Enhancing HR

Enhancing HR Value to the CEO:
Strategies for Matching Strategy to Capability
Laske and Associates, LLC Otto Laske, PhD PsyD, Manager Medford, MA, USA 781.391.2361 oelaske@earthlink.net
This seminar takes a comprehensive, systemic view of the organization and its readiness for intervention.
It addresses the people power paradox: most companies seek their future outside of themselves, not in their own people.
Copyright Laske and Associates, LLC, 2002
Workshop Objectives
At the conclusion of this workshop, participants will be able to:
better understand the relationship of strategy and capability see their own role as HR Director in a new, proactive light, as guarantors of a balance between strategy and capability advise the CEO on how to expand current HR evaluation levels to measuring capability underlying performance advise the CEO on how to improve asssessing the realism of company strategy in light of existing capability
discuss the allotment of capability resources needed for fully realizing present strategic objectives.
Assumptions of this Workshop

Achieving strategic objectives is more than ever dependent on the capability of individuals and teams
Much more in-depth knowledge about human capability is available in social psychology than has so far been appreciated by CEOs and HR Directors
We need to open a window on new and highly stratetgic data sources that heighten the realism of strategic decision making at the highest level of management (in particular, a Capability Metric) We address CEOs and HR Directors alike, focusing on human capability.
Workshop Topics
Part I: The Relation of Company Strategy and Work Capability
Performance is based on Capability Relevance of Capability in the Strategy Map
Part II: Building and Using a Capability Metric

Opening a Time Window on Capability How CDREM works What a Capability Metric Tells Management
Part III: Wrap Up

Benefits of CDREM New Tasks of the HR Director Case Study Deliverables
Part I Company Strategy and Work Capability
Performance is Based on Capability
Human Strategy Regards Work Capability

Vision
Business Strategy Organizational Strategy
Human Strategy: Capability

Your Human Strategy Should be Guided by Insight into Work Capability
When you need a high-level view of human resources available to meet strategic objectives, you need to understand current and future work capability
Performance Is Analyzed In Terms of Work Capability

Actual work performance is based on personal capability to work, and differs from person to person, team to team Following Elliott Jaques (1994), we distinguish and measure three kinds of work capability:
current applied capability current potential capability future potential capability
Research shows that potential capability grows over the life span along predictable maturational pathways of self- and complexity awareness (Loevinger, 1976; Kegan, 1982; Laske, 1999) Limits of (current and future) potential capability set limits to training effectiveness, and require long-term remediation, restructuring, or outsourcing decisions.
opyright Laske and Associates, LLCC, 2002
Relevance of Capability in the Strategy Map

Any business may be seen as composed of four layers:
financial customer relations internal business process learning and growth, or human capital
Strategic objectives in the first three layers, when mapped into Learning and Growth, appear as HR deliverables Requisite HR deliverables regard capability, not just performance HR or Learning and Growth comprises two sublayers:
enablers such as competence, team synergy, etc., that execute strategy capabilities that underly enablers (sometimes called metaenablers) and measure capability.
opyright Laske and Associates, LLCC, 2002
Five Dimensions of a Strategy Map

(adapted from BCS Collaborative, Inc., 2001)
Shareholder Value Financial Perspective
Human Capital Effectiveness Human Resource Efficiency
Customer Perspective
Customer Satisfaction
Employee Satisfaction
Internal Process Perspective
Deliver World Class services
Manage Customer Relationships
Manage Operating Efficiency
Two Tiers of Learning and Growth
Enablers
Competencies Leadership Cultural Climate
Learning & Growth Perspective Meta-Enablers
Strategic Alignment / Motivation
Team Integration
WORK CAPABILITY
Impact of Capability on Performance

Financials
[long-term] Internal Business Process [short-term] Customer Relations [short-term]
Competence
Leadership
Alignment
Culture
Team Synergy
CAPABILITY
Meta-Enablers Measure Capability

To improve the short- as well as long-term realism of company strategy, we need to expand the number of HR evaluation levels.
By doing so, we take into account a companys actual work capabilities that determine its level of current and future performance.
Expanding HR Evaluation Levels

