1. Delivering Strategy Execution Through Human Capital Architecture
Edward B. Yost, Ph. D., SPHR
November 2013

2. Determine the Critical Components of Strategy Execution
Step #1
Determine the Critical Components of Strategy Execution

3. Strategic Success Hierarchy
Industry
Firm/Company
Business Unit/Function
Position
Person

4. Defining the Business Strategy
Strategy is:
The central, integrated, and externally oriented concept of how we will achieve our objectives. (Hambrick & Fredrickson)

5. Strategic Success
Looking for operational, financial customer, workforce success through…
Betting on the incompetence of competitors
Acquiring and utilizing the resources & competencies of others
Using existing resources & competencies differently

6. Organizational Resources and Competencies
Tangible and intangible resources and capabilities that enable the organization to develop, choose and, implement value enhancing STRATEGIES through resource deployments, systems and processes that cannot be imitated.

7. Strategy Simplified Resources Cost Advantage Value
Creation
Distinctive Competence
Differentiation
Advantage
Capabilities

8. What is Strategic Success?
Delivering high value results to significant stakeholders
Financial Success = Market Value; ROI
Operational Success = Costs; Quality
Customer Success = Value Added
Workforce Success = Q.W.L.; Performance

9. What is “Strategic Competitive Advantage?”
Enacted or Utilized Distinctive Competency that:
Allows the organization to differentiate itself from competitors
Cannot be readily duplicated or imitated
Provides a positive economic benefit(s)

10. Action Item #1 Building the Strategy
What Resources does your organization have?  
What are your organization’s Key Capabilities and Competency?
How are the resources, capabilities and competencies used to create value (the strategy)?

11. Strategic Success Chain
The Ultimate Goal is Survival Sustainability Goes beyond the traditional financial measures of firm performance and shareholder value - focused on achieving high levels of success in the short term without compromising the future

12. Strategic Success Chain
Strategy Execution
Competitive Advantage
Sustainability

13. Strategy Execution
Enacted responses (behaviors) to internal requirements and external constraints by individuals and teams based on the existing capabilities in the workforce moderated by the underlying culture of the organization that drives organizational performance
We will see this again later!

14. Competitive Advantage Human Capital Components
Strategy Execution
Competitive Advantage
Sustainability
Human Capital Components
Human Capital Capabilities
Human Capital Behaviors
Workforce Culture
(Performance Drivers)
Pivotal Positions
Pivotal Talent Pools

15. Constructing Human Capital Architecture
Strategic Direction
Pivotal Talent Pool(s)
Pivotal Position
Strategy Execution
Pivotal Role Challenges
Implement & Adjust HCA
Capabilities
Behaviors
Culture
Congruence and Consistency of HCA Components

16. Step #2
Effectively Managing, Talent Pools, Human Capital and Pivotal Positions

17. The Secret Revealed!
What is the SECRET of obtaining a Strategic Competitive Advantage?
Not just having a strategy
but executing the strategy
All depends on the Human Capital Architecture to enhance the exploitation of these resources and capabilities.

18. Human Capital & Strategy Execution
Resources + Capabilities = Human Capital
Systems + Processes + Practices = Human Capital Architecture
Human Capital X Human Capital Architecture = Strategy Execution

19. Talent Segmentation
Talent segmentation involves identifying pivotal talent pools where human capital makes the biggest difference to strategy execution
Where would a significant improvement in quality or availability make the BIGGEST difference to strategy execution?

20. Pivotal Talent Pools
Talent segmentation is as vital as customer segmentation
Pivotal Talent Pools are embedded in the Primary and Support activities of the Value Chain

21. The Value Chain

22. Research & Development Group
Critical Outcomes for Strategy Execution at Big Pharma 1. New Product Applications 2. Reduce Time to Market

23. Focus on a Strategic Business Unit at Big Pharma
Strategy Execution
Enables the Value Proposition for Stakeholders
Operations
Research & Development
Marketing
Human Resources

24. Pivotal Talent Pools
Identify two pivotal talent pools in your organization using the “Value Chain Model”

25. Constructing Human Capital Architecture
Strategic Direction
Pivotal Talent Pool(s)
Pivotal Position
Strategy Execution
Pivotal Role Challenges
Implement & Adjust HCA
Capabilities
Behaviors
Culture
Congruence and Consistency of HCA Components

26. Pivotal Talent Pool Critical Outcome A? Critical Outcome B?
Action Item #2 Pivotal Talent Pools and Critical Outcomes (from item #1)
Pivotal Talent Pool Critical Outcome A? Critical Outcome B?

27. The Importance of Human Capital
Pivotal Talent Pools Pivotal Positions Determine the Pivotal Positions to Deliver Strategy Execution

28. Social networks (capital) Desire and visions
What is Human Capital?
Talents and abilities
Knowledge and skills
Social networks (capital)
Desire and visions

29. Human Capital Defined
The collective sum of the attributes, life experience, knowledge, inventiveness, energy, and enthusiasm that people choose to invest in their work Weatherly 2003

30. Human Capital Has Value
“People are our most valuable asset INVESTORS!”
PROVE IT! Must be demonstrated by management practices and actions that compose the Human Capital Architecture

31. Human Capital and The Bottom Line
To create value through Human Capital requires a fundamental change in how it is recognized and managed in most organizations.
The firm’s human assets have a value that corresponds to the present value of future net cash flows and are derived from the skills, motivation and adaptability of the firm’s workforce.

