Defining a solid talent management strategy requires an understanding of where you stand and where you want to go. That’s just what a business capability assessment is for.

A capability assessment is a standardized framework designed to evaluate the skills of both current and prospective employees. Organizations conduct such diagnostics to identify their strengths and weaknesses and chart an optimization course. When properly implemented, this technique can have a tremendous positive impact on business success. Here’s how.

Why Run a Business Capability Assessment

It’s not enough to set targets and standards for your organization and your workforce. You then need to ensure that your business is indeed meeting those goals. This largely depends on the ability of your human resources to effectively complete the tasks and activities that will create value for the organization.

Which, in turn, requires making the most of your resource pool by assigning the right person to the right task at the right time. You also need to ensure that your people are fit for the job and demonstrate the right business capabilities.

Taking the guesswork out of the evaluation process

At this point you’re probably thinking, “Well we hired them, so I guess they must be good enough.” The thing is the world is changing — fast. Just think how much novelty businesses have experienced over the past years: the rise of remote working, new worker expectations, and the emergence of potentially game-changing digital tools. Accordingly, the business capabilities your organization needs to stand out in the market are changing too. This means that a worker who used to perfectly match the capability requirements yesterday might now need to update their skills.

The problem is that most organizations rely on unstructured manager assessments to evaluate capability and identify skill needs. While this may provide a ballpark idea of the overall performance of the organization’s workforce, it hardly makes for objective, sound metrics.

As a structured framework, a business capability assessment will take the guesswork out of the evaluation process. Accordingly, it will enable you to obtain a fact-based, granular assessment of the performance of your organization.

Expected Benefits of a Business Capability Assessment

A well-conducted business capability assessment will help your organization to:

  • Make better hiring decisions: Knowing what you’re looking for in a prospective employee will help you pick the right candidate from a selection of job seekers.
  • Customize training journeys: Drive continuous improvement by focusing learning and up-skilling programs to fill up the key capability and competency gaps within your workforce.
  • Identify your strategic resources — the highly-skilled people whose capabilities are critical to business success and revenue generation, those who are irreplaceable or who would not be easily replaced — and treat these valuable human assets accordingly.
  • Improve overall human resource management: The ability to identify and recognize outstanding performance and effort empowers you to nurture desired skills and behaviors across the organization. This will also encourage smoother career progression paths for employees.
  • Identify business capability gaps relative to industry peers and quantify the potential financial impact of bridging them.

The bottom line? Improved visibility and control over the business, resulting in an increased ability to anticipate market changes and adapt.

How to Run a Business Capability Assessment

Consulting firms and other third-party experts have developed business capability analysis frameworks and can conduct an employee capability assessment on your behalf. However, it is also possible to manage it in-house.

Most capability diagnostics follow a 3-step process:

  • Capability identification and selection of criteria
  • Execution of the capability evaluation
  • Analysis and action

Identifying Business Capabilities and Criteria

The first step of a business capability assessment is a definition of what success looks like. Keep in mind, not all business capabilities are equal in terms of organizational value. You need to pinpoint which skills and capabilities are the most important to help you achieve your business strategy and reach the targets you have set for your firm. Doing so requires drawing a comprehensive list of all applicable business and employee capabilities, then ranking each item against several key criteria:

  • Is it consistently creating financial or business value?
  • Is it instrumental in achieving a strategic goal?
  • Is it supporting a key product or value proposition?
  • Is it creating opportunities for future business growth?

At this point, you should also decide on standards and criteria for measurement and scoring. Many organizations opt for the Capability Maturity Model framework, which ranks capabilities across a 5-level ladder: Initial – Repeatable – Defined – Capable – Efficient.

Finally, this preliminary step should involve a determination as to the scope of the assessment. Unsurprisingly, the larger the group of individuals assessed, the harder and longer the evaluation takes. You need to decide whether it makes sense for your business to survey large populations inside and even outside the organization or if you’d rather focus on key functions and roles.

Assessing Business Capabilities

Once the foundations are set, you can go ahead and perform the business capability assessment itself. This involves collecting data — whether by interviewing employees and other stakeholders or putting together structured assessment tools and questionnaires — to evaluate proficiency against each of the key capabilities you’ve defined. 

Regardless of the data-gathering technique of your choosing, the keywords are consistency and objectivity.

At this stage, communication and perception management are key. After all, the people you’ll be assessing may feel or express concerns at the prospect of being evaluated. You need to send the right message: A business capability assessment is NOT a witch hunt, but rather a tool for organizational improvement. Be sure to explain the why, the what, and the how, in order to alleviate fears and concerns.

Once you aggregate and consolidate individual assessments, you get an organization-level business capability matrix.

Analyzing the Results

Now comes the time to use the data you’ve gathered and turn it into actionable insights. Your business capability assessment provides a snapshot of your employees’ performance. This should empower you to identify areas of improvement, either for bridging skill gaps or for furthering competitive edges.

The assessment results might also reveal or highlight the existence of process-related issues and help you come up with a proper fix. Long story short, assessing capabilities puts you on track for long-term improvement.

Keep in Mind

Remember that capability assessments should be carried out on a regular basis to maintain this positive momentum. Among other reasons, scheduling regular assessments will enable you to track learning progress.

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