets that are mostlikely to deliver positive business results.9
The processes and capabilities at the heartof the framework include a broad range of processes, including non-traditional HR activities such as workplace design,learning management and knowledgemanagement.
Figure 5. The Accenture Human Capital Development Framework.
Capital EfficiencyRevenue
Growth
Return on
Invested Capital
Total Return to
Shareholders
Recruiting
Productivity Quality Innovation Customers
Leadership
Capability
Workforce
Performance
Employee
Engagement
Ability to Change Human Capital
Efficiency
Competency
Management
Career
Development
Performance
Appraisal
Rewards and
Recognition
Employee
Relations
Learning
Management
Knowledge
Management
Workforce
Planning
Change
Management
Workplace
Design
Human Capital
Infrastructure
Workforce
Adaptability
Talent
Management
Succession
Planning/Leader-
ship Development
Human Capital
Strategy
Business Results Tier 1
Key Performance Drivers Tier 2
Human Capital Capabilities Tier 3
Human Capital Processes Tier 4
Illustrative Business Measures
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Analyzing the results
Once all data are collected, Accenturegenerates an Accenture Human CapitalDevelopment Framework Assessment thatshows—in numbers, graphs, and compar-isons against benchmarks—an organiza-tion’s ability to use human capital to drivebusiness results.
First, the assessment provides effective-ness scores for each element in tiers twothrough four of the model (human capitalcapabilities, key performance drivers andbusiness results). Second, the assessmentprovides a color-coded scorecard indicat-ing the relative score for each elementcompared to other organizations whohave implemented the framework (seesample scorecard in Figure 6). In addition,the framework can identify significant
differences by respondent type (e.g., byfunction, region, or age) and any align-ment issues that might exist betweenhuman resources and the business.
Based on these objective findings, current strengths and opportunities forimprovement can be identified readily.Three criteria are most important:
1. The relative maturity of each process 2. The presence or absence of a strong
statistical link between each processand business results (see next sectionfor more detail on these processes)
3. The importance of a process to thestrategy or values of the organization.
Organizations will achieve the greatestbenefits by focusing on processes that aresimultaneously (1) strongly related tobusiness performance and (2) the least
mature. At the bottom of the investmentpriority list should come those processesthat are neither strongly related to business results nor in need of significantimprovement (see Figure 7).
Strategy, business drivers andhuman capital values
This preliminary prioritization is then tempered through the third criteria, acompany’s own business strategy, cultureand value system. The framework determines these company-specific attributes through interviews with business executives. The framework analysis is not “one size fits all”; uniquecharacteristics of a company based on the marketplace, competitors, key valuepropositions, and other internal and
Figure 6. Accenture Human Capital Development Framework sample scorecard.
5 High Top Quartile
3
1 Low Bottom Quartile
How effective is your organization?
Capital EfficiencyRevenue
Growth
Return on
Invested Capital
Total Return to
Shareholders
Recruiting
Productivity Quality Innovation Customers
Leadership
Capability
Workforce
Performance
Employee
Engagement
Ability to Change Human Capital
Efficiency
Competency
Management
Career
Development
Performance
Appraisal
Rewards and
Recognition
Employee
Relations
Learning
Management
Knowledge
Management
Workforce
Planning
Change
Management
Workplace
Design
Human Capital
Infrastructure
Workforce
Adaptability
Talent
Management
Succession
Planning/Leader-
ship Development
Human Capital
Strategy
Business Results Tier 1
Key Performance Drivers Tier 2
Human Capital Capabilities Tier 3
Human Capital Processes Tier 4
Illustrative Business Measures
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Likewise, not all companies value theirhuman capital capabilities in the same way;some organizations place a premium onemployee engagement, whereas others feelworkforce adaptability is more important.By understanding which processes ultimately connect to particular key performance drivers or to the human capital capabilities an organization valuesmost, organizations can make even better decisions concerning investmentpriorities. (See sidebar, “From human capital development to human capitalcapabilities” for a brief description of theprocesses most closely linked to these keyhuman capital capabilities.)
For example, take an organization thatcompetes primarily on innovation.Accenture research demonstrates that an organization’s ability to innovate isstatistically related to three human
in one of its business units (Briggs &Stratton Power Products) suggested thatthe company needed to place a high priority on improving this process.
In a similar way that analyses based onthe framework can be tailored to uniquemarket circumstances and strategies, ananalysis can also take into account thekey performance drivers a company usesto compete, or the particular human capital capabilities it values most andwants to improve. Not all companies generate superb business results orachieve high performance the same way;some compete on superior customer service and satisfaction, others competebased on high-quality products and services, while others compete on theconstant introduction of innovative new products and services.
external factors may override the preliminary findings based on plottingprocess maturity against business impact.
