Skills portfolios and adding up intellectual capital

Improving the link between strategy implementation and HR development

Business strategies are central to the future success of companies. Two of the biggest challenges in implementing strategies and ultimately securing strategic success are resistance within the organization and a lack of commitment. The Fraunhofer Institute for Production Systems and Design Technology (IPK) has developed a tool called the Strategy-Based Skills Portfolio together with the Steinbeis Consulting Center for Human Capital Management (HCM). Its aim: to improve links between company strategy and HR development planning.

The tool, which was derived from a Fraunhofer IPK method for capturing intellectual capital in a business, was designed to help integrate HR experts more closely into an organization’s core processes, strategy planning and strategic implementation.

Currently, in many sectors of industry, companies rarely involve HR specialists in strategy implementation. Experience has shown time and time again that communicating strategic goals and adapting them to individual needs is a key challenge of strategic leadership. By contrast, HR development processes typically work independently with few links to the core goals of an organization, which are usually derived from the business strategy. Further, there is an increasing tendency for firms to question the ability of HR development to add value to the business. Yet dovetailing strategy implementation and HR development more closely holds tremendous potential. The Strategy- Based Skills Portfolio, which was based on “intellectual capital statements” designed by the Fraunhofer IPK, helps companies develop ways to dovetail these two activities and put these methods into practice.

The underlying idea of the “Intellectual Capital Statement – Made in Germany” is to provide user-friendly tools for measuring the intellectual capital (IC) within a business in a way that matches the needs of SMEs. It helps firms assess IC, then work out and steer key measures that not only match the strategy but also move the company forward, especially “soft” success factors. IC within an organization describes all intangible success factors important to the running of the business and the links between success factors. They fall into three categories: human, structural and relational capital. Human capital encompasses all attributes and skills of individual workers. Structural capital describes supportive infrastructure used by workers to do their job throughout the business. Relational capital describes all relationships with groups and people outside the organization that are drawn upon in carrying out work. Within these three categories of capital, there are also individual, nontangible influencing factors. When a business is undergoing change, these factors have a direct or indirect impact on business success and an organization’s ability to achieve its goals.

An intellectual capital statement (ICS) can thus be used as a tool for decisionmaking or as a monitoring instrument, with the overall aim of developing intellectual capital. Apart from this steering function, the ICS can also be used for internal or external communication purposes to make the intangible assets of a company more transparent to different target groups. A software package or ICS Toolbox breaks the technique down into eight simple steps: the business model, IC, evaluation, measurement, effect, assessment, actions and the ICS itself.

The Steinbeis Consulting Center has updated this method for summarizing intellectual capital in collaboration with the Fraunhofer IPK. The aim was to adapt the approach to the needs and conditions of HR development. One of the key differences with the new system is that the evaluation tool is used by the company’s HR development experts within departments or teams. Unlike the approach underlying the ICS, the aim with this system is to take a comprehensive snapshot of the company. The method behind the Strategy-Based Skills Portfolio is based on a survey conducted using questionnaires during workshops. The priority is to work out HR development tools according to the needs of individual departments. Using this approach, a methodology was developed for planning investments in HR development that are more closely based on the business strategy.

The strategy used at the start of the process has to be as detailed as possible. Ideally, it should also be derived from higher-level corporate strategies for the specific department. The goals defined within the strategy provide a basis for defining departmentspecific influencers (competences) which simultaneously provide an evaluation template for managers and workers. The quick ICS test involves a questionnaire, initially based on standard, more general influencers (taken from empirical sources), which is used to carry out preliminary online evaluations.

The fundamental strategic approach underlying the ICS, and the methodical approach used to work out the influencing factors (which are needed as intangible resources to implement a strategy), are an excellent starting point for dovetailing HR development plans with business strategies. The fact that the workers themselves assess influencing factors, by referring to the departmental strategy, means that they have to be familiar with the (previously communicated) business strategy.

The tool makes it possible to work out specific HR development requirements within each department, based on corporate and business area strategies. To do this, managers have to ensure four activities take place:

  • Strategy communication: presentation and discussion of the key thrusts of the business or departmental strategy with people working in each area.
  • Determination of key required skills on an individual and departmental level, to focus departmental priorities, in keeping with the strategy.
  • Later: assessment by workers of skills profiles within the department, based on the “importance of each type of skill in implementing the strategy“ and the “existing levels of each type of skill“ within each department.
  • Pooling of the results of each survey to arrive at a “strategic skills portfolio.” The areas in which development is needed in the department, as identified by workers and managers, are plotted. This development profile is used to draft an HR development plan which links back systematically to the strategy.

One of the main benefits of using the “strategic skills portfolio” is that HR development plans are more tightly focused on the business strategy and resources. It thus allows HR development experts to bolster their role in communicating and implementing the business strategy. Workers understand why they are important in implementing the strategy and how they can make a contribution. Overall, this amplifies the relevance of HR development as a business activity.


Prof. Dr. Benedikt Hackl
Steinbeis Consulting Center Human Capital Management (HCM, Ravensburg)

Markus Will
Competence Center for Knowledge Management (CCWM) at the Fraunhofer Institute for Production Systems and Design Technology (Berlin)

The Strategy-Based Skills Portfolio fulfills three main objectives in strategic HR development:

  • Value-adding contributions made by HR: Like a funnel, this tool helps the company focus HR development decisions on core challenges posed by the company strategy. By dovetailing individual HR development decisions with strategic demands, information relating to the strategic direction improves, as does understanding among staff. This cuts the cost of implementing the strategy and combats resistance.

  • Strategy communication: the tool simplifies dialog between managers and workers regarding goals and challenges, as dialog takes on a life of its own – talking about the strategy becomes a natural part of annual HR development processes.

  • Focus: the strategic skills portfolio helps reduce the risk of simply dumping decisions on workers from above – especially regarding staff training, as this is now based on the strategy process in the business. The business relevance of HR development, which is sometimes not seen as relevant, improves, as do contributions to value-added.

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