Evaluation Level Reaction Learning Implementation Enablers Brief Description of Measurement/Evaluation Participants reaction to an HR initiative Motivation, knowledge, or attitude changes Changes in behavior on the job through HR initiative Survey answers regarding Leadership, competence, personal alignment, team synergy, cultural climate, etc. Measured in terms of three kinds of meta-enablers (current applied, current potential, future potential) Business impact of the companys meta-enabler profile Monetary value of intervention results against cost of the HR initiative
Work Capability
Business Impact
Financials (ROI)
Part II: Building and Using a Capability Metric
Opening a Time Window on Work Capability

To analyze and measure work capability in sufficient depth means to open a time window through which to view capability now, in the near future, and the far future.
Capability Evolves in Time

Future Potential Capability Current Potential Capability
Current Applied Capability
Now
Near Future (0.5 to 2 years)
Far Future (2-5 years)
Assessing Work Capability with CDREM

Future Potential Current Potential Current Applied
Strategic Objectives 6. 1. HR Deliverables
5a-c
CAPABILITY METRIC 4a. 4b.
WHAT: Enablers
WHO: Repr. Sample
Index Variables
3b.
3a.
2.
Copyright Laske and Associates LLC, 2002
Three Kinds of Work Capability

(adapted from E. Jaques, 1994, p. 7)
Now: Current Applied Capability (CAP): the level of capability a person is actually applying at a given moment in some specific work Near Future: Current Potential Capability (CPC): the maximum level of work a person could carry out at any given point in time, in a domain of work they value and given environmental support Far Future: Future Potential Capability (FPC): the predicted level of potential capability that a person will possess at some specific time in the (near or far) future
FPC grows throughout the life span along predictable maturational pathways, and therefore can be reliably predicted.
CDREM measures all three kinds of work capability.

Definition of Different Kinds of Capability

(researched by Jaques, Kegan, Basseches, Laske, 1955-2000)
Current Applied Capability = Systemic grasp & developmental level & *personal need & energy sinks Current Potential Capability = Balance of critical vs. constructive thinking (complexity of processing) & developmental level & *personal aspiration Future Potential Capability = Developmental level & potential, & systemic grasp & balance of critical vs. constructive thinking (complexity of processing). * comprising self conduct, task focus, and interpersonal perspective.
Index Variables, Current Applied Capability

CAC
Systemic Thinking
Developm. Level
Personal Need
Energy Sinks
Critical
Constructive
Risk
Potential
Self
Task
Interpersonal
Thinking
Thinking
Clarity
Self concept Risk taking Change Flexibility Need for power Need for visibility Confrontationalism
Conduct Focus
Autonomy Drive to achieve Resourcefulness Endurance Quality of Planning
Perspective
Affiliation Empathy Helpfulness Dependency Bias
Change Relationship Structure Structure under transformation
Need to Self Protect Relationship to Power
Capability Potential Detailed

Future Potential Capability (determined by developmental level)
developmental level (level of self awareness) developmental potential (for reaching subsequent level) developmental risk (for regressing to lower level) systems thinking capacity (critical, constructive, systemic thinking)
Current Potential Capability (determined by personal aspirations and developmental level)

task focus (autonomy, endurance, risk taking, drive to achieve, motivation, quality of planning, follow-through, etc.) self conduct (self confidence, flexibility regarding change, need to control and direct, need for visibility, etc.) interpersonal perspective (capacity for affiliation, bias, dependency on others, etc.)
Capability Is Measured in Three Time Dimensions

Capability is measured in terms of variables defining people properties (sometimes called meta-enablers) In CDREM, variables together form an index An index is specific to a particular enabler, such as
leadership or team synergy

Each enabler is measured in three different but interrelated time dimensions of capability: current applied, current potential, and future potential.
Capability Index for Leadership

Enabler Index Variables
1. Current and future potential, Developmental level (maturity) 2. Future potential, Developmental risk vs. potential
Leadership
3. Current and future, Systems thinking capacity
4. Current and future, Change flexibility