For example, interviews with leaders atBriggs & Stratton revealed an importantdetail about market fluctuations for thecompany. Lawn mower engines are sold on a seasonal basis, and demand foranother product, generators, is largelydependent on unpredictable events suchas storms—although demand for theseproducts has increased dramatically beforestorms occur. Thus, for Briggs & Stratton,accurately forecasting and planning forworkforce needs to meet fluctuatingdemand is very important. Although theworkforce planning process is not onewith a strong statistical link to businessperformance, it was nevertheless targetedas an important area for Briggs &Stratton. The low score in this process
Figure 7. Prioritize human capital investments based on process maturity level and impact on business performance.
Medium Priority
Low
Impact on Business Performance
Maturity Level
Low Priority
Low
HighTargeted, Incremental Improvements Only
High Priority
High
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From human capital development to human capital capabilities
Figure 8. Human capital processes correlated with employee engagement.
Mature human capital processes do more than drive business results; they also drive human capital
capabilities like leadership, employee engagement, and workforce adaptability. Organizations hoping
to achieve improvement in one or more of their human capital capabilities should target the specific
processes found to be most strongly correlated with the chosen capability. Some of the capabilities,
and the processes most strongly associated with them, are noted below.10
Employee Engagement. Robust people
processes and programs seem to impact
employee engagement the most—10
out of the 13 processes we measured
are strongly correlated with employee
engagement (see Figure 8: Human
capital processes correlated with
employee engagement). Organizations
seeking a highly engaged workforce
will focus on improving a broad range
of human capital processes, including
performance feedback and rewards,
a positive and supportive work
environment, and plenty of learning
and development opportunities. Performance Appraisal
Career
Development
Performance
Appraisal
Recruiting
Employee
Engagement
Workplace Design Rewards and
Recognition
Employee
Relations
Human Capital
Strategy
Learning
Management
Human Capital
Infrastructure
Knowledge
Management
Human Capital Processes Tier 4
Human Capital Capabilities Tier 3
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Figure 9. Human capital processes correlated with leadership.Leadership. Leadership—or the ability
for anyone who directs the work of
others to successfully guide an organi-
zation in achieving its goals—is the
most valued of all the human capital
capabilities. Organizations in our
study with the strongest leadership
capabilities also have more mature
recruiting, workplace design, employee
relations, human capital strategy,
and learning management processes
(see Figure 9: Human capital processes
correlated with leadership).
Performance AppraisalRecruiting Workplace Design Employee
Relations
Leadership
Human Capital
Strategy
Learning
Management
Human Capital Processes Tier 4
Human Capital Capabilities Tier 3
Figure 10. Human capital processes correlated with workforce proficiency and performance.Workforce Proficiency and
Performance. The next most valued
capabilities by business leaders are
workforce proficiency and performance.11
Interestingly, results seem to suggest
that who you hire and the environment
you put them in may have more of
an immediate impact on workforce
proficiency and performance than any
other actions (see Figure 10: Human
capital processes correlated with work-
force proficiency and performance).
Performance AppraisalRecruiting Workplace Design
Workforce
Proficiency
and Performance
Employee
Relations
Human Capital Processes Tier 4
Human Capital Capabilities Tier 3
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capital capabilities: (1) Leadership: theability of employees who manage othersto make effective decisions and guide and inspire others; (2) Employee engagement: employees’ commitment to their work and to the entire organiza-tion; and (3) Workforce performance: the ability of employees to effectivelyapply their skills, knowledge and abilitiesto accomplish their performance objectivesand meet the organization’s goals. Each of these capabilities, in turn, is statisticallylinked to specific human capital processes.
Such an analysis suggests that an organization that competes on innovationshould focus not only on the human capital processes linked directly to financialresults, but also on the processes linked to the human capital capabilities that will most likely drive innovation. Theseprocesses are listed in Figure 11. A colored
block indicates that the process is statisti-cally linked to a specific business outcome;the specific color of each block indicatesthe level of maturity of the process for the organization being analyzed, compared to other organizations in theAccenture benchmarking database.
Organizations implementing the frameworkcan use a chart like this to help fine-tunetheir human capital investments. The sample provided in Figure 11, for example,indicates that this organization wouldbenefit most from improving the employeerelations process. That process is (1)amongthe least mature; (2) strongly related tobusiness results, and; (3) strongly relatedto all three of the human capital capabilitieslinked to innovation. Secondarily, such a
company may decide to focus on processesrelated to human capital strategy, recruitingand human capital infrastructure. Theseprocesses could all use improvement, and all are linked to three of the fourbusiness outcomes.
