Archive for the 'Human Capital and Capabilities' topic

Why do we have such a problem relating knowledge to our business needs?

Enterprises have a well-known problem in relating knowledge to business needs.This is because enterprises do not organize and manage the business. Dead-end 20^th century management used today lays organization, business process, administration, and a variety of other structures over the business to manage the enterprise. Knowledge is not related to the business; knowledge is related to contrived structures laid over the business, such as an index of subjects and topics.

The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Knowledge is capital consisting of specific solutions of worth utilized to improve the utilization of other solutions for cost and effectiveness of performance to produce value and quality in results. Knowledge is human capital that increases human personnel capital worth by improving their performance in utilizing various capital solutions effectively and producing higher value-quality results. Knowledge is used to develop specific human capability solutions that are utilized to produce specific difficult results to be of high value-quality,

Enterprises need a systematic way to identify specific business results that must be supported by knowledge, identify specific capital solutions that must be utilized properly to produce the result, define the precise knowledge needed, to relate knowledge to the capability of the user applying the knowledge, to link knowledge to where and by whom it is needed, to understand the value created by knowledge that gives worth to the knowledge, and to get feedback and improvement on the knowledge. This can only be done by managing the actual business.

There are many problems inherent in knowledge management today

Many enterprises make large investments in knowledge, but 20^th century methods that we use to manage knowledge limit the value created and the return of the investment:

• Knowledge is labeled as intellectual capital or intangible assets to relieve us of the responsibility to manage knowledge as an asset of worth
• Knowledge is organized by topics or subject matter, which depend on someone referencing the topic to their job or function to put knowledge to use
• Knowledge is human capital to improve human capability, but it is rarely managed as human capital
• Knowledge is delivered through learning, but learning material is often separate from knowledge
• Knowledge is information capital to contribute to the overall business information base, but is usually separated from other information
• Knowledge is not integrated with the business to be utilized as a capital solution to produce value for the enterprise
• Knowledge gains worth by creating value in business results, but results are not managed and only a few results are supported directly by knowledge

Conventional methods hamper the application of knowledge by using structures that are defined through various contrived entities like department, activity, and object, while organizing knowledge by topic, subject, etc. These fundamental problems prevent knowledge from being leveraged to be high-worth capital utilized in a managed business.

Knowledge is human capital that enables other human capital to utilize specific capital solutions to produce specific results

Knowledge is human capital that must be created and managed specifically to increase human capital worth through the value of results produced. Knowledge is also information capital that must be integrated with business data and delivered where needed to produce specific results and to support human capabilities utilized. [more...].

Human resource development and management does not develop human capital precisely to produce valuable results and increase in worth

There is a lot of talk and writing about human capital, intellectual capital, knowledge management, and other means to improve the capabilities, productivity, and output of human capital. Despite the talk and writing, companies have never been able to integrate business process capability requirements, human capital capability development, qualified human capability deployment, human performance and cost, the value created by human performance, the value-added by human capabilities, and the worth of specific human capital.

Many companies proclaim that their people are their most important asset. But most of the companies manage human resources as employees, rather than managing human capital as assets. Many common human resource structures actually stifle human capital with contrived organizations and positions, position or job descriptions, salary scales, and career plans.

We can manage human capital effectively by managing the utilization of all capital in business performance to produce business results

The fundamental problem of 20^th century enterprise management used today is the failure to manage the business. The enterprise is managed through organization, planning, accounting, human resource management, performance management, and other structures laid over the business. The actual business is defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Investments in capital include human capital solutions in the personnel utilized, human capabilities developed, and human knowledge support developed.

All human capital solutions are utilized in business performance to produce specific business results. [more...].

20^th century enterprise management administers human resources

20^th century enterprise management provides the human resource function to administer human resources. Human resources provide administration for recruitment, actions, payroll, and some development functions. While human capital may be called human capital, rarely is there any real effort to develop humans as actual capital solutions to meet the specific business needs and increase individual human worth to the enterprise.

20^th century enterprise management cannot develop and apply human and knowledge capital directly to the business

Some more advanced companies try to develop human capital, but as humans rather than as the specific capital solutions needed by the business. They are at a disadvantage because the business is not organized to define specific business needs, to understand where special capabilities are required in the business, to understand the value created in the business through application of human capabilities, and the added worth of human capabilities through value creation.

