Human Capital Management In IT Strategic Planning

arrangement of colorful game pieces symbolizing team of peopleShould I be surprised a subject like human capital management resulted in my spending the better part of yesterday being totally unproductive? Well I am not too surprised and sitting here right now I am actually feeling pretty good about it.

Our Greatest Asset

It seems you can’t read an organization’s human resources career site or a strategic plan these days without finding a declaration in the mission, vision or values on the importance of the organization’s people – their human capital.

  • We value, challenge and reward our people
  • Our people are our greatest strength/asset
  • We recognize that people are our key asset.

What if these sentiments were more than just obligatory human resources messaging? What would it look like if you found an organization, particularly and IT department, where they walked the human capital talk? What evidence would there be showing the IT staff were the department’s greatest asset?

Answering these questions is where I began to lose my day.

Human Capital Management

Human capital management for some it is about aligning the goals of the employees with the goals of the organization. For others it is a strategic approach to managing people that focuses on their knowledge and skills and their ability to develop and innovate.

Human capital management (HCM) is more than just talent management as it considers the strategic use of human resources. Many CIO’s have likely already heard of human capital management due to a number of major software companies  entering this space with new HCM product offerings. Companies like Workday offering a SaaS solution while others like SunGard are adding HCM to traditional products.

What would a human capital management plan look like for an IT department which saw its people as the most valued asset?

IT Strategy for Human Capital

IT Strategic Planning Model showing components of the IT plan driven by businessThe IT strategic planning model I use includes a Resource Plan as one of its main components. The Resource Plan address the required financial and human resources to support the other components of the IT strategy.

This model recognizes the strategic importance of human resources and the necessity to plan for staff development in support of other planned changes. This approach includes consideration of growing new leaders and ascension planning. It requires contemplation of any human capital risks which might exist and the need to mitigate those risks.

In plain terms, the strategic planning model I prefer to use forces CIO’s to do comprehensive strategic planning. It requires a strategic plan to address the IT trinity – People, Process, and Technology.

But in practice, very few IT strategic plans even touch on human capital strategies or staff development let alone Process. Clearly this doesn’t square with People being the most valued asset. Perhaps it is even evidence of viewing the IT staff as the least valued IT asset.

IT Assets Relative Value

When you consider the employee retention rates in higher education and in particular those for public institutions, CIO’s must anticipate every new hire is a long term investment. That might mean a hiring decision that affects the next 20 or 30 years.

By comparison, your enterprise application investment decisions might be with you 15 years or more but will constantly evolve and add new capabilities. Similarly, your servers, storage, and end user devices might last you 5 years before being replaced. The exception here is structured cabling, data center systems and some network systems will have somewhat longer life cycles.

And yet, the amount of time, money and thoughtfulness that goes into a software or system selection far exceeds that of acquiring the human resources. Not to mention the fundamental talent management question of growing talent or buying it is often never addressed. Compounding the problem is the ongoing emphasis on the technology in strategic plans with little or no thought for the human capital requirements.

Further evidence of the disconnect on the strategic importance of human capital management in IT is the lack of funding in operational budgets to support staff development. This is the point source of the IT department death spiral that plays out in so many shops.

Buy some new technology but don’t fund formal training of staff. Pay the vendor to implement it, and provide a day or two of knowledge transfer. Fire fight technical problems and pay the vendor again to fine tune or fix the issues and do some more knowledge transfer. IT credibility suffers, morale tanks and you repeat it on the next purchase.

This is completely upside down given the dependency between technology implementation, operational success and the capability of the human capital who do the work. This is the core of a sustainable technology ecosystem.

Now What?

So where do we go from here? One thing might be to examine your own strategic plan and budgets using one of the assessment approaches I have described. Just do a quick tally of the dollars and initiatives targeting People, Process, and Technology. If your strategy and budget are like most, the People focus will be conspicuously absent.

For me , I am going to continue think about this and hope you will take a minute and share your experience and thoughts with a brief comment. If you do get a tally, please consider sharing your results.

Image Credit: Copyright (c) 123RF Stock Photos

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6 Responses to Human Capital Management In IT Strategic Planning

  1. This is a subject that has always been at the forefront of my thoughts while working at various colleges and universities. Budgets are tight, I get that, but there never seems to be any emphasis on staff education. Funding to the levels that is needed for staff, particularly the IT staff, is difficult to justify with all the other funding that is allocated to the IT department from a capital aspect. The ability to justify operational funding, especially on-going education, versus capital funding (which runs into the hundreds of thousands of dollars) is something that the CIO has to be able to ‘sell’.