Identifying pragmatic investments
Once the human capital processes havebeen prioritized for improvement, answersprovided to specific survey questions areanalyzed to identify specific, pragmaticactions an organization should take toimprove the maturity of that particularprocess. For example, at Australian engineering and construction consultingfirm Sinclair Knight Merz (also known as SKM), survey responses revealed that,although the organization had robustknowledge management technologies
Figure 11. Sample framework scorecard for an organization that competes on innovation.
Capital Efficiency Leadership Engagement Workforce
Performance
Human Capital
Processes
Employee Relations
Human Capital Strategy
LearningManagement
Recruiting
Workplace Design
Human CapitalInfrastructure
Career Development
Rewards and Recognition
Performance Appraisal
The Three Human Capital Capabilities Linked to InnovationFinancial
Top Quartile
Bottom Quartile
Business Outcomes
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in place to help people access and shareinformation, employees were not usingthe technology as often as they mightbecause knowledge sharing was not beingactively encouraged or rewarded. Such an analysis suggests that improvementefforts should be targeted at encouragingand rewarding knowledge sharing. The strengths and opportunities forimprovement within a process will varyfrom organization to organization, but in all cases the weakest process should be improved first, provided it is stronglylinked to business performance and/or to specific strategies, business drivers andhuman capital values of the company.
The benefits
Companies today are implementing theAccenture Human Capital DevelopmentFramework in order to develop criticalperformance insights, and then to translate those into action. Specifically,the framework is helping companies to:
• Develop an HR or workforce strategy for prioritizing investments in critical HR processes
• Identify strengths and weaknesses in human capital processes and capabilities,and track their changes in performance over time
• Target specific recommendations for action
• Justify investments in people to all relevant stakeholders
• Provide input to fiscal and operational planning
• Identify whether an organization has the people capabilities in place to meet changes in business conditions, strategy or structural changes like mergers and acquisitions
• Identify any areas of misalignment between the business and the HR function
• Support large-scale organizational trans-formations, where the goal is to reshape traditional HR, learning/training and development functions to bring them in line with a new business strategy
• Determine best practices that can be shared across business units
• Identify specific employee populations that are underserved by existing people programs and processes.
"There is no question in my mind that human capital is the most important ingredient in any activity."
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Gary Wilson, Chairman, Northwest Airlines Corporation
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From human capital developmentto business results
As we’ve noted, inconsistency in howcompanies invest in their human capitalhas been rooted in a scarcity of tools that would help executives understandhow human capital contributes to bottomline business results, and especially whichinvestment decisions would have the most positive financial impact. The lack ofdata-based approaches to human capitalmanagement has caused executives to relysolely on logic, faith, or commonly-heldassumptions when it comes to managingtheir people.
Our research suggests that many of ourassumptions may in fact be true. Findingsfrom our initial implementations of theHuman Capital Development Frameworkindicate, for example, that people processes
and programs do make a significant difference to bottom line business results.Those organizations with more maturehuman capital processes have betterfinancial performance than organizationswith less mature processes (see Figure 12).Indeed, more than half of the 13 humancapital processes we measured have a statistically significant relationship with a company’s overall business performance,as well as with key human capital capabilitieslike leadership and employee engagement(see sidebar, “From human capital develop-ment to human capital capabilities).However, our research also reveals that a few of our long-held beliefs may in fact be wrong (see sidebar, “Some surprising findings about human capitalmanagement”).
But which investments in people are most important? Specifically, we foundthat those organizations that focus on processes devoted to three key areasachieve far greater economic success than those that do not.
1. Creating a people strategy alignedwith the business strategy. Our analysisdemonstrates that successful companiesdesign human capital strategies to ensurethat the right people capabilities are inplace to effectively execute the businessstrategy. Top performers in our study havevery different human capital strategies;what they have in common is a maturestrategy process for formulating andaligning human capital initiatives withbusiness strategy. These organizationsmake clear priorities and track their people programs based on the businessvalue they create.
Figure 12. Companies with mature human capital processes have superior business results.
Top Quartile | 3.4
Bottom Quartile | 1.8
Top Quartile | 3.6
Bottom Quartile | 1.7
Top Quartile | 3.6
Bottom Quartile | 1.5
Top Quartile | 3.5
Bottom Quartile | 1.7
Top Quartile | 3.3
Bottom Quartile | 1.8
Top Quartile | 3.6
Bottom Quartile | 2.2
Process maturity score (score based on relative performance
to peers in the Accenture benchmarking
database)
Top Quartile | 3.4
Human Capital Strategy
Human Capital Infrastructure
Career Development
Succession Planning /
Leadership Development
Learning Management
Knowledge Management
Employee Relations
Bottom Quartile | 2.2
1 Immature 2 Moderately Mature
3 Mature 4 Highly Mature 5
Organizations that scored in the
top quartile of business results
Organizations that scored in the
bottom quartile of business results
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Some surprising findings about human capital management
Are our assumptions about managing
people for high performance correct?
