THE ESSENTIALS OF A HUMAN CAPITAL STRATEGY | Addressing the Human Capital Crisis in the Federal Government: A Knowledge Management Perspective

Various solutions have been proposed for partially resolving the government's human capital crisis. For example, David Walker, Comptroller General of the U.S., in his E-Gov 2001 speech entitled "Efforts to Address GAO's Human Capital Challenges," mentioned various legislative reforms that would need to be done, including broadbanding systems for mission staff, expected hiring authority (e.g., internship program), special pay rates, senior level for technical staff, targeted early-outs and buyout authority, revised reduction in force rules, and the like. Others concerned about the federal human capital crisis have discussed ways of bringing back retirees in knowledge retention and mentoring roles, and having programs where industry-government exchanges of personnel for some periods of time could be made. Whatever combination of human capital strategies is utilized, the underlying foundations should at least include the following:

Competency management: What competencies/knowledge areas should the organization's workforce know?
Performance management: How can these competencies be transformed into performance?
Knowledge management: How can the institutional memory of the organization be built before employees leave the organization?
Change management: What needs to be done, from a cultural viewpoint, to stimulate and achieve change in the organization?

According to the 2002 book Competency Management in the Public Sector (edited by S. Horton, D. Franham, and A. Hondeghem, IOS Press), competency management is increasingly being adopted as an approach to human resources management in both the private and public sectors. Much of the competency management movement can be traced from the 1980s in the United States and the United Kingdom. In the U.K., for example, a holistic approach to competency management in the Senior Civil Service is used, and there is also widespread use throughout the rest of the service. In France and Germany, however, competency management has just recently appeared on the reform agenda.

Competency-based management is being used in the Public Service of Canada. According to The Framework for Competency-Based Management in the Public Service of Canada (Treasury Board of Canada and the Public Service Commission, December 1999), competency-based management is the application of a set of competencies to the management of human resources to achieve both excellence in performance and results that are relevant to the organization's business strategies. Competencies refer to the knowledge, skills, abilities, and behaviors that an employee applies in performing his or her work. According to the Public Service Commission of Canada, competencies differ from qualifications because of the linking of competencies to the strategic objectives and capabilities of the organization, and because competencies can be used to track performance in all human resources areas (including training, development, performance management, and succession planning—not simply resourcing). Competency profiles can be developed as a set of competencies that includes associated behaviors that link directly to overall strategic priorities and the work that needs to be done to achieve them, as well as to levels of proficiency for each behavior (http://www.tbs-sct.gc.ca/hr_connex-ions_rh/sigs/CBHRM/framework_cbm/fcbm1_e.html).

In 1998, the Public Service Commission ran a study surveying fifty-seven organizations within the Canadian federal sector to determine the interest in and status of competency-based management. At that time, thirty-two organizations had launched competency-based projects for at least one human resource application. Many private sector companies have also followed suit. Companies using competency-based management approaches generally have (http://www.tbs-sct.gc.ca/hr_connexions_rh/sigs/CBHRM/framework_cbm/fcbm1_e.html):

Based competencies on their corporate culture, values, and business strategies to enhance competitive advantage;
Used the executives of the organization and the business mission and strategies as starting points for identifying a specific direction and consistency in applying competencies;
Defined competencies in terms of how performance could be enhanced by applying job-specific skills and behaviors;
Positioned competency-based management as part of an overall business strategy or change process, and not as a stand-alone end in itself;
Integrated competencies into current human resource systems where the need was greatest, as opposed to revamping programs around competencies;
Aligned actual behaviors with those behaviors that were valued in the organization.

Like competency management, performance management should play a critical role in an organization. In terms of performance management, the U.S. Office of Personnel Management (OPM) has defined performance management as the systematic process by which an agency involves its employees, as individuals and members of a group, in improving organizational effectiveness in the accomplishment of agency mission and goals (http://www.opm.gov/perform/overview.asp). According to OPM, employee performance management includes:

Planning work and setting expectations (set goals and measures; establish and communicate elements and standards);
Continually monitoring performance (measure performance; provide feedback; conduct progress review);
Developing the capacity to perform (address poor performance; improve good performance);
Periodically rating performance in a summary fashion (summarize performance; assign the rating of record);
Rewarding good performance (recognize and reward good performance).

All five of these processes, working together, should achieve effective performance management.

OPM's Handbook for Measuring Employee Performance: Aligning Employee Performance Plans with Organizational Goals (Report PMD-013, September 2001) asserts how performance elements tell employees "what" they have to do and standards tell them "how well" they have to do it. One of the problems with the current employee performance plans in the U.S. government is that the performance elements are typically on a pass-fail scale. By using a pass-fail scale, little feedback is provided to the employee during the typical employee annual performance review. Besides employee performance, U.S. federal agencies are required to develop organizational performance plans under the Government Performance and Results Act (GPRA) of 1993 (OMB Circular A-11). These organizational performance plans:

Establish program-level performance goals that are objective, quantifiable, and measurable;
Describe the operational resources needed to meet those goals;
Establish performance indicators to be used in measuring the outcomes of each program.

