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Capability-Building: Getting Learning Programs Right

By Lynnda Nelson, President, ICOR:

Skills can and do expire. In addition to skills, organizations need people who can continually learn and adapt quickly. They need people who are open to new experiences and flexible in their thinking. This has never been more relevant than during the global pandemic.

We will explore how forward-thinking organizations have accelerated their capability-building efforts to ensure its people learn continuously.

Learning and its Relationship to Organizational Resilience
Building a more resilient workforce is one of the many strategies for building a more resilient organization.  It involves implementing systems to increase workforce capacity to handle stress, increase engagement, and manage continuous change.

The organization demonstrates the capability to intentionally work to reduce employees stress, provides opportunities for learning and professional development, and creates a positive work environment.  This paper focuses on how to accelerate learning as an organization by promoting a mindset of continuous learning that encourages and supports its people to adapt and reinvent themselves to meet shifting needs.

What do we mean by “capability”?
Capability is defined as the state of being capable.  To be able, competent, equal, fit, good, qualified, and suitable.  It is about having attributes required for performance or accomplishment. Being capable includes a set of tasks that a person or system is potentially able to perform (acquired skills) at a certain performance level (available capacity).

Capability vs Capacity-Building
In change management, the terms “capacity-building” and “capability-building” are often used interchangeably.  Let’s take a closer look at each to better understand their relationship to each other.

Capacity = the resources you have to complete a task: time, energy, or money.   In the context of transformation, “capacity-building” refers to an individual or organization’s ability to absorb change effectively.  Too often, the pace and scope of changes outpace the organization’s ability to absorb it.  Capacity is a finite resource.

“Capability-building” refers to the skills and knowledge required for a particular task. An organization may have the capacity to change, but lack certain key capabilities.  Building capability by increasing a team’s knowledge and skills can actually help expand capacity – the idea of working smarter, not harder as working through change is the new business as usual.

Defining Business Capabilities
Business Capability is the expression or the articulation of the capacity, materials, and expertise an organization needs in order to perform core functions.  A business capability is the set of tasks or activities that a business function of an organization is potentially able to perform (acquired skills) at a certain level of performance (available capacity).

Strategy (objectives & initiatives) require certain capabilities. Business capabilities describe what a business does and needs to do in response to the defined strategy. They help to close the gap between strategy and execution.

The Business Capability view brings many benefits. With Business Capabilities, you may link execution to strategy, by associating which Capabilities support the strategy pillars, aligning funding to core Capabilities, and assigning, measuring and monitoring key performance indicators.

Learn more: https://www.leanix.net/en/business-capability

Organizations today identify business functions, business abilities, business capabilities and business disabilities via business capability studies.  In practice, a business capability will be formulated more ambitious than an everyday business function, process or ability. For example, 24 x 7 full automated online sales in 100+ countries is a capability. Even if you are not actually doing this currently, but you ultimately could do this, it is a business capability.

The importance of doing a business capability study is:

  1. Identifying which business capabilities are needed because of the new strategy and new competition
  2. Identifying the gaps with the current business capabilities, in terms of skills and capacity
  3. Understanding what partners, suppliers, knowledge, technologies, systems and training you need in order to develop a business capability
  4. Understand what it takes to turn a business capability into a business ability, or how to upgrade business abilities with it

https://www.dragon1.com/terms/capability-definition

Intentional Learning – a Fundamental Skill
Learning itself is a skill. Unlocking the mindsets and skills to develop it can boost personal and professional lives and deliver a competitive edge.

In McKinsey’s article on the future of work, (https://www.mckinsey.com/featured-insights/future-of-work/the-most-fundamental-skill-intentional-learning-and-the-career-advantage) they remind us that intentional learning is a fundamental skill.

The pandemic has heightened the urgency of doubling down on skill building, either to keep up with the speed of transformation now underway or to manage the particulars of working in new ways.