5. Current, near future, and far future interpersonal perspective
6. Current, near future, and far future self-conduct

7. Current, near future, and far future approach to tasks (task focus).
How CDREM Works
Steps Toward Building a Capability Metric

Company Strategy Map
HR Deliverables, from Strategy
Define Target Population
Measurement Objectives
Define Representative Sample
Define Index(es) based on Capability Standards

Definitions
Representative samples comprise individuals or teams who, as groups, have certain work capability levels critical to company performance An index comprises a set of variables used to measure the work capability of a repr. sample Indexes measure a samples work capability levels against validated normative standards Standards stipulate current and future work capability levels defined in harmony with requisite HR deliverables.
Steps in Building a Capability Metric

HR CONCERNS
CORPORATE STRATEGY
Indexes
WORK CAPABILITY
HR DELIVERABLES
Representative Sample
Assessment of Capability in terms of Index Variables
How to Define a Representative Sample

The Company
Division B
Division A Target Population
Division C
Sample
Note: Divisions can also be crossfunctional groups
Structuring a Representative Sample

TYPES OF SAMPLE A. Pure Samples B. Mixed Samples 1. Executive team only (=E) 1. Balanced sample (E, M, T, I=25%) 2. Middle management [group 2. Management sample (E=10%, leaders] only (=M) M=50%, T=20%, I=20%) 3. Critical teams [and team 3. Team sample (E=0%, M=30%, managers] only (=T) T=70%, I=0%) 4. Individual contributors only (=I) 4. Workforce sample (E=0%, M=30, T=0%, I=70)
Indexes and Their Capability Standards

A CDREM Index is entirely customizable; it refers to any aspect of capability HR decides to measure An index measures capability levels with a focus on a particular enabler (e.g. leadership) An index is composed of a set of pertinent variables each of which is associated with a standard (customized to company strategy and HR concerns flowing therefrom) CDREM capability standards derive from current social science research Each index measures all three time dimensions of work capability: current applied, current potential, and future potential capability.
Capability Indexes are Composed of Meta-Enablers Measuring Capability Levels

Six Classes of of Meta-Enablers 25 Capability Criteria Any number of customized indexes
Future Capability
Current Capability
Customized to Company Strategy
Example: Variables of a Leadership and Change Flexibility Index

Developmental level (16 levels) Developmental potential and risk Strength of complexity awareness (transformational capacity) Strength of systems thinking Self conduct
self concept flexibility for change need for power and control
Task focus
autonomy resourcefulness under stress quality of planning and order
Future potential capability
Interpersonal perspective
empathy helpfulness/supportiveness capacity for affiliation
Current potential and applied capability
Energy sinks (gaps between personal needs and aspirations) Culture climate index (gaps between Personal aspirations and actual organizational experience)
Current and Near-Future Capability Standards

Factors of Current Capability Self Conduct: how people perceive themselves Task Focus: how people perceive their work Interpersonal Perspective: how people perceive their co-workers Energy Sinks: gaps between need and aspirations Culture Climate Index: gaps between aspirations and org. experience
Dimensions of Current Capability

Personal Need Aspirations Org. Experience Validated managerial standards of actual experience of the organization (e.g., experience of managements achievement orientation)
Validated managerial standards of personal and ethical needs to be satisfied by work (e.g., drive to achieve)
Validated managerial standards of aspirations held for own organizational functioning (e.g., aspired-to achievement)
Far-Future Capability Standards

Factors of Future Potential Capability Level of developmental maturity Manifestation 16 levels between ages 20-100, each associated with a different degree of leadership capability Likelihood of advancing from present level, getting stuck at present level, or regressing from level Overall capability to see the organization systemically, rather than by personalization Balance of multiple perspectives in organizational situations
Near-future developmental risk and potential Strength of systems thinking
Strength of critical vs. constructive tools (transformational capacity)
What a Capability Metric Tells Management