Results from initial implementations
of the Accenture Human Capital
Development Framework suggest that
not all of our commonly-held beliefs
about human capital management
may be true. For example, our
research suggests:
Formal learning programs foster
engagement, but not necessarily skill
development. Most organizations want
a highly skilled workforce. But according
to a recent survey of 244 executives,
just 17 percent of executives describe
the overall skill level of their entire
workforce as industry-leading.13 The
solution? Most would say training.
However, our research reveals that formal
learning programs impact business results
less because they create a more highly
skilled workforce, but more because they
create a more engaged one. Indeed, less
formal learning opportunities like on the
job experience and mentoring may do
more to impact workforce proficiency than
formal training alone. The US Department
of Labor, for example, estimates that
70 percent of workplace learning occurs
informally.14 The conclusion? Develop
strong and robust learning and training
processes, but be aware of their limitations
in building the skills of your workforce.
Offer training and learning programs
with the aim toward increasing commit-
ment—by using training as an opportunity
to build trust and camaraderie in the
organization, for example. But to truly
develop employee skills, make sure to
supplement formal training with
less formal learning programs like
mentoring and job rotations.
Organizations that focus solely on
“winning the war for talent” tend
to under-perform. Many executives
believe that acquiring and retaining
superior talent through high salaries
and lots of perks is one of the most
important ways to maximize workforce
performance and ultimately, business
results. Indeed, the 117 HR executives
interviewed in the initial implementa-
tions of the framework ranked recruiting
as the most important of the 13 processes
to business success; they ranked rewards
and recognition as the fourth most
important. But our research suggests
that focusing solely on “winning the
war for talent” may actually be
hazardous to an organization’s health;
those organizations in our study that
actively intervened to improve workforce
performance (through employee develop-
ment processes and the creation of
supportive work environments, for
example) have far greater business
success than those that focus primarily
on the recruiting and rewards and
recognition processes alone.
An employee’s physical and technical
work environment can exert a
significant influence on workforce
performance. Workplace design—or the
physical and technological environment
of an employee—is not linked to overall
business results. But it is statistically
linked to nearly all of the human capital
capabilities we measured, including
employee engagement, leadership,
workforce proficiency, and workforce
performance. Many executives believe
that the environment employees work
in has little to do with their performance.
The HR executives in our study, for
example, consistently ranked workplace
design as the least important human
capital process to organizational
success. Workplace design may,
however, be one of the most neglected
ways to easily improve an organization’s
people capabilities; not only does it
send the most tangible and visible
signal that an organization cares about
the comfort and well-being of its
employees, but it can be one of the
most important factors in building
social capital and encouraging effective
knowledge sharing and communication.
Workforce planning may hinder the
adaptability of a workforce. Workforce
planning—or the process of determining
the future number and types of employ-
ees needed, and then taking corrective
actions such as retraining or staffing
increases or decreases based on these
projections—may in some cases actually
hinder an organization’s ability to
adapt. We found that organizations with
the most rigid and robust workforce
planning processes have significantly
less flexible workforces than organiza-
tions that strike a balance between
rigid planning and no planning at all.
For at least one study participant,
SAP America’s senior vice president
of human resources Terry Laudal, the
finding wasn’t surprising at all. He
explains, “We have a very responsive
and adaptive company that prides itself
on not introducing bureaucratic steps
in our action planning process. But
traditionally, we haven’t planned very
effectively, because our conditions
change so fast that long-term planning
hasn’t had a clear return on investment.
On the other hand, not planning
enough has caused problems in the
past, as we haven’t had the necessary
number of employees available when
we needed them. With improved
workforce planning capability, we’ll
be better equipped to strike the right
balance in the future.”
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Take the experience of a well-known cellphone manufacturer we’ll call CellTech. In the mid-1990s, CellTech was at the top of its game. But later in the decade, newplayers flooded the market and analog cell phones slipped along the product lifecycle curve toward commoditization.CellTech sought to stem its shrinking margins by developing the next wave of industry innovation: digital cell phones.Although CellTech had a new businessstrategy, it lagged in devising a new people strategy to support it. The companyneither acquired nor developed the skillsin its workforce that would enable it tocreate and produce the new technology in time. Because CellTech had never developed the human capital strategyprocess that would have enabled it toanticipate a new workforce need based on a changing business strategy, it wasunable to execute its plan in a timely way. It lost significant market share andmillions in potential revenues.
2. Providing supportive work environments.Successful organizations also have aneffective employee relations process specif-ically devoted to ensuring that employeesare informed, satisfied and engaged. Theseorganizations effectively address employeegrievances or concerns, inform employeesabout business issues affecting them andestablish programs to reduce the impacton morale when the company undergoes a major organizational change.