32. Constructing Human Capital Architecture
Strategic Direction
Pivotal Talent Pool(s)
Pivotal Position
Strategy Execution
Pivotal Role Challenges
Implement & Adjust HCA
Capabilities
Behaviors
Culture
Congruence and Consistency of HCA Components

33. What is a Pivotal Position?
Not necessarily the highest paid/ranked position
Not necessarily most critical
Not necessarily the most common/number
Not necessarily the most visible
Not necessarily the most obvious
Not ever a person

34. Talent Segmentation
Talent segmentation is as vital to strategic success as customer segmentation.
Talent segmentation involves identifying pivotal positions where human capital makes the biggest difference to strategy execution

35. Pivotal Positions
Positions in the organization where quality or availability of human capital makes the biggest difference to strategy execution
Positions that leverage the strategy execution

36. Pivotal Positions
Those talent pools that with a 20% improvement in quality or availability (quantity) would make the biggest difference in strategy execution and organizational success

37. Drill Down More Research Scientist
What are the Pivotal Positions for executing strategy?
Provides the most significant (relative to others) improvement in strategy execution
Leveraged by the HCA
Research Scientist

38. Talent – Performance Yield
Yield Curve - understanding where differences in quality or quantity of talent and organization have the greatest impact on strategy execution (steepness, elasticity, D, slope) Find the Pivotal Position

39. Yield Curve Big Pharma Strategic Value Best RS 20% Worst RS
Worst Sales Rep
Best Sales Rep
Strategic Value
Sales Representative
Best RS
Research Scientist
20%
Worst RS
Performance

40. Finding Pivotal Positions
Clearly understanding where differences in quality or quantity of the talent pool will have the greatest strategic impact (steepness, elasticity, D, slope)

41. Action Item # 3 - Finding YOUR Pivotal Positions
Identify a Pivotal Position from within the Pivotal Talent Pool. Provide a rationale for this selection based on the critical outcome for strategy execution from Action Item #1

42. Step #3
Pivotal Role Challenges: The Performance Drivers of Strategy Execution

43. Constructing Human Capital Architecture
Strategic Direction
Pivotal Talent Pool(s)
Pivotal Position
Strategy Execution
Pivotal Role Challenges
Implement & Adjust HCA
Capabilities
Behaviors
Culture
Congruence and Consistency of HCA Components

44. Talentship
Talentship requires a redefinition of the traditional service role of HR managers in organizations.
This involves a process of "talent segmentation" and the need to focus managerial attention on "pivotal positions". 

45. Research & Development Group
Critical Outcomes for Strategy Execution at Big Pharma 1. New Product Applications 2. Reduce Time to Market

46. Pivotal Role Challenges – Research Scientist
New Product Applications
Discovery of unique and patentable uses of existing products
Identify new markets for existing applications
Seek and process information from diverse sources

47. Pivotal Role Challenges
Performance Drivers
Pivotal Role Challenges
Culture
Behavior
Capability

48. Finding Performance Drivers
Starting with the critical talent pools focus down to pivotal positions
Within that position look for the pivotal role challenges
Identify the specific capabilities, behaviors and culture necessary to succeed at the pivotal role challenge.

49. Strategy Execution
Enables the Value Proposition for Stakeholders
Identify the required Culture & Mix of Capabilities & Behaviors
Behavior
Capability
Culture
Determine the most critical Capabilities, Behaviors, and Culture to support Strategy Execution for the Pivotal Position

50. Constructing the Factors of Strategy Execution
Capability = knowledge, skill, ability or competency inherent in a unit of human capital
Behavior = Actions, reactions, interactions exhibited by a unit of human capital
Culture = a system of shared values, understandings and affect that distinguishes the unit that contains human capital

51. Finding Performance Drivers
Capabilities – Nouns;
Capabilities are either resident in the human capital or can be acquired through knowledge management interventions
Capabilities can be bought or they can be made.