CDREM outcomes are stated in the format of a Capability Metric The metric reveals the hidden work capability of a representative sample. Results are stated in terms of potentialto-risk ratios for all variables included in the index measured.
Format of the Capability Metric

Index Variable Standard Chosen Risk Potential (Proportion (Proportion Missing Exceeding Standard)* Standard)* Future Potential Capability Risk-to-Potential Ratio
Variable 1 Variable n Developmental Median Variable 1 Variable n Behavioral Median
Important Link
Current Applied and Potential Capability
Capability Mean * Those adhering to standard are implicitly represented by 1.0.
Example 1
Leadership Capability Metric of an e-business firm lacking current and future capability potential
Leadership Capability Metric

CDREM Index Dev. Level Dev. Potential Change Flexibility Systemic Thinking (Current Applied Capability) Self Conduct Task Focus Missing/ RISK (Future Potential Capability) Adherence/ STANDARD Exceeding/ POTENTIAL
Future State
Present State
Interpers. Perspective
Energy Sinks Unused current potential -1.0
+1.0
High-Level Summary for Leadership

Negative Findings Positive Findings Overall: Risk Outweighs Potential Risk 1: There is a large deficit in farPotential 1: There are pockets of sample future potential capability (developmental members exceeding the standard set for level and systemic grasp) that cannot be developmental potential, but they are not alleviated by training sufficient to offset the overall lack of farfuture developmental capability Risk 2: a. Whatever current potential capability there is, is presently not used (energy sink) b. The area of greatest current deficit is self conduct (i.e., self concept, risk taking, change flexibility, need for power and visibility); this reflects a lack of farfuture potential capability Potential 2: There are pockets of sample members exceeding the standard set for interpersonal perspective (emotional intelligence), but they not sufficient to offset the overall lack of far-future capability
Actionable Detail, Example

Index Criterion Proportion Proportion Missing Adhering to Standard Standard Prognostic Findings 50% 33% Proportion Exceeding Standard 17%
Degree of systems thinking Conduct (self concept, flexibility for change, need for power)
Diagnostic Findings 37% 45%
18%
Reaction of a Manufacturing Firm

Repr. sample regards the middle management level High future potential capability is too long-term to be actionable High energy sinks require immediate harnessing of current potential in all ways possible (e.g., reward structure) Available options:
start a massive management development effort geared to harnessing existing behavioral and developmental potential
diminish unused potentials by wide-scoped job re-assignment and work place restructuring by firing parts of middle management, and either rehiring or outsorcing managers showing high current & future potential capability
Reaction of an Accounting Partnership

Repr. sample regards managing partners (some of whom reside on the executive committee) High future potential capability points to a need for comprehensive succession planning High energy sinks speak to need of redefining partner responsibility in terms of existing individual work capability Available options:
demote present managing partners whose current and future work capability does not measure up to newly defined standards initiate a follow-up assessment focused on a target population of partners with potential to become managing partners.
Example 2
Team Synergy Metric of a pharmaceutical company with good capability potential
Team Synergy Capability Metric

CDREM Index Dev. Level Dev. Potential Change Flexibility Systemic Thinking (Current Applied Capability) Self Conduct Task Focus Missing/ RISK (Future Potential Capability) Adherence/ STANDARD Exceeding/ POTENTIAL
Future State
Present State
Interpers. Perspective
Energy Sinks Unused current potential -1.0
+1.0
High-Level Summary for Team Synergy

Negative Findings Positive Findings Overall: Potentials Outweigh Risks Risk 1: Lack of maturity level and Potential 1: There are large potentials for resultant systems thinking deficit of team developmental advance and change members presently pose the greatest risk flexibility that need program support to team synergy; risk is not outweighed (coaching, mentoring, team restructuring) by potential Potential 2: There is a huge potential for Risk 2: Self conduct risks exaggerated or low developing interpersonal perspective self concept, lack of flexibility for (emotional intelligence), and a more change, need for power and visibility balanced self concept. are considerable, but outweighed by adherance to, and exceeding of, standard Risk 3: Existing potentials of team Potential 3: future potential (far future) synergy are currently unused. solidly supports current potential (near future),
A Capability Metric Facilitates:

1. Applications for Venture Capital 2. Merger and Acquisition Decisions 3. Re-Visioning of Organizational Strategy 4. Change Management Initiatives 5. Human Capital Readiness Reports 6. Restructuring of Reward Systems 7. Outsourcing Decisions 8. Automation and Web Transfer Decisions 9. Management Development Programs 10. Employee Development Programs
11. Culture Climate Enhancement

12. Internal Business Process Enhancement 13. Customer Relations Enhancement.
Following-Up Capability Assessments

Results:
Following up assessments enables comparisons against a base line established by the initial capability metric Follow up delivers insight into the effectiveness of developmental programs for all three aspects of capability
Timing:
Current and future potential is followed up annually Current applied capability can be followed up in periods shorter than a year.
Part III
Wrap Up
What CDREM Delivers

CDREM is a tool for calibrating the quality of human capital in organizations in terms of work capability
CDREM provides a Capability Metric detailing present,

near-future, and far-future work capability A capability metric reveals the hidden potential of a companys workforce Findings in a Capability Metric heighten the realism of
strategic decision making at the highest level of

management.
A Capability Metric Scores Hidden Company Intelligence

Financial Perspective Customer Perspective
Internal Process Perspective
Enabler Intelligence
Competencies Strategic Alignment / Motivation Team Integration
Leadership
Cultural Climate
Work Capability
Developmental (long-term) Potential Behavioral (short-term) Potential
Selected Benefits of Capability Assessment

A Capability Metric: is based on objective (social-science) standards of work capability in organizations is customized to current company strategy extends the time window on capability into the future strengthens and broadens the role of the HR Director at the strategy table introduces a heightened realism into HR program design and intervention, including e-HR (personalization of information).
New Tasks of the HR Director
The Principal Task of the HR Director Is To Answer to Work Capability Concerns

Strategic Company Objectives Insight into Work Capability CONCERNS
Assessment of Work Capability
HR Solutions
and Deliverables CDREM
The Need for Integrating Two Approaches to Human Capital Management

The old way The new way
Ad hoc & situational: Opinion-survey based Best Practices
Grounded in social science: Assessmentbased Capability Metrics
State of Human Capital

The best way to explore the utility of a Capability Metric is to carry out a CDREMcase study targeting some highlevel company concern.
Case Study Deliverables

A CDREM case study by Laske and Associates accomplishes: translating HR capability concerns into measurable indexes structuring and sizing one or more representative samples defining capability standards appropriate to the companys present strategic objectives and cultural climate carrying out the assessment proper (developmental interviewing, behavioral questionnaire) calibrating the Capability Metric for one or more indexes interpreting capability findings with attention to actionable insight suggesting appropriate CDREM follow up assessments.
How to Learn More

References
Becker, B. E., M.A. Huselid, & D. Ulrich (2001). The HR scorecard. Boston, MA: Harvard Businss School Press. Fitz-enz, J. & Phillips, J.J. (1998). A new vision for human resources. Menlo Park, CA: Crisp. Kaplan, R. & D.P. Norton (2001). The strategy-focused organization. Boston, MA: Harvard Business School Press. Jaques, E. (1994). Human Capability. Falls Church, VA: Cason Hall & Co. Kaplan, R. & D. P. Norton (1996). The Balanced Scorecard. Boston, MA: Harvard Business School Press. Laske, O. (2002a). How will you deliver strategic human resources beyond domain competence? Human Capital Online, Delhi, India. Laske, O. (2002b). After competence, emotional intelligence, and learning and growth: Whats the next step? HR.com, February.
Laske, O. (2002c). The place where work happens. Submitted to The OD Practitioner. Laske, O. & B. Maynes (2002). Growing the top management team. A. & N. Korac-Kakabadse (Eds.), Journal of Management Development, 21. Cranfield, Bedfordshire, U.K.
Laske, O. (2001a). Linking two lines of adult development: The Developmental Structure/Process Tool. Bulletin of the Society for Research in Adult Development (SRAD), 10.1, 8-11. Laske, O. (2001b). A learning and growth metric for strategy-focused organizations (http://www.balancedscorecard.org/wpapers.html). Laske, O. (2001c). The CDREM readiness report (http://www.balancedscorecard.org/wpapers.html). Laske, O. (2001d). CDREM for managers (http://www.balancedscorecard.org/wpapers.html). Laske, O. (2001e). What lies beyond alignment with strategy and other HR enablers? HR.com, Nov. 16, 01. Laske, O. (2001f). What do meta-enablers add to your insight into the workforce? HR.com, Nov. 30, 01. Laske, O. (2001g). How do you access and assess intangible human-resource assets? HR.com, Dec. 14, 01. Laske, O. (2000a). Foundations of scholarly consulting. Consulting Psychology Journal, 52.3, 178-200. Laske, O. (1999a). Tranformative effects of coaching on executives professional agenda. Ann Arbor, MI: Bell & Howell Company (www.bellhowell.infolearning.com; order no. 9930438) Laske, O. (1999b). An integral model of developmental coaching. Consulting Psychology Journal, 51.3, 139-159.
Laske and Associates, LLC