Mindsets are powerful, often exerting tremendous influence on behavior, sometimes unconsciously. When built on a foundation of self-efficacy—the belief that your actions can help you achieve desired outcomes.  Building a more resilient workforce requires the organization to hire people with a growth versus fixed mindset.  Those with a growth mindset believe that they can grow, expand, evolve, and change.  Intelligence and capability are not fixed points, but instead traits to be cultivated.

Each of us can become an intentional learner.

It’s not as hard as it sounds.

Create a Culture of Intentional Learning
Any organization can build an intentional-learning culture, but its leaders play a critical role in fostering the culture that allowed learning to flourish.  McKinsey advises leaders to embrace a few key practices:

  1. Model and teach intentional learning practices. Leaders who value curiosity and learning have teams that value those things, too. To build an intentional-learning culture, you must visibly invest meaningful time in your own development, letting go of the idea of the leader as expert and embracing the idea of the leader as learner.
  2. Make high-quality learning and development planning part of your culture and processes. Emphasize the need for intentional learning and create space for it in everyday practice. Ensure that employees get on-the-job mentoring, make time for coaching and feedback conversations, and provide specific learning times that replace day-to-day work.
  3. Beware of mixed messages. Intentional learning cultures thrive when the words of leaders match their actions.
  4. Curate but don’t spoon feed. Encourage and empower them to grow, providing opportunities and access to experts as needed, but don’t remove the personal accountability all of us have for directing our own development.

Consider these truths regarding learning and capability-building:

  • LEARNING IS A SKILL. YOU CAN LEARN NEW SKILLSThere’s a huge role that organizations play in setting the context and the culture for learning. Like so many things, it starts at the top, and it starts with having a CEO or a senior leader who actually values learning and talks about it very actively. –Matthew Smith
  • A LEARNING CULTURE REQUIRES A LONG-TERM GROWTH ORIENTATION. CULTIVATE A GROWTH MINDSETUse storytelling and role modeling by senior leaders that learning and long-term perspective are important. Invest in learning programs, reskilling programs, and be explicit in expectations of time spent on learning. Drive a culture and language of learning by constantly saying, “What are we missing?” or “How can we consider how to do this differently?” Create psychological safety so that people feel comfortable sharing ideas.
  • IDENTIFY THE MOST CRITICAL SOFT SKILLS TO DRIVE BUSINESS VALUE. HIRE FOR ADAPABILITY. Set the expectation that people are required to take time out to learn. Hire people who have that growth mindset and a willingness to embrace new perspectives, new skills. Ensure your learning-and-development spend is explicitly connected to your strategic objectives.

Capability-Building and a Learning Culture
McKinsey interviewed Tim Welsh, U.S. Bancorp Vice Chairman, Consumer and Business Banking about how U.S. Bank has built a learning culture. (https://www.mckinsey.com/featured-insights/the-next-normal/capability-building) It is a fascinating interview to both read and listen to. I’ve shared some of his thoughts that I thought were particularly insightful.

 ‘If you don’t get the capability-building right, you can’t get the strategy right. It’s as essential as any tool a company has for achieving its strategy.”

“An environment of mission, purpose, and individual generosity is central to building capabilities that achieve strategic outcomes.”

“We purposefully invest in human capabilities—a strategic priority for the bank—and the importance of executives serving as role models for learners.”

Tim Welsh recommends:

  1. Start with a clear understanding of what your organization is trying to accomplish from a learning-and-development perspective.
  2. Instill a mindset rooted in your mission, which is wanting your people to invest their hearts and minds to power human potential.
  3. Create an environment where each and every person can thrive—where they feel they are at the top of their game, being their best self.
  4. People need to feel psychologically safe, that they are trusted, and that they trust the people around them, which allows them to bring their whole self to work and be exactly who they are, without fear.
  5. It’s in this sort of environment that people start to want to get better at the specific skills required for their jobs, knowing that they can make mistakes because that is part of the learning process.