In addition, there is a statistically significant relationship between humancapital infrastructure processes and business results. Besides the basics ofbeing able to pay people reliably, accu-rately and on time, robust human capitalinfrastructure processes also provide business and HR managers with reliabledata and information regarding their costs and their people. Having the infrastructure and systems in place tosupport core HR transactional processesconsistently and effectively across thebusiness is an essential capability, yet for some organizations, it is still somethingof an aspiration.
Although we found it rather surprisingthat such basic processes are differentiators,we heard time and again from the execu-tives we interviewed just how important itis to perform these fundamental processes well. Not only do they help create a moresupportive work environment, but theseprocesses, above all others, enable HR personnel to gain credibility and trustfrom both employees and business leaders.
3. Developing employees by giving themample opportunities to learn and grow.Companies that actively develop theiremployees and provide them with opportunities to learn and grow alsoachieve superior economic success. Ouranalysis shows that career development,succession planning, learning manage-ment and knowledge managementprocesses are all strongly associated withbetter business performance.
Take one professional services companythat has consistently achieved far superiorreturn on assets, return on capital, andcapital efficiency than industry peers, for example. Not only is it among the top financial performers in our study,compared to other organizations in thestudy, a larger proportion of employees in this organization felt that they weregetting the training they needed to excelat their current jobs and prepare for futureones. Employees are also given moreopportunities to formulate career plansand goals; on average, employees meetwith their supervisor or career counselorat least one to two times a year to discussspecific career development plans. Third,this organization has established commu-nities of practice, or groups of people withshared interests who get together to shareknowledge, solve problems and informallycollaborate across functional boundaries.The organization even monitors the communities’ activity levels and rewardsemployees for participation.
In addition, particular attention is placedon identifying and developing future leadersof the company. Compared to other organizations initially implementing the
framework, this organization more oftenassigns mentors to succession candidatesto guide candidates in their development,and a larger proportion of succession candidates are provided with specificdevelopment plans, such as rotationalassignments or skill-building programs.
Just how much of a difference does investingin people processes and programs make?Results of the initial implementations of theframework suggest that business perfor-mance improves as a company improvesits scoring in these critical human capitalareas. As an organization moves from onebenchmarking quartile to the next withinthe framework scoring, its capital efficiency—or the ratio of total annual sales to thecapital invested in the operations of thebusiness by shareholders and creditors—improves from 10 to 15 percent. Thissends a powerful signal to anyone whohas ever doubted the business value ofinvesting in people; our research indicatesthat such investments do indeed pay off.
Summary and conclusion
The Accenture Human CapitalDevelopment Framework has enabled rigorous analyses of human capital investments that have, until now, largelybeen unavailable. It offers executives, for the first time, a comprehensive tool to assess human performance, to align HR and learning strategy with businessstrategy, and to make human capitalinvestments that generate real businessvalue and move an organization furtherdown the path to high performance.Supported by a growing database on humancapital and shareholder value, the Accentureframework enables an organization todiagnose its strengths and weaknesses in key human capital practices, prioritizeinvestments and track performance, and,ultimately, empirically establish the linkbetween human capital investments, business practices and overall businessperformance.
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American Standard credits highperformance business results totheir investment in people
American Standard, a US$9 billion global,diversified manufacturer of bathroom andkitchen fixtures and air conditioning andvehicle control system products, used an early version of the Accenture HumanCapital Development Framework in 2002to assess its human capital processes andcapabilities. Larry Costello, the VicePresident of Human Resources—and a firmbeliever in the link between investmentsin people and financial results—explainsthat, “When we looked at the results ofthe analysis, I could almost guess thefinancial performance of a particular business by seeing the assessment of ourpeople programs and processes. The morethe color red (indicating poor performance)showed up in a business unit, the worsethe financial performance of the businessunit was.”
Based on recommendations resulting from implementation of the framework at American Standard, Costello has sinceworked on improving the performancemanagement, career development,employee relations, human capital strategy, succession planning, knowledgemanagement, and learning managementprocesses. For example, he implemented a 360-degree performance feedbackprocess, started measuring employee satisfaction, and designed methods toimprove and encourage collaborationamong employees.
Since implementing the framework and the new initiatives the frameworksuggested, American Standard’s stockprice has risen about 50 percent, and its revenues have risen by 9 percent.Although there is no way to definitivelyknow if the investments the company has made in people are the root cause ofthe improvement in business results (thiswould require multiple implementationsof the framework over time in the samecompany), Costello and the business leaders at American Standard do creditthe company’s superior financial perfor-
mance in large part to their continuedfocus on people. Costello explains, “Wehave changed our company’s performancebecause of our emphasis on human capital. Many business unit executiveshave made compelling changes based onthe framework. Without this analysis, wewould probably never have been able to obtain the additional support andinvestments that are needed to transformthe way we work and maximize ourhuman capital.”