Senator Fred Thompson, Chairman of the Senate Governmental Affairs Committee, issued the Thompson Report that looked at how well the U.S. agencies are doing with respect to their organizational performance plans. Committee staff meetings with agency officials and the reviews of agency documents revealed that agencies have not consistently developed performance goals and associated measures that directly address their respective management challenges and high-risk programs (www.whitehouse.gov/omb/circulars/a11/2002). For fiscal year 2001 Performance Plans, "the Committee staff found that 11 of the 24 agencies reported few, if any, specific and readily identifiable goals and measures that directly address their major management problems. Eight of the 24 agencies reported a moderate level of such goals and measures for these management challenges. Only 5 of the 24 agencies reported more extensive goals and measures that directly address these challenges" (http://www.senate.gov/~gov_affairs/102700_Agency-Performance%20Goals.pdf; http://207.27.3.29/gpra/govaffairs/1000report/efforts.htm).

Besides performance management and competency management, knowledge management is a critical component of a human capital strategy. Nick Bontis and J. Fitzenz's article, "Intellectual Capital Return on Investment: A Causal Map of Human Capital Antecedents and Consequents" (Journal ofIntellectual Capital, vol. 3, no. 3, Emerald, 2002), presents research that shows the importance of coupling knowledge management activities with general human resources policy. Knowledge management activities fall along three constructs: knowledge generation, knowledge integration, and knowledge sharing. Their research shows that employee commitment has a positive influence on knowledge generation and that knowledge sharing will occur if value alignment is evident. Thus, their research shows that knowledge management initiatives can decrease turnover rates and support business performance if they are coupled with human resources policies. This suggests that knowledge management and human capital have an important, intertwined role.

Knowledge management involves how best to leverage knowledge internally and externally. The knowledge management steps are typically knowledge identification, knowledge capture, knowledge sharing, knowledge application, and knowledge creation. Usually the Chief Knowledge Officer (CKO) is responsible for spearheading the knowledge management initiatives in an organization. According to Dr. Robert Neilson of the National Defense University and the Federal CIO Council's Subcommittee on Knowledge Management (http://www.fgipc.org/02_Federal_CIO_Council/cko.htm), the role of a CKO in a public sector organization involves focusing the CKO's efforts on an integrated set of activities that address organizational behaviors, processes, and technologies. Dr. Neilson feels that the six competency areas that public sector CKOs should possess include leadership and management, communications, strategic thinking, tools and technologies, personal behaviors, and personal knowledge and cognitive capability (in fact, these competency areas probably hold true for CKOs in the private sector). In Michael Mitchell and Nick Bontis' article "A CKO's Raison D'Etre: Driving Value-Based Performance Gains by Aligning Human Capital with Business Strategy" (January 14, 2000; http://mint.mcmaster.ca/mint/papers/papers.htm), Mitchell and Bontis feel that there are many tools to help CKOs achieve alignment strategies that fill human capital gaps, and that a CKO must be well-oriented to human resources management, IT management, and strategic management. Many organizations use knowledge management to retain key expertise—that is, to preserve the human and intellectual capital in the organization. Thus, knowledge management needs to play a central role in a human capital strategy.

Various knowledge roles for those in an organization can be developed to further support the organization's knowledge management activities and human capital strategy. Michael Berens and the author of this text developed a set of knowledge roles for those at the American Society for Interior Designers. These are shown in the following table:

	Director	Professional	Admin/Support
KNOWLEDGE ROLES (Adapted from J. Liebowitz and M. Berens work at ASID)
KNOWLEDGE IDENTIFICATION & CAPTURE
Identify Knowledge	Identify areas of knowledge that the organization needs to capture. Identify knowledge and knowledge competencies needed to accomplish strategic goals. Identify knowledge deliverables from major projects or efforts.	Identify sources for capturing knowledge as assigned. Identify emerging issues/trends within or affecting assigned organizational segments.	Alert staff to urgent and emerging service issues.
Capture Knowledge	Establish policies for managing knowledge and quality standards for knowledge work. Establish schedules for knowledge capture and reporting. Monitor knowledge contributions of assigned staff for quality and frequency.	Monitor knowledge sources and compile relevant knowledge as assigned. Capture lessons learned and successful practices from major projects and make them available on the intranet. Monitor and collect information from chat rooms and threaded discussions to help identify issues for future research, online communities, and product/service offerings.	Record and compile job-related data and information as assigned. Report lessons learned and successful practices. Post on the intranet and update as necessary relevant information and documentation for operating unit, as assigned.
KNOWLEDGE SHARING
Communicate Knowledge	Facilitate open communication and knowledge sharing throughout the organization. Provide key stakeholders with regular updates/ progress reports on major projects. Ensure that others receive timely and useful communiques of information and knowledge they need to perform.	Provide key stakeholders with regular updates/progress reports on major projects/efforts. Ensure that others receive timely and useful communiques of information and knowledge they need to perform effectively.	Ensure that others receive timely and useful communiques of information and knowledge they need to perform effectively.
Build and Nurture a Knowledge Sharing Culture	Establish crossfunctional project teams and foster collaboration. Recognize and reward knowledge sharing, creation, and use. Encourage and facilitate in-time, on-the-job learning and skills transfer. Practice and promote knowledge sharing across the enterprise.	Establish or participate in communities of interest, communities of practice, or other informal knowledge sharing groups. Respond promptly to requests for knowledge or subject matter expertise, making sure that the response meets the requestor's need. Acknowledge when others share knowledge.	Respond promptly to requests for knowledge or subject matter expertise, making sure that the response meets the requestor's need. Acknowledge when others share knowledge.
KNOWLEDGE APPLICATION
Incorporate Knowledge	Adjust strategy as needed, based on emerging knowledge. Ground decision-making in explicit knowledge. Review evaluations of products, services, and programs periodically, and adjust offerings accordingly.	Gather relevant knowledge objects and assemble necessary expertise to achieve project goals. Look for ways to add and use new knowledge to existing or new products, services, or programs. Recommend modifications to projects or tasks, when needed, based on emerging knowledge. Contribute suggestions for new products, services, and process improvements.	Recommend modifications to procedures or tasks, when needed, based on emerging knowledge. Contribute suggestions for new products, services, and process improvements.
Reuse Knowledge	Maintain and refer to "organizational memory" of how strategy was set or decisions reached.	Consult intranet and other knowledge resources to review lessons learned and proven practices when undertaking new projects and efforts. Use templates and other preformatted materials.	Use templates and other preformatted materials.
KNOWLEDGE CREATION
Create Knowledge	Communicate, reinforce, and clearly link to projects and activities the organization's vision, mission, and goals, to provide context for knowledge application and learning. Identify and synthesize key learnings and report to leadership.	Analyze and synthesize knowledge captured, as assigned, and share learnings. Build and refresh content knowledge and subject matter expertise.	Transfer "new" knowledge into the knowledge repositories on the intranet and website, as assigned.

Closely aligned with knowledge management is change management. There are two schools of thought regarding an organization's culture and knowledge management. One school feels that an organization's culture should be changed first before introducing knowledge management. The second school says to accept the organizational culture as is, and then introduce knowledge management strategies that fit the given organizational culture. Since macro-organizational cultures of large, entrenched organizations (such as the federal government) can take anywhere from ten to fourteen years to change, as Marilyn Parker points out in her book Strategic Transformation and Information Technology (Prentice Hall, 1996), it may be better to take the existing culture as is and then apply knowledge management and change management techniques that would match that given culture (or subculture). The thought here is that by changing some individual behaviors (e.g., through the introduction of knowledge management practices), then over time, the organizational behaviors and culture would eventually change.

According to the Business Process Reengineering Learning Center (http://www.prosci.com/chg9.htm), a study of 254 companies looked at best practices in change management. The general findings were:

The number one contributor of top management is the ability to define and communicate the vision.
Most companies find dealing with resistance the most difficult part of the project.
Many change agents find that their biggest obstacles are the same people who initiated the change in the first place.
A major reason companies use consultants from outside their organization is to avoid political agendas and biases from within their own company.

Resistance to change is a "given" in most organizations, although some people believe that it is the fear of resistance to change that is commonplace in organizations. In looking at human capital strategies, certain processes will undoubtedly change in order to be in better alignment with the organization's strategic mission and vision. As new processes are introduced, change management must be part of the implementation strategy—in fact, if one wants to wait and do change management towards the end of the process, then the processes won't be accepted by the users and will generally fail. The users (i.e., those individuals who will be affected by the processes) should be involved in all phases of design, development, and implementation (from the requirements generation through implementation and maintenance). In the information systems field, many systems have failed due to the "parachute philosophy" of "throwing the system over the wall and hoping that the users catch it." Change management practices need to be discussed and applied during the entire life-cycle process. Otherwise, the human capital strategy and "new processes" might be a "technical success," but a "technology transfer failure."

Let's take a case in point: NASA is introducing throughout the Agency the Integrated Financial Management Program (IFMP), which is one of its highest priority projects. According to the main website for IFMP (http://ifmp.nasa.gov), "The mission of IFMP is to improve the financial, physical, and human resources management processes throughout the Agency. IFMP, under the auspices of the Office of Chief Financial Officer, is reengineering NASA's business infrastructure and implementing enabling technology to provide better management information for decision-making." Change management has been recognized as a critical component of making IFMP successful. According to NASA (http://imfp.nasa.gov):

IFMP change management is the process of aligning NASA's people and culture with the impending changes in the Agency's business strategy, organizational structure, and systems. Such changes will inevitably affect the daily lives of NASA employees and managers, compelling them to change the way they do their jobs, and how they regard their roles. IFMP change management efforts will help NASA's people understand why change is happening, how change will affect their daily lives, and what they must do to succeed in the new IFMP environment. Failure to include change management in a program the size of IFMP is a major risk to program success; even the best and newest software will not help an organization if nobody wants it or understands how to use it.