52. Finding Performance Drivers
Behaviors – Verbs;
Behaviors are conscious and sub conscious actions of human capital units
Behaviors originate at the individual level and have intensity, direction and persistence

53. Finding Performance Drivers
Culture Prototypes
Innovation, Risk Taking
Attention to Detail
Outcome Orientation
People Oriented
Team Oriented
Aggressive
Stability

54. Strategy Execution
Enables the Value Proposition for Stakeholders
Creates a Culture & Mix of Capabilities & Behaviors
Behavior
Capability
Culture
Determine the most critical Capabilities, Behaviors, and Culture to support Strategy Execution for the Pivotal Position

55. Example: New Product Applications
Capabilities: 1. Deep knowledge of specific products, 2. Creativity and Innovation Skills,
Behaviors: 1. Scans multiple sources for potential applications beyond present uses, 2. Share tacit knowledge with the team
Culture: 1. Innovation and risk taking, 2. Team orientation

56. Action Item #4 Critical Challenges & Performance Drivers
Role Challenge to deliver the critical outcome for pivotal position
Performance Drivers
Capability
Behavior
Culture

57. Understanding the Human Capital Architecture and Strategic Alignment
Step #4
Understanding the Human Capital Architecture and Strategic Alignment

58. Human Capital Architecture
The unique combination of practices, policies, and procedures that the organization uses to procure talent, develop talent, manage performance and reward performance of the human capital employed to deliver strategy execution.

59. Constructing Human Capital Architecture
Strategic Direction
Pivotal Talent Pool(s)
Pivotal Position
Strategy Execution
Pivotal Role Challenges
Implement & Adjust HCA
Capabilities
Behaviors
Culture
Congruence and Consistency of HCA Components

60. Human Capital Architecture
Procurement & Retention

61. Procurement & Retention
Buying Human Capital
A procurement function
An inventory management and valuation function
Matches human capital resources to needs
Provides for retention and divesting of human capital

62. Human Capital Architecture
Procurement & Retention
Knowledge Management

63. Knowledge Management Creating Human Capital
Matching competencies and skills to strategic needs
Capturing, maintaining, allocating and protecting knowledge
Preparing for the future

64. Human Capital Architecture
Procurement & Retention
Knowledge Management
Performance Management

65. Performance Management
Measuring the critical behaviors that support strategic success
Evaluates the effectiveness of staffing
Identifies training & development needs
Evaluates the effectiveness of training & development
Provides a basis for allocation of rewards

66. Human Capital Architecture
Procurement & Retention
Compensation & Rewards
Knowledge Management
Performance Management

67. Compensation & Rewards
Provides a culture and mind-set to support strategic execution
Encourages critical behaviors
Attracts critical and capable human capital
Retains effective and removes ineffective human capital

68. Why is Human Capital Architecture Critical?
Provide a basis for a sustained competitive advantage
Things like financial structure operational processes and technology can be easily copied or purchased

69. The Key Question is…
What is the appropriate Human Capital Architecture required to support pivotal positions to successfully execute strategy?

70. Strategy Execution Enables the Value Proposition for Stakeholders
Creates a Culture & Mix of Capabilities & Behaviors
Behavior
Capability
Culture
Human Capital Architecture is the Unique Differentiated Mix for Pivotal Positions
Procure & Retain
Knowledge Mgmt.
Perform. Mgmt
Comp. & Reward
Enables Strategy Execution by Creating and Supporting Performance Drivers

71. Action Item # 5 HCA Components
Procurement & Retention
Compensation & Rewards
Knowledge Management
Performance Management
Identify 3 or 4 Components of Human Capital Architecture for each of the pivotal positions in your organization

72. Step #5
Designing the New Human Capital Architecture – Vertical Alignment & Congruence

73. Align HC Architecture with HR Deliverables
Congruence is the causal linkages between the HR systems and the realization of the strategic competitive advantage
Consistency is the extent to which the HR policies and practices interact and support the other HR policies and practices

74. Constructing Human Capital Architecture
Strategic Direction
Pivotal Talent Pool(s)
Pivotal Position
Strategy Execution
Pivotal Role Challenges
Implement & Adjust HCA
Capabilities
Behaviors
Culture
Congruence and Consistency of HCA Components

75. Congruent & Differentiated
Vertical Alignment:
Differentially Constructed for the Pivotal Position
Human Capital Architecture
Performance Drivers
Strategy Execution

76. Vertical; Congruence with Strategy Execution
Enables the Value Proposition for Stakeholders
Creates a Culture & Mix of Capabilities & Behaviors
Behavior
Capability
Culture
Vertical; Congruence with Strategy Execution
Human Capital Architecture is the Unique Differentiated Mix for Pivotal Positions
Procure & Retain
Knowledge Mgmt.
Perform. Mgmt
Comp. & Reward

77. Vertical Alignment - Congruence
Retain practices that have the most significant impact on strategy execution.
Remove or modify practices that have a negative impact on strategy execution
Ignore or modify practices that have no impact on strategy execution

78. Vertical; Congruence with Strategy Execution
Enables the Value Proposition for Stakeholders
Creates a Culture & Mix of Capabilities & Behaviors
Behavior
Capability
Culture
Vertical; Congruence with Strategy Execution
Human Capital Architecture is the Unique Differentiated Mix for Pivotal Positions
Procure & Retain
Knowledge Mgmt.
Perform. Mgmt
Comp. & Reward
Horizontal; Consistency across HCA Components

79. Designing an Effective Human Capital Architecture
Remember the prize ! Develop an integrated mix of human capital architecture components that is differentiated to deliver the performance drivers for the pivotal positions to execute strategy Vertical Alignment; Congruence Horizontal Alignment; Consistency