SAP uses the Accenture HumanCapital Development Frameworkas a communications tool
For SAP America, the North Americansales and services division of enterprisesoftware giant SAP, much of theAccenture framework’s value came fromusing it as an organizing principle andcommunications tool. According to SeniorVice President of Human Resources TerryLaudal, “The framework is immensely useful because it gives us something theHR community is generally lacking: acommon language and vocabulary for
The Accenture Human CapitalDevelopment Framework in action
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what we do. It frames human capitalprocesses in terms of business results, providing a professional toolkit for our HR team members to speak with businessexecutives about the value of human capital investments and the contributionto the bottom line”.
Longer term, Laudal plans on using theframework in SAP America’s leadershipprogram to ensure that leaders understandhow their expertise and skill in managing key human capital processes can improvebottom-line business results. He also plans on using the framework as a communications methodology withinSAP’s HR community, both in NorthAmerica and globally.
Harley-Davidson uses theAccenture Human CapitalDevelopment Framework to prioritize and justify human capital investments
Executives at Harley-Davidson MotorCompany, the producer of high-endmotorcycles, used the Accenture frameworkto help them make more fact-based decisions regarding the prioritization of keyhuman capital initiatives. The HR functionhas supported years of phenomenalgrowth by focusing a large amount oftheir energy on recruiting—at the potentialdetriment to other areas. Company executives felt it was time to take stock of other people processes. Explains VicePresident of Human Resources HaroldScott, “The goal with the framework wasto introduce a more metric driven view-point of human resources and to thinkabout people programs in business terms.Bringing a tangible HR business case tothe table is not easy. The business doesnot undergo a major initiative withoutsome key underlying metrics critical tosuccess; why should human resources be any different?”
Results of the framework confirmed management’s intuition. Although overallworkforce performance was relatively highcompared to other companies, the lack offocus on more strategic human resourceinitiatives beyond recruiting had taken itstoll on employee engagement, workforceadaptability and workforce proficiency. Of particular concern was the ability forHarley employees to adapt to—and havethe skills necessary to support—a changein strategy aimed at pursuing a morediverse and international customer baseand producing lower cost vehicles througha more cost conscious culture.
Framework results helped Scott prioritizehis HR investments. Results revealed thatHarley-Davidson was performing abovethe average in over half of the 13 humancapital processes. Scott decided to focuson two processes that are both linked tobusiness results and that could use themost improvement. He felt that masteringone of these processes—the human capitalinfrastructure process—would provide animportant foundation to improving theoverall function and further increase hiscredibility as a strategic partner to thebusiness. As a result of the frameworkfindings, Harley-Davidson has begun asignificant effort to upgrade and improveits computer systems supporting HR transactional processes.
Scott has begun to work on his secondpriority—the human capital strategyprocess—by mapping the framework findings onto his already existing HRcapability model. In addition, he plans on improving the process by adoptingtools to track and report quantitative andqualitative workforce metrics, solicitingthe feedback of employees as to theeffectiveness of human capital programs,and prioritizing programs and processes as to the business benefit likely to be created. Scott believes that improving the human capital strategy process is an important first step before improvingother strategic processes like career development, learning management, andrewards and recognition processes—all of
which are likely to ultimately improve keyhuman capital capabilities like employeeengagement, workforce proficiency, andworkforce adaptability. Once Scott final-izes the human capital strategy, he plansto take the strategy and the frameworkresults to the organization’s business leaders to provide them with a fact-basedbusiness case for future investments.
Sinclair Knight Merz (SKM)’simplementation of the frameworkreveals hidden capability gaps
Sinclair Knight Merz (SKM) is anAustralian company that provides consulting services in sectors including theenvironment, infrastructure, buildings andproperty, and power and mining. SKM waslooking for ways to increase its ability tomanage and grow its workforce capabili-ties. In this industry, companies competelargely on the basis of their people—theirskills, their ability to provide excellentclient service, and therefore the ability of the company’s HR function to provideexcellent services at high levels of effi-ciency. The company asked Accenture toimplement the Accenture Human CapitalDevelopment Framework to help the HRfunction identify ways to enhance humancapital capabilities.
The Accenture analysis affirmed thestrength of the company’s human capitalprocesses. The company was among the strongest ever analyzed using theAccenture framework. However, theAccenture analysis did more than justconfirm existing strengths. It also identified a number of areas where further improvements could gain themvital competitive advantages in terms of workforce performance.