Specialists in Human Capital Measurement
Otto E. Laske PhD PsyD Founder & Manager
51 Mystic St. West Medford, MA 02155, U.S.A. (781) 391-2361 oelaske@earthlink.net
What gets measured, gets managed
Consultation on strategic human-resources management, including web-based systems Design of Capability Metrics

Enhancing HR

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Enhancing HR Value to the CEO:

Strategies for Matching Strategy to Capability

Copyright Laske and Associates, LLC, 2002

Copyright Laske and Associates, LLC, 2002

Assumptions of this Workshop

Part II: Building and Using a Capability Metric

Part III: Wrap Up

Part I Company Strategy and Work Capability

Copyright Laske and Associates, LLC, 2002

Performance is Based on Capability

Copyright Laske and Associates, LLC, 2002

Human Strategy Regards Work Capability

Business Strategy Organizational Strategy

Human Strategy: Capability

Your Human Strategy Should be Guided by Insight into Work Capability

Copyright Laske and Associates, LLC, 2002

Performance Is Analyzed In Terms of Work Capability

Relevance of Capability in the Strategy Map

Five Dimensions of a Strategy Map

Internal Process Perspective

Deliver World Class services

Manage Customer Relationships

Manage Operating Efficiency

Two Tiers of Learning and Growth

Learning & Growth Perspective Meta-Enablers

Strategic Alignment / Motivation

Impact of Capability on Performance

Meta-Enablers Measure Capability

Copyright Laske and Associates, LLC, 2002

Expanding HR Evaluation Levels

Copyright Laske and Associates, LLC, 2002

Part II: Building and Using a Capability Metric

Opening a Time Window on Work Capability

Copyright Laske and Associates, LLC, 2002

Capability Evolves in Time

Current Applied Capability

Near Future (0.5 to 2 years)

Far Future (2-5 years)

Copyright Laske and Associates, LLC, 2002

Assessing Work Capability with CDREM

Strategic Objectives 6. 1. HR Deliverables

CAPABILITY METRIC 4a. 4b.

WHO: Repr. Sample

Copyright Laske and Associates LLC, 2002

Three Kinds of Work Capability

CDREM measures all three kinds of work capability.

Definition of Different Kinds of Capability

Index Variables, Current Applied Capability

Change Relationship Structure Structure under transformation

Need to Self Protect Relationship to Power

Copyright Laske and Associates, LLC, 2002

Capability Potential Detailed

Current Potential Capability (determined by personal aspirations and developmental level)

Capability Is Measured in Three Time Dimensions

leadership or team synergy

Capability Index for Leadership

3. Current and future, Systems thinking capacity

4. Current and future, Change flexibility

6. Current, near future, and far future self-conduct

How CDREM Works

Copyright Laske and Associates, LLC, 2002

Steps Toward Building a Capability Metric

HR Deliverables, from Strategy