Rule No. 8 of 21^st century business management: Manage human personnel, capability, and knowledge capital to increase human worth

21^st century business management organizes the business results produced and human capital as specific solutions to be utilized to produce specific results. Rule No. 8 requires that human capital be identified as specific capital solutions utilized to produce business results, investments be made to develop human capital to increase the value of assigned results, human capital performance be managed against the results produced to increase human worth, and that human reward be a commensurate part of proven human worth to the business. As part of this rule, there are business management principles for strong human capital management:

• Define economic output results that must be produced across the business and those high-value results that require specific human capability solutions
• Analyze the business process to produce difficult high-value results and describe how human capabilities must utilize the process
• Define specific high-worth capabilities to produce high-value results as capital solutions for specific human knowledge and human capability development
• Focus human capital on results, so that they always know the results expected and how to apply their capabilities to produce results
• Develop human capabilities as specific capital solutions to produce specific high-value results
• Support human capital with knowledge capital to utilize specific capital solutions to produce specific results
• Let human capital know the value of their results and how their performance can add value to results
• Let human capital know the relationship between the value added to results produced and their worth to the enterprise as human capital
• Compensate and reward human capital in accordance with their human capital worth

Strategic human capital development develops the capabilities described in the business process and the knowledge required to produce new high-value strategic results. [more...].

The enterprises, where we work, do not manage the business

Enterprises today do not manage the business, which is defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Instead of organizing the actual business, an organization structure organizes people, positions, functions, and reporting relationships and is laid over the business. The organization structure is the fatal error of 20^th century management. Once an organization structure is laid over a business, the business cannot be managed. The enterprise is managed using process, function, account, performance management, activity, and other structures laid over the business.

We utilize our capital in our performance to produce results naturally, utilizing common sense

We all know how to manage a business. We naturally manage our personal business using common sense. We do not lay organization charts, business processes, or functional procedures over our personal business. We manage our personal business as a chain of results to be completed: such as up and dressed, breakfast prepared, breakfast consumed, and arrived at work. In order to complete each result, we utilize our personal capital in our time, capabilities, knowledge, possessions, supplies, tactics, and process followed. [more...].

Human capital is administered as human resources and their worth in the value added to the business is unknown

In most enterprises, human resources are administered as employees and are assigned to positions in organization units. There is no way to measure the value they produce, evaluate performance costs against the value created, assess their worth as human capital, or to develop them to increase their worth and provide measured increased value to the enterprise. Administered employees do not have a defined stake in the enterprise.

The economic crisis shows that banks and other corporations do not plan, manage, and account for human worth in the value-added to the corporate business, giving rise to perceived unmanaged executive compensation and staff rewards. The only way to eliminate the problems that caused the economic crisis is to manage the business and to manage human capital as part of the business.

20^th century human resource management methods prevent good human capital management

There is a lot of talk about human capital, intellectual capital, knowledge management and other means to improve the capabilities, productivity, and output of human capital. But, each item is treated separately. We try to manage human performance, but have no framework to understand real human performance related to measured value to the business. We try to develop human capabilities, but have no framework to relate human capabilities to specific business needs. We have no way to integrate human capital performance with the value created and the worth of human capital.

We must manage the business to manage the worth of capital in development costs and the future value added to results produced

Before we can manage human capital properly, we must organize the business for 21^st century management. The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. We must identify and organizes the results needed for business success, the human and other capital solutions needed to produce results, and performance in the utilization of each solution to produce each result. We must manage the development and utilization of specific human capital solutions to produce measured result value, to increase capital worth, and justify increased performance costs.

We must improve human performance by managing the results humans produce

The key to making human capital a high-worth asset is to manage the results our enterprise produces related to human and other capital utilized. [more...].

Our personal business is the way that we organize and manage our daily life

Each of us has our own personal business that must be organized and managed just to get things done in our daily life. Our personal business is the same as an enterprise business in “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. We invest in capital such as a home, auto, belongings, purchased supplies, magazines, personal improvement, services, and other solutions the same as an enterprise. We utilize this capital as specific solutions in our performance to produce our personal results, such as a good nights sleep, arrived at destination, clean house, investment income, healthy body and mind, cleaned suit, etc.

We organize our personal business naturally

We have things to accomplish, whether it is a prepared breakfast, entries in a “to do” list, items purchased, or going out for a good time. Each thing we accomplish is a result. We do not consciously think of them as results, we just accomplish them naturally. The results we produce are distinct outputs or accomplishments that can be described and counted.

In order to produce results, we must perform or execute some actions ourselves or through automated means. Performance itself is not enough, we must utilize some of our personal capital. [more...].