He further shares that …”everyone wants to continually learn and grow.  Our task is to help people develop the core skills that will help them to thrive in this way. People need to understand why learning matters. We’re not doing this for the sake of learning, although that can be a good thing. We’re doing it because the external environment is evolving, our customers’ expectations are rising, and we have to respond strategically.

People also need to understand the role U.S. Bank is trying to play, which comes down to understanding our purpose and mission. They can then put the two together: if the world is changing and I aspire to power human potential by investing my heart and mind, then I’ve got to keep learning.”

He also shares the importance, not just of leadership, but how leadership needs to model capability-building and foster a learning culture.  “The role of senior executives is absolutely pivotal in building a learning culture. I talk about why learning matters all the time, in virtually every forum. And I describe my own personal learning journey, my own strengths, the challenges I have faced.

I encourage others to do the same. I also take courses. All of us need to participate in learning programs. Learning’s not just for others. So we all take courses and help design them, which is very powerful. One very seasoned senior executive stood up in a big meeting of 150 people and announced he had spent the weekend on a course on analytics because he didn’t know much about it and wanted to learn. That sent a huge radiating signal to others to act similarly.

Capability-building never ends. It is an ongoing task.  I hear people saying, “I didn’t think we could do that, but we did.” For me, those stories are a key indicator that we’re creating an environment where everybody can thrive.  If we are really building human relationships and powering human potential, attrition rates will be the proof of success, as I don’t think any customer would ever want to leave us.

I also hope we’re creating an environment where people are so excited to work at U.S. Bank that they couldn’t imagine working anywhere else.”

Make Purposeful Investments in People
To thrive in a fast-changing world, leaders must treat capability-building as a strategic weapon.  Given the speed at which business is changing, no matter how long employees have been at a company or at what level, there’s always a next horizon of learning that’s important for them to stay current.

The more employers and employees embrace the idea that each person has a personalized learning journey ahead, the more successful the company will be. It’s critical for all employees to have a personalized learning journey.  Consider these recommendations when investing in your people.

A sense of personal growth. Every employee’s approach to their career should be one of excitement about being able to develop new skills and new knowledge that helps enhance their productivity all along their career path.

When organizations intentionally invest in their people, they grow in terms of personal fulfillment and enrichment; they believe they are able to live up to more of their potential.

This increases their overall sense of happiness and their loyalty to the organization. Time and again, when we look at employee engagement or employee-satisfaction surveys, we see how powerful it is when people feel a sense of personal growth—when they feel equipped to do the best possible job they can.

Long-term return on investment. Capability-building will have a direct result on the organization’s financial performance, on your ability to compete more effectively for customers, and on employee satisfaction—so treat capability-building as one of the most important strategic weapons you have. Make purposeful investment in it.

Treat capability-building as a capital investment in the human capital of the organization.  This investment is capitalized and then depreciated over several years—and the human capital investments you’re making enable your employees to adopt new skills for the future needs of the company.

Consider the investments that you’re making in your employees as having a multiyear investment return. Look at the investment in any one year against the payout of the performance shift that will come several years down the road.

Well-being as a skill. If people’s whole well-being is the best it can be, they’re going to be that much more productive at work. Well-being is a skill that can be cultivated— just like communication or leadership or problem solving.

With technology in our lives 24/7, it’s become standard to work constantly. If you don’t have your priorities straight in terms of protecting your physical and mental health, and if you don’t have a clear sense of purpose, it’s very easy to let work and other people’s priorities take over your existence.

If we begin to think about well-being as something to practice, individuals can test what works for them. Companies can be supportive, providing ideas, curricula, and safe spaces for people to exchange notes on what’s working. This is a journey that most professionals will need to start.

Common Mistakes

  1. Learning programs or capability-building programs not directly tied to an expected performance improvement. Companies get much more out of their efforts when they are extremely clear about what performance change they are seeking, whether that’s revenue growth or quality improvement or higher employee-satisfaction scores.
  2. Spending too much time in the classroom context—meaning a physical classroom where people come in for a week or two to learn in a concentrated way that is separate from their day-to-day job. Virtual programs are as successful as an in-person experience and are more flexible – accessible to any employee in the world at any time.