For example, although the HR functionhad many best practices in place, executives were surprised to learn thatemployees in non-managerial roles had a lower level of knowledge and use ofthese programs than was expected. Thisfinding prompted HR to increase its communication to staff and review its
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method of communication of programs to supplement the preferred method ofcommunication through managers.Learning management will be anotherfocus. The framework revealed that those companies with effective learningcapabilities have much stronger financialresults; it also revealed, however, thatSKM invests significantly less in learningthan the benchmarking average.
To ensure the company is adequately augmenting internal skill developmentwith skills brought in from the outside,SKM executives also intend to focus onimprovements in their recruiting capability.Data collected from the frameworkrevealed, for example, that those organi-zations with more effective recruitingcapabilities have superior workforce performance and employee engagement.Framework results have prompted the HRdepartment to further review its methodsof recruiting top talent, and put in placean internal capability in key geographies.The initiative has been immediately effective; it has reduced time to recruitkey staff, increased the firm’s ability tohandle large recruiting assignments, andsignificantly increased the satisfaction ofmanagers with the HR recruiting service.The initial pilot program has since beenexpanded to include more geographies.
Briggs & Stratton uses theAccenture Human CapitalDevelopment Framework to inte-grate new acquisitions and todevelop an HR strategy
Briggs & Stratton Corporation, the world’slargest producer of air-cooled gasolineengines for outdoor power equipment,faced new kinds of market and competitivechallenges as the company moved from a mature, increasingly commoditized business of components into new businesses that developed and sold endproducts. As part of this strategy, in 2001Briggs & Stratton acquired Generac PowerProducts, a producer of generators andpressure washers for the home, and, most recently in the summer of 2004,Simplicity, a producer of lawn mowers.15
Implementation of the Accenture framework helped with the acquisitions in two distinct ways. First, frameworkresults clearly communicated differencesbetween the businesses and identifiedareas of opportunity for sharing andlearning. Second, the framework helpedwith the recent acquisition of Simplicityby helping leaders responsible for work-force initiatives keep focused on thestrategic programs and initiatives thatcreate value. Assistant Vice President Joe Da Via explains, “We could have easilygotten sidetracked and spent lots ofresources on non-value added activitiessuch as whether or not we should haveseparate policies or the like; with theframework, we focused right away onmaking the decisions that matter.”
Briggs & Stratton also used the frameworkas significant input into their HR strategy.Framework results were presented and discussed at their annual three-day HRstrategy workshop. One outcome of themeeting was a prioritized list of the tophuman capital initiatives they wanted toundertake in the next few years.
The framework was particularly helpful forthe small and developing Power ProductsHR group. Explains the Power Products’HR leader Jenny Scherer, “When theresults were presented, our gears startedto turn and we became quite energized.The lower benchmarking scores receivedwere not happy results, but the powerfulthing is that if we can see it and feel itthen we can have others see it and feel it as well. The results were a catalyst for action.”
This work led to the group’s first true HR strategy, with a list of prioritized initiatives. Scherer then presented thestrategy, using the framework results tosupport it, to the President of the PowerProducts business, Todd Teske. ExplainsScherer, “Framing HR initiatives in termsof business results helped immensely; I think the framework helped him view HR less as an administrative function and more as a strategic function.” Scherer hopes to use framework findings(including one that revealed that thehuman resources function is significantly under-resourced compared to the averagebusiness of comparative size) to justifyfurther investments in people programsand to continue to link her efforts tobusiness success.
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About the authors
Susan Cantrell is a senior manager at the Accenture Institute for High Performance Business. She can be reached at [email protected].
James M. Benton is an associate partnerwith the Accenture Human Performance practice. He can be reached [email protected].
Robert J. Thomas is executive director of the Accenture Institute for HighPerformance Business and a former faculty member of the MassachusettsInstitute of Technology’s Sloan School of Business. He can be reached [email protected].
Meredith A. Vey is a research fellow and industrial/organizational psychologist with the Accenture Institute for HighPerformance Business. She can be reachedat [email protected].
Linda A. Kerzel is a senior manager with the Accenture Human Performancepractice. She can be reached [email protected]
About Accenture
Accenture is a global management consulting, technology services and outsourcing company. Committed todelivering innovation, Accenture collaborates with its clients to help thembecome high-performance businesses and governments. With deep industry and business process expertise, broadglobal resources and a proven trackrecord, Accenture can mobilize the rightpeople, skills and technologies to helpclients improve their performance. Withmore than 110,000 people in 48 countries,the company generated net revenues ofUS$13.67 billion for the fiscal year endedAug. 31, 2004. Its home page iswww.accenture.com.
About the Accenture Institute forHigh Performance Business
The Accenture Institute for HighPerformance Business creates strategicinsights into key management issuesthrough original research and analysis. Its management researchers combineworld-class reputations with Accenture’sextensive consulting, technology and outsourcing experience to conduct innovative research and analysis into how organizations become and remainhigh-performance businesses.
