Using Strategy Maps to Illustrate the Value of Human Capital

Using Strategy Maps to Illustrate the Value of Human Capital

Sometimes the best way of working is the simplest. When things get too complex, they can get too unwieldy. When they are unwieldy, people can get confused, work at cross purposes, and sometimes just give up because things appear too hard. The art of simplicity is what developing strategy maps is all about. Strategy maps are graphical means of expressing the relationships between an organization’s parts and activities. These pictures, diagrams, charts, or other visuals provide clarity and show individual performers how what they do fits into the whole.

The classic version of strategy maps, authored by Drs. Robert Kaplan and David Norton, inventors of the Balanced Scorecard, contain four elements:

1) Financial: Represents an organization’s economic goals — Greater revenue, profitability, liquidity, or costs.

2) Customer: Examines how an organization wants to be seen in the eyes of its customer (e.g. high quality, excellent service, responsive, trustworthy, exclusive, etc.) This image almost becomes a brand promise. What is projected becomes what customers expect, and the company must be able to deliver on these ideas to their customers. The ability to do so is determined by its internal operations.

3) Internal operations: Defines the organization’s work processes and systems that help give it a competitive advantage. Obviously Fed-Ex’s customer image is provided through its guarantee of fast and on-time delivery, but its logistical system must be able to make this happen. Amazon’s customer intelligence software always seems to know what customers might want and makes good suggestions. CarMax’s ability to find a vehicle that every used car buyer wants is another example.

4) Learning and growth: This is where is HR or people elements stand out among other assets. How can the talents of the people be deployed to support the overall enterprise and its goals? Learning and growth is where human capital plans are displayed. It could be through a culture of innovation or risk taking. It could be how the compensation system is used to motivate employees to perform, or it could be how the organization develops employee competencies.

How HR pros can make their mark

Strategy maps help show the connections between the plans, actions, and actors that are operating together to produce organizational outcomes — They show the building blocks of organizational success. A quick ‘Google’ search will yield lots of examples. Starting from the bottom and building upwards, strategy maps show the bedrock value of human capital. They communicate the criticality of what employees know and are able to do, and their importance to organizations.

Internal systems are designed to support employee activities so that organizations deliver the right kind of value to customers and the company can achieve its financial or economic goals. The beauty and simplicity of these strategy maps is that they clearly show cause and effect linkages.

In their paper, “The Strategy-Focused Organization” Kaplan and Norton reports that, "A mere 7% of employees today fully understand their company's business strategies and what's expected of them in order to help achieve company goals." How can today’s knowledge worker perform at their best if they do not understand why their work matters? The biggest point to note here is that the entire system does not work if the people part does not work well. This is where strategic HR practitioners can make their mark.

Human Resources departments can demonstrate their value to organizations by ensuring that their activities are aligned, connected, and deliberately linked to the internal operations of the company, the needs of customers, and the financial goals of the organization in a line-of-sight fashion. Strategy maps make these connections explicit.

Illustrating success with strategy maps

If a strategy map cannot be drawn that shows how human capital fits into the larger picture, then this blind-spot undermines the importance and potential of the HR function. Human Resources professionals must harness the potential of human capital and point it toward organizational ends. Our departments must carve out their place in organizations and be able to clearly articulate the connections.

A picture is worth a thousand words and learning the value of strategy maps is a tool that should be found in the tool bag of all HR strategists (Spoiler alert: This will be discussed in a later blog post). We will learn to use strategy maps to communicate how various HR functions, programs, and services are deployed to fuel the learning and growth objectives of strategy-focused organizations.

Tags:  For Managers


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