    As an example, let’s assume an IT department in a medium size institution is about 15 – 20 people including management. Given that the cost of a class for any given ‘technical’ resource is about $3,000 before travel, meals, and other expenses. If you only provided one class per staff per year, you would have to allocate between $45 – $60,000 as a base for education. Now, let’s assume that these classes and expense are closer to $5,000 per class. We quickly are in the $75 – $100,000 range. To get a single line item called training or education is almost impossible which seems a bit of an oxymoron at institutions whose main “business” is education. Institutions spend hundreds of thousands of dollars on ERP systems, infrastructure, and ‘high’ tech implementations but will struggle with funding the education of those that are delegated with maintaining and making sure that these crucial elements are available on a 24 x 7 basis.

    But that mindset is not limited to just institutions of higher learning but appears to be prevalent across the board with businesses. There are some that actually do put their staff first as they realize the benefits on the backside; but those seem to be rare in today’s bottom line world. I read a great article this week (http://www.linkedin.com/news?actionBar=&articleID=924066459&ids=0ScjgNd30UczAIc3wRc3sRdP8Vb3ARd3oSc3gOeiMPd3kNc3wTczAIdPcUejoPd38V&aag=true&freq=weekly&trk=eml-tod-b-ttle-96&ut=1h2U7a5jkxe501) in which Steve Job’s thoughts were captured. To take a small excerpt from this article, “He’s (Steve Jobs) at the end of his life and is summing things up. His mission, he says, was plain: to “build an enduring company where people were motivated to make great products.”

    The key words in this excerpt is “where people were motivated”, Steve wasn’t concerned about the bottom line as much as keeping his people motivated to be innovative, create the next big thing, and to continue to improve on products that were already in the market from Apple. The “bottom line” would take care of itself if the people remained excited about what they were doing.

    In IT it is very easy to get in a rut of doing the same thing day in and day out. The job of IT management, especially the CIO, is to find ways to make everyday special for every staff member, to keep them motivated to provide the highest level of service (desktop, help desk, network, systems, database, applications, etc.) every day. The last thing you need is staff that are only showing up to collect a paycheck for the next 20 – 30 years. There has to be something that the staff is looking forward to, something that motivates them to excel.

    Human Capital Management, as stated previously, goes beyond hiring and firing, it speaks to retention and elevation, training and educating, and it also means providing and creating an environment where these invaluable resources ‘feel’ wanted.

  2. The Higher Ed CIO says:

    This is a very thoughtful summation of an all too common scenario. I realize this problem is not confined to IT as all training budgets get slashed. But in many organizations, the requirements of the job, or at least its tools are not always in a state of change which warrants most IT resources getting constant training or things begin to suffer. Thanks again Richard for your contribution.

    PS – Hopefully tomorrow I can share the companion piece on Human Capital Risk…

  3. Barry Wiech says:

    One technique I have used in the past to go beyond the training budget is to build into projects and initiatives training prerequisites for staff either in implementation or support of the end solution. These training requirements are costed into the project and scheduled as a deliverable and measured as a success factor of the project.

    Use the traditional training budget as a foundation for staff career development and advancement but offset with these project based training initatives to fill out the required training and development for each staff member.

    It is a challenge but it can work as long as the value of the training is demonstrated through the outcomes of the project or through the support offerings post implementation. With demonstrated value (through higher quality, better SLA’s or support capability etc) business sponsors are likely to accept these costs as part of the project.

  4. Barry… I totally agree with your idea on adding training/education into the cost of the projects whether that is a network upgrade or an applications upgrade. One of the concerns is that the added costs of the education, depending on how many staff need to attend, may greatly exceed the original anticipated costs of the project; otherwise, this is the perfect way to get the education the staff need to perform their duties at the highest levels.

    What were need to continue to sell, and it is a selling atmosphere when it comes to getting the allocated funds for projects (especially one’s that you can get education included), is to constantly remind your distractors that when a new or upgrade to an application occurs, it is usually assumed that the IT department will be responsible for setting up and conducting the training/educating for all of the other departments. Knowing this, it is even more important that the skills of the IT department are constantly upgraded, updated, and properly funded as the dividends come back tenfold when we understand the number of staff that are affected by IT’s ability to transfer the knowledge to the other departments.

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