About the Accenture Human Performance practice
The Accenture Human Performance practice helps it clients address their mostcritical people issues through innovativeapproaches in the areas of organizationstrategy, human resources, learning,knowledge management, performancemanagement and change management.With more than 5,000 skilled human performance professionals, Accentureoffers a full range of consulting and outsourcing solutions to help clientsimprove the performance of their workforce and the business overall.
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Notes
1 “In Search of Performance Anatomy,” by
Tim Breene and Robert J. Thomas, Outlook 2004,
Number 3, pp. 27-35.
2 Sam Walton with John Huey, Made in America,
New York: Bantam, 1992 pp. 163-164
3 “The CEO as Coach: An Interview with AlliedSignal's
Lawrence A. Bossidy," Harvard Business Review,
April 1995.
4 Interviews with authors.
5 The Accenture High-Performance Workforce Study
2004.
6 Ibid.
7 The measurement technique used in software
development is called the SEI (Software Engineering
Institute) Capability Maturity Model (CMM). The
measurement technique used in manufacturing
processes was originally developed by W. Edward
Deming in 1979 and dubbed the “plan-do-act-
check-act” method. Deming’s original concept later
developed into techniques such as Total Quality
Management and Six Sigma.
8 The number of organizations was limited in the
statistical analysis due to a number of reasons,
including unavailable data (for example, government
organizations don’t have traditional financial
metrics) or the need to eliminate organizations
with overlapping employee populations (for example,
a business unit that overlaps with an enterprise, or
a region that overlaps with a function). Statistical
relationships between capital efficiency and human
capital processes are based on eleven of the organi-
zations in our sample, and relationships between
key performance drivers, human capital processes
and human capital capabilities are based on twenty-
six of the organizations in our sample.
In addition, a few key elements have changed in
the framework since it was used in the initial imple-
mentations. First, data about key performance dri-
vers, with the exception of innovation, could not be
obtained in the initial implementations because few
organizations collected standard factual metrics in
this area. The analytical instrument at the heart of
the framework has since been substantially modified
to enable data collection in this area in subsequent
implementations. In addition, the change manage-
ment, ability to change and talent management
elements were added since the initial implementa-
tions, so these elements are not reported on in this
paper. Finally, the initial implementations measured
workforce proficiency separately from workforce
performance; in the current framework, proficiency
and performance have been combined into a single
element called workforce performance.
9 Preliminary research conducted by Accenture to
help define the framework included:
Original research in conjunction with Science
Magazine on the human capital drivers of financial
performance for 15 companies in the pharmaceutical
industry; see “Achieving High Performance through
Human Capital Development: A Look at the
Pharmaceutical Industry,” by Meredith A. Vey and
Susan Cantrell, Accenture Institute for High
Performance Business, January 15, 2004.
Research concerning how leading organizations
measure the impact of human capital on business
results, including four in-depth case studies
(International Paper, Harrah’s Entertainment,
a Midwestern manufacturing firm, and a pharma-
ceutical company) of leading organizations’ human
capital measurement practices and results.
The annual Accenture High-Performance Workforce
Study, a survey of over 200 senior executives at
companies in six countries, to understand how orga-
nizations are using human resource programs and
initiatives to try to improve workforce performance;
see “The Accenture High-Performance Workforce
Study 2004.”
10 Processes correlated with the ability to change and
talent management elements are not noted because
these two elements were not measured in the initial
implementations of the framework; they were added
to the framework after the conclusion of the initial
implementations. The human capital efficiency
element is not listed because no processes were
found to be statistically related to it.
11 Workforce proficiency and performance were
measured as distinct elements in the initial imple-
mentations of the framework. Because they were
found to be highly correlated, they were combined
into a single workforce performance element for
the current framework model.
12Summary of the "Human Capital: The Driver of
Economic Growth" conference at the Milken Institute
in conjunction with Forbes, April 23, 2002. see
http://www.milkeninstitute.org/gc2002/
prog_detail.cfm?ID=49
13 The Accenture High-Performance Workforce Study
2004.
14 The Department of Labor based this conclusion, in
part, on a comprehensive study conducted by the
Education Development Center Inc. (EDC) in Newton,
Massachusetts in 1997. Dobbs, 2000 “Training on the
Fly,” Sales & Marketing Management; November,
2000, Vol. 152 Issue 11, p 92.
15 The Accenture Human Capital Development
Framework was implemented in the traditional
engine and power products businesses only; Briggs
& Stratton acquired Simplicity after the implemen-
tation of the framework.
Copyright © 2005 AccentureAll rights reserved.
Accenture, its logo, and High Performance Delivered are trademarks of Accenture.