Capability-Building as a Strategic Advantage
Capability-building and learning should be a CEO-agenda-level item. Developing talent should be job one for every leader in an organization.

One of the most important things an organization should do is understand the role between capability-building and business value.  What’s the percentage of revenues you’re plowing back into your workforce? With talent being a differentiator for companies and their performance, what’s the amount of money you’re putting into your people?

What’s the effectiveness you’re getting out of that? The investment includes capability-building in resilience and adaptability, topical training, executive coaching, and a whole swath of things that makes your workforce a lot more effective.

We have a critical post-pandemic opportunity to develop talent by systematically reviewing the talent profile, identifying the skills needed now and, in the future, and working with HR leaders to map skill sets to strategic and operating plans.

Establish a skills matrix that outlines key roles and responsibilities relevant to the changed business context.

Managers can have frank conversations (during performance reviews, for instance) about the new skills and mindsets required in various parts of the organization and understand the associated investments.

(https://www.mckinsey.com/Business-Functions/McKinsey-Accelerate/Our-Insights/Capability-building-in-2030)

Back to Human – Focus on Your People and Purpose, Value & Culture
Chief human-resource officers in Europe say a shift to employee-centric policies is long overdue. The pandemic is a big factor in their thinking, but process fatigue has been building for some time.  The reality that processes have oftentimes replaced the creativity and innovation needed to attract and develop talent, manage and reward performance, and optimize workforce strategy.

The COVID-19 pandemic—which accelerated employee demands on HR to meet physical and mental health needs, as well as intensified moral concerns about a company’s overall impact on society—lent urgency to their view that some core human element has been lost in all these technological advancements.

https://www.mckinsey.com/business-functions/organization/our-insights/back-to-human-why-hr-leaders-want-to-focus-on-people-again

Capability-Building Powers Transformation

Closing thoughts…

Role modeling. One of the best ways to drive the adoption of new mindsets and behaviors is by ensuring that senior leaders model the desired change. When senior leaders role model the behavior changes they’re asking employees make, transformations are 5.3 times more likely to be successful.

Widespread employee engagement. To create the foundation for truly widespread change, a capability-building program must directly engage at least 25% of the workforce – the critical mass of the workforce can overturn deeply embedded behaviors within the organization and enable transformational change to scale across the enterprise.

Shaping a new learning environment: Virtual delivery.  Virtual environments can deliver experiences that are equivalent to or better than those of traditional in-person programs and workshops. They are available to everybody.

Learn More

  1. https://www.mckinsey.com/featured-insights/future-of-work/the-most-fundamental-skill-intentional-learning-and-the-career-advantage
  2. https://www.mckinsey.com/business-functions/mckinsey-accelerate/our-insights/building-a-learning-culture-that-drives-business-forward
  3. https://www.mckinsey.com/featured-insights/the-next-normal/capability-building
  4. https://www.mckinsey.com/business-functions/mckinsey-accelerate/our-insights/the-capability-building-imperative-make-purposeful-investments-in-people
  5. https://www.mckinsey.com/Business-Functions/McKinsey-Accelerate/Our-Insights/Capability-building-in-2030
  6. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-cfos-role-in-capability-building
  7. https://www.mckinsey.com/business-functions/mckinsey-accelerate/our-insights/rethink-capabilities-to-emerge-stronger-from-covid-19
  8. https://www.mckinsey.com/business-functions/organization/our-insights/the-organization-blog/are-you-building-employee-capabilities-across-these-four-critical-areas
  9. https://www.mckinsey.com/business-functions/organization/our-insights/back-to-human-why-hr-leaders-want-to-focus-on-people-again
  10. https://www.mckinsey.com/business-functions/transformation/our-insights/how-capability-building-can-power-transformation

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