Friday, March 03, 2006

People Capability Maturity Model and Organizational Capability

I work at knowledge based services firm – which involves product design, manufacturing & logistic services. Our core competitive advantage is derived from the talent of the employees who deliver these services. So this article is all about managing and developing employee talent.

In a knowledge based service industry such as consulting, design services etc., employee talent is the key for success of a firm. When the performance of the organization depends on the talent of its employees, top management will have to look at ways to improve the skills of its employees.

Carnegie Mellon University’s Software Engineering Institute developed a framework to improve the capability of employees – called as People Capability Maturity Model (PCMM). PCMM helps organizations develop the skills of their employees in a phased manner. It also helps address critical people issues based on current best practices in HRM, knowledge management and organizational development. PCMM provides a guideline for developing and managing their workforce.

In my organization’s context, employee skills is the key for successful business performance and with the threat of losing key talent (to competitive firms), HR strategies has to focus on the latent and apparent needs and aspirations of employees. The challenge for the management is to align employee development program with that of the organizational goals.

PCMM levels

Carnegie Mellon University ahs defined five distinct levels under which any organization can be classified based on their employee development plans. The People CMM consists of five maturity levels that establish successive foundations for continuously improving individual competencies, developing effective teams, motivating improved performance, and shaping the workforce the organization needs to accomplish its future business plans. Each maturity level is a well-defined evolutionary plateau that institutionalizes new capabilities for developing the organization's talent pool. By following the maturity framework, an organization can avoid introducing workforce practices that its employees and managers are unprepared to implement effectively. These levels are:

  • Level-1: Initial level.
    Organization has only the staffing functions.

  • Level-2: Managed Level.
    Here the organization has mapped out a well defined compensation plan, has performance management policies, has developed work communication & coordination structure and has a training & development plan for employees.
  • Level-3: Defined Level. Here the organization has developed a competency based HR practices, career development plan for employees, Workgroup planning and workforce development based on competency analysis.
  • Level-4: Predictable Level.
    The organization has now developed a mentoring program, empowered workgroups, quantitative performance management is practiced, and Employee competency is treated as a key asset.
  • Level-5: Continuous improvement.
    The organization continuously improves its capabilities, encourages workforce innovation and organization’s performance is aligned with the market needs.

In depth explanation of each of these PCMM levels is beyond the scope of this article as it digresses from the intent of this article.

PCMM: New paradigm in HR

Till recently, there was no global standard against which an organization could benchmark it’s HR processes. Hence, there was no way in which an organization could comprehensively measure its HR policies and align employee development with the business process. The People Capability Maturity Model (People CMM) is a tool that helps an organization to successfully address the critical HR issues in their organization and align the employee needs with that of the customer’s or market needs.

The PCMM’s primary objective is to improve the capability of the talent pool. Talent pool capability can be defined as the level of knowledge, skills, and process abilities available for performing an organization's business activities. Talent pool capability indicates few parameters of the organization:

  1. Readiness for performing its critical business activities.
  2. Likely results from performing these business activities.
  3. Potential for benefiting from investments in process improvement or advance technology.

Hence, the People CMM framework is one which attempts to build strong linkages of people processes with business results. PCMM enables firms to develop a mature policies and practices for continuously elevating talent pool capability. i.e., have a well defined training & mentoring plan. This is a significant shift from the ad hoc and inconsistent mode improving people capability.

The philosophy implicit in the People CMM can be summarized in 10 principles.

  1. In mature organizations, talent pool capability is directly related to business performance.
  2. Talent pool capability is a competitive issue and a source of strategic advantage.
  3. Talent capability must be defined in relation to the organization's strategic business objectives.
  4. Knowledge-intense work shifts the focus from job elements to people competencies.
  5. Capability can be measure and improved at multiple levels, including individuals, workgroups, people competencies, and the organization.
  6. Organizations should invest in improving the capability of those people competencies that are critical to its core competency as a business.
  7. Operational management is responsible for the capability of the talent pool.
  8. The improvement of talent pool capability can be pursued as a process composed from proven practices and procedures.
  9. The organisation is responsible for providing competency and career improvement opportunities, while individuals are responsible for taking advantage of them.
  10. Since technologies and organizational forms evolve rapidly, organisation must continually evolve their people practices and develop new people competencies.

PCMM is an evolutionary framework. It guides the organization in selecting high-priority improvement actions based on the current maturity level of their people practices. Benefit of PCMM is in narrowing the scope of improvement activities to those vital few practices that provide the next foundational layer for developing an organization’s talent pool. By concentrating on a focused set of practices and working aggressively to implement them, organizations can steadily improve their talent pool and make lasting gains in their performance and competitiveness.

Talent management in turbulent times can be done effectively by using the PCMM framework, which helps organizations to manage their talent, in line with their business requirements and revolving around competencies. This results in more motivated employees who work to delight the firm’s customers, thus giving the organization a strong competitive edge.

New strategy

A new comprehensive HR strategy should be customer oriented and revolves around developing employee competencies required to meet the new challenges. This requires a shift from the traditional HR strategies which were centered on meeting organizational goals – and were extremely inward looking. Organization is this global economy will have to use HR strategies as core competitive strategies. For example, IT services firms from India – such as Infosys, Wipro, TCS and others tout their CMM & PCMM level-5 certification as competitive advantage over other IT firms. Wipro was the first firm in the world to get the PCMM level-5 certification – and has used it in their marketing campaigns.

As the market conditions change and become global, various HR programs and initiatives must become customer centric. For example, if training on customer needs analysis is given to front end engineers, they will impact the customer directly by understanding their needs well, and deliver much more accurately - hence this would be a primary impact on the firm’s performance.

Let me give you another example. If the organization defines career path for its employees and develops career development plan which takes customer needs into account, employees can then measure and build their career based on the value they (employees) are delivering to the customer. And when employees are able to chart out their career paths within the organization, there will be lesser propensity to leave the organization and lower attrition means lesser project delays for the customer.

Closing Thoughts

Developing a HR strategy based on customer needs will redefine the role of HR to be more objective and have a greater impact on the organizational performance. This is a major paradigm shift for the HR. Human behavior is very subjective and hence HR department has been very subjective in the past.

People Capability Maturity Model transforms HR department to be objective and enables the organization to compete effectively through it's empoyee capabilities.

5 comments:

tejas said...

Hello Arun, I am Tejas Oza. It was nice to read your article. I am working in this are and right now involved in developing a maturity model for project teams. Can't reveal much at this stage. Can you mail me at tejasmoza@yahoo.com. I will need you help regarding this topic, if you dont mind, I can use some of your expertise.
Regards,
Tejas Oza
+447900550938

prajakta said...

Hi Arun. I am very much impressed by this article. I want to learn more on PCMM. I am working with a organization planning to implement PCMM. I need your guidance in understanding measures that make PCMM practices effective. Can you mail me on prajakta.phansalkar@gmail.com. I can directly put forth my queries. Thanks.

Maria_Rilke said...

"Since technologies and organizational forms evolve rapidly, organisation must continually evolve their people practices and develop new people competencies." That's right. Employee development and elearning can be very expensive. Good thing there are some softwares right now that can give cost-effective programs that are appropriate to the specific needs.

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maverick said...

P-CMM has not worked for a large number of Organisations and is used primarily as a carrot to attract Software Outsourcing. To HR Managers Worldwide, tt is evident that it takes more than P-CMM to attract talent - Everyone cannot be TCS, Wipro or Infosys . . . Least of all Reliance

(See Link: www.franasher.com/html/article.html)