Capability Management

Capability Management refers to activities that build organizational competency and capability in the organization, typically below the senior leadership levels. This process identifies organizational capabilities required to meet strategic goals and ensures continual alignment of employee development, career progression, and talent management to evolving business needs.

Capability management is one of the six key human capital processes defined by TDRp(1) and includes:

  • Skills assessment and transferability
  • Career planning and development
  • Competency modeling and maintenance
  • Talent reviews
  • Talent pool management
  • Succession management for lower level leaders and all other employees

Organizations may centralize some components of Capability Management and have other components reside within the business units. Some organizations may not even have formal processes for all of the above components such as succession management for lower level leaders. In practice, each organization is free to organize their human capital activities any way they choose. We simply need a framework to organize the measures.

Each key process like Capability Management contributes to the achievement of organization goals (for example, a 10% increase in sales or a 15% reduction in costs) and talent outcomes (for example, a 5 point increase in employee engagement or a 2 point increase in the retention rate). Often, some of the talent outcomes are top-level goals of the organization on par with an increase in sales or a reduction in costs. Other times, the talent outcomes are viewed as intermediate goals in support of achieving the top-level goals. TDRp is designed to work in either case.

Over 40 measures are defined for Capability Management. These measures are grouped by type of measure (efficiency, effectiveness, outcome) and across four subcategories. Each organization should choose the measures most appropriate to achieve their goals and manage their human capital. Capability Management will typically support the broader organizational goals, as well as talent management focused goals. A short summary of each Capability Management subcategory, including examples, follows.

  • Career Development – measures that describe the movement of employees within the organization.
  • Effectiveness examples: Career Movement Percentage, Career Path Ratio, Career Transfer Ratio, Vacancy Rate of Critical Positions
  • Supervisor Changes – measures describing the prevalence and types of supervisor changes.
  • Efficiency examples: Average Supervisor Changes, Percent of employees with Supervisor Changes, Percent of Supervisor Changes Due to Reorganization
  • Bench Strength – measures regarding the depth of the talent pool.
  • Effectiveness examples: Employee Bench Strength, Managerial Bench Strength, Percent of Positions with Ready Replacements, Percent of Positions without Ready Replacements
  • Bench Time – measures detailing the length of time employees spend in a role before achieving a promotion.
  • Efficiency examples: Average Number of Months to Promotion, Average Number of Months to First Promotion, Average Time to Promotion, Average Time to First Promotion

In addition to being grouped by TDRp category (efficiency, effectiveness, outcome), the measures have also been grouped into Tiers, which are described below. In choosing measures, we recommend starting with Tiers 1 and 2.

  1. Tier 1: These are typically going to be the Key Performance Indicators (KPIs) of a given Talent Process. They are likely to vary from one organization to the next and some “Tier 2” metrics may indeed be key to one organization and “Tier 1” metrics for them, while not for others. At a minimum, “Tier 1” metrics are a list of starting-point, TDRp suggested metrics for those looking to build measurement in a given Talent Process.
  2. Capability Management examples: Career Movement Percentage, Vacancy Rate of Critical Positions, Percent of Positions with Ready Replacements
  3. Tier 2: These are typically going to be the supporting metrics for a given Talent Process, which one might look to in order to determine why any noticeable changes or trends in KPIs might be occurring.
  4. Capability Management examples: Career Path Ratio, Career Transfer Ratio, Average Number of Months to Promotion, Average Number of Months to First Promotion
  5. Tier 3: These are usually the raw data points that when used in combination with one another create the Tier 1 “KPIs” and Tier 2 “metrics.”
  6. Capability Management examples: Employees Transferred, Employees Promoted, Total Number of Months to Promotion, Number of First Time Promotees, Number of Months to First Promotion

Click here for a complete list of measures for Capability Management. CTR members may also access the full electronic version of the TDRp Capability Management Measures Library, which provides definitions, formulas, comparable measures, and complete references to source documents for a detailed discussion of each measure.

In addition to the measures described above, ten sample statements and reports have been created for Capability Management. These are all available in pdf format and as Excel spreadsheets (CTR members only). The various statements and reports are described in the white paper Introduction to TDRp. The ten include the following:

High-level Business Outcome Statement (with quantitative impacts)
High-level Business Outcome Statement (with qualitative impacts)
Detailed Business Outcome Statement
High-level Effectiveness Statement
Detailed Effectiveness Statement
High-level Efficiency Statement
Detailed Efficiency Statement
Summary Report (with quantitative impacts)
Summary Report (with qualitative impacts)
Operations Report
Program Report (coming in 2013)

These statements and reports are provided as a starting point in your understanding and application of TDRp. We know each organization is unique and will need to select its own measures, but the templates have proven valuable to the early adopters.

The white papers Introduction to TDRp and Extending TDRp to All Key Human Capital Processes are highly recommended. Since the TDRp initiative began with a focus on Learning & Development, more has been written for L&D than for the other key processes. The Tips and Tools for L&D, however, will also be helpful for understanding how to construct the various statements and reports for Capability Management. With time, advice pieces will be written for each key process.

Notes:(1)The other five key human capital processes are Talent Acquisition, Learning & Development, Leadership Development, Performance Management, and Total Rewards. Workforce Planning and Demographics is a key sub process, which supports all six key goals. For more on the TDRp framework see Introduction to TDRp and Extending TDRp to All Key Human Capital Processes.