20^th century management administers the human resource function

Today’s 20^th century management generally administers human resources as employees. Human capital management is talked about, but is not truly understood and is rarely put into practice. Since the business is not managed, human capital can not be managed as a part of the business. Humans tend to be assigned to a responsibility center to be managed by a specific manager, with human utilization and development depending on the outlook of the manager.

Human and knowledge development tend to be directed at the general needs of the enterprise, rather than the specific needs of the business. Humans are not developed and utilized as enterprise capital to create the highest value and to increase human capital worth.

R-pM manages human capital worth to produce result value-added for 21^st Century Management

Result-performance Management (R-pM) organizes the business for 21^st Century Management. R-pM follows 21st Century Management conventions, definitions, and standards to enable business collaboration and integration, common solutions and outsourcing, and an environment for human capital development that can be applied to any business. R-pM includes fundamental principles to improve the worth of human capital and the value-added to business results:

• Enterprise capital is organized by the human capabilities required to manage, develop, and support the capital
• Enterprise result sets are organized to utilize a common set of performance solutions, particularly human capability and outlook
• Human capital is organized as one category to be managed by those with human management and development capabilities
• Human personnel is readiness capital to maintain human capital ready to produce a set of results under a result management responsibility
• Human capability is production capital to define the capabilities needed by the business process for difficult high-value results to acquire or develop specific capabilities needed by the business
• Human knowledge is information capital to create and manage the knowledge to develop capabilities, and to utilize specific performance solutions to produce specific results
• Human capital worth is increased by additional capabilities developed and knowledge established through knowledge creation to produce results
• Human capital worth is assessed against the known result value-added produced and other factors to ensure that human remuneration is in line with the value created in the business

Human capital is the most difficult to acquire, develop, and manage in any business. R-pM places human capital where they have the interest, outlook, and capability to produce specific results and develops capabilities where humans have the interest, innate foundation, and prior experience.< [more...].

Most of us think of human capital as human resources or the people that are employed in the business. This is one part of human capital. Human capital includes people as human personnel capital.

Human capital also includes the capital that improves innate human performance. This capital includes human capabilities as a separate set that can be developed and managed to produce results. This capital also included human knowledge as a separate set that can be created and delivered to assist humans utilize other performance solutions and produce higher-value results. Human capital is logically defined as “the personnel, capability, and knowledge capital that is mobilized through performance solutions to execute enterprise operations and produce results”.

Logically all capital must be defined as performance solutions to be deployed and utilized to produce a specific result. The post on August 6, 2007, The Logic of Capital Management, provides the background.

Capital utilized by the business is organized into four categories

Capital utilized by the business requires different professional capabilities to be professionally managed, which organizes four categories of capital:

• Business organization, process, and data capital to manage capital that directly produces a result and cannot, generally, produce another result. [more...]

Human Resource Managers are important capital managers

Are you a human resource manager? How do you approach your work? As a routine administration function? As responsibility for the enterprise human capital to ensure that human capital maintained ready to perform, is developed to acquire new capabilities to increase human worth, and provided with knowledge needed to provide value to the business?

If your answer is closer to the latter, you will clearly benefit from R-pM. The impact of R-pM on human resource management is explained in the Human Capital Management Forum, and in human capital articles, such as “Integrate Human Capability Capital with the Business” in 21^st Century Management Magazine. R-pM goes beyond 20^th century human resource administration to provide professional 21^st Century Human Capital Management.

Result-performance Management (R-pM) organizes the business for 21^st Century Management

The means to understand the actual business and the human capital that you support is through Result-performance Management (R-pM). The enterprise business and your business is defined by only two entities:

• Results: The economic outputs that create the value from the business
• Performance Solutions: The human and other capital consumed in performance to generate the costs incurred by the business to produce result value

Even as human capital manager, you manage only these two entities in your business, as a sub-set of the enterprise business. [more...].

Capital Management is the management of enterprise capital in performance solutions to produce results of value needed by the enterprise. Capital management is an important part of 21^st Century Management.

Capital is not managed in 20^th century management

20^th century management does not manage capital. 20^th century management provides administration functions like finance, accounting, human resource administration, purchasing, information technology, and corporate planning to administer selected tangible capital. Most capital is not identified or managed by the enterprise. Much capital is created and used in the enterprise, but is known only in the department that keeps it. Much enterprise capital is assigned to a responsibility center and managed no further. The capital in administrative units is administered rather than managed to provide solutions, control costs, create value, and increase in worth.

Capital investments are not managed to develop specific capital to produce value in results

Enterprises invest significant sums in the capital used, but these investments are not managed to provide the specific returns. The tangible capital is normally developed as a lump sum for an asset or a project. [more...]