Companies are forever in search of ways to increase their chances of success. They are willing to spend time and money to achieve greater success in realizing their business goals. Capability building is a sure way to do so, more and more companies are becoming aware of it. That effective capability building methods can lead to over-all transformation and excellence, is something an ever-increasing number of companies are paying a great deal of attention to.
Approach to Capability Building
However, the right approach to gauge the capabilities requirement is missing. Very few companies have a systematic and sustained method for building organizational capability. A careful assessment of existing capabilities and then identifying the gaps are first steps in capability development. Most companies still use the old methods of manager assessment and self-assessment for their capability building programs. This approach will not yield the desired results. Organizations must move to using objective third party diagnostics for devising effective capability development strategy.
Moreover, as business environment changes, learning needs of the employees also change. Organizations largely are still depending on traditional methods of skill-building like on-the-job training and teaching. For large scale learning programs, they are still using the age-old train the trainer method. Very few companies are using formal coaching in a big way. Companies are yet to embrace cutting edge learning systems such as experiential environments. They are not very enthusiastic about model factories or simulators as a learning method.
New age digital tools like mobile based learning or group online courses are also not being adopted by most companies. These new training methods can be easily scaled up and thus are quite cost effective in the long run. Building capability for performance requires a new approach to design learning programs by corporate leaders, only then truly effective and personalized learning programs can be devised for capability development of the employees.
So, how to go about building corporate capabilities in a systematic way? Most companies face difficulties to fill capability gaps. As per the 2014 McKinsey survey conducted world-wide, although a good fifty percent of the correspondents were of the view that capability building was their company’s one of the top three priorities, only a handful (14%) stated that the learning programs of their company for frontline and senior staff were really effective in terms of improved business performance. This survey also threw up the fact that companies are not doing too well for digital and technological capability building. Companies that have effective capability building programs are paying attention to developing capabilities in strategy, operations, marketing and sales as these are critical to business performance.
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This is a significant departure from the earlier thinking which placed emphasis largely on building leadership capabilities. Companies are also paying attention and allocating more funds on capability building of their frontline employees. This is a noteworthy change. Senior leaders are a distinct second priority as far as the capacity development strategy is concerned. The fundamentals of successful capability building strategy are essentially, diagnosis, design and delivery.
Systematic diagnosis begins with first identifying existing capabilities. The key here is objective analysis. Objective diagnostic tools are immensely helpful in locating capability gaps vis a vis industry peers. It helps companies to assess the financial cost of addressing these capability gaps as well. Such an objective analysis is the correct foundation for designing capability building programs.
An Effective Capability Building Program
An effective capability building program must relate to business results by having real and quantitative business targets. Effectively designed programs center around employees’ existing skills and needs. No one program can suit different employees as their strengths and requirements differ. A blended approach that incorporates classroom learning and actual work, digital interventions such as mobile based individual learning and experiential learning on simulators works well.
Building capabilities is only half the battle won. The more important part that companies must pay attention to, is to sustain capabilities. To reap the benefits of skill or capability development, it is essential to devise ways to maintain capabilities. The McKinsey survey of 2014 reported that most companies falter in doing so.
Companies must emphasize and encourage the approach that makes the HR and business units co-own the learning programs. Capabilities can only be sustained if the business units co-own learning. It is not something the HR can do in isolation. Learning, to be effective, needs to be aligned with business outcomes. Companies that are successful in making their HR and business units co-own their skill and capability development programs show extremely encouraging results in sustaining capabilities. These companies have a structured way of devising their capability development programs based on competency models for all roles.
According to McKinsey, a good way to sustain and even further capacity building is by having a corporate academy. Corporate academies do a wonderful job of developing functional and technical skills. If these academies are co-owned by HR and business units jointly (as opposed to only HR), the alignment between learning and business goals is cemented. After all, metrics is a quantitative way, a most assured way of measuring the gains of capability building. This method is far superior to the usual method of manager feedback to assess capability building. Employing metrics to assess skill development convinces organization heads to engage more with capability building programs and to allow more funds. Stringent performance management systems with strong metrics need to be employed to gauge progress against business targets for best results.
References:
- Building capabilities for performance. A McKinsey survey. Jan 2015. Richard Benson-Armer, Silke-Susann Otto, Gina Webster.
