How to Develop a Capability Building Framework for Sustainable Business Success
There’s no green agenda here—your organisation simply can’t thrive if you’re only building capability for short-term gratification. You need to be looking long-term for success.
A capability building framework is a little different to your average capability framework, in that it defines the who, what, where, when, why and how of building organisational capability. There’s a lot to unpack here, so let’s just dive in.
What is a capability building framework?
A capability building framework is a scalable plan for how an organisation can identify, develop and nurture the capabilities critical to business success. It shapes training and development around improving employee performance through the capabilities most likely to have a business impact.
But perhaps one of the most important facets of a capability framework is how it drives sustainable long-term success. Without sustainability, you face an uncertain future, potential whiplash from sudden changes, and success that may not be trackable or replicable in future.
Capability vs competency
Before we go deep into capability building, we want to clear up some of the confusing language you may see thrown around. Some use “competency” over “capability”, but we don’t believe this is the right language based on our industry research.
Many based their arguments on the very literal sense of these words. Capability means to be capable. Competency means competence. Employees can be capable, but they must gain a level of competence to be effective. With this line of thinking, competency would be the more accurate business term.
But the baseline for a capability shouldn’t be competency, because competency alone does not support organisational success. (How can you measure competency without knowing what you’re meant to be competent in?) That foundation should be desirable behaviours, skills, knowledge and attributes that are shown to have business impact.
In the simplest terms, we see capability as a behavioural or technical realisation of an organisation’s vision or culture. Competency refers to how a capability is performed at a moment in time. One is the outcome and the other a measure of how it gets done. Remember this, it will be important later.
Capability vs capacity
You may also hear “capability” and “capacity” being used interchangeably. Though complementary, they aren’t the same.
Capabilities are a dynamic resource, as the skills, knowledge and attributes key to a particular task, job role or business. Though they can be lacking, they can be developed at an almost infinite rate. This is why capabilities are often called the building blocks of an organisation.
Capacity refers to the resources you have. When talking about capacity building, we’re discussing how an individual or organisation can change. Building capability can increase capacity—capacity to change, capacity of resources, or workforce capacity.
What if you don’t implement a capability framework?
In business it can feel like there is a model, matrix or framework for everything we do. And we must draw the line at some point, right? Well, we believe said line shouldn’t be drawn before implementing a capability development framework or starting on capability building efforts. Here’s why.
Distil the core responsibilities of your CEO down. They manage strategy, cash-flow and people. All paths tend to lead to these core metrics. To truly deliver on each of these three, you need the organisation to have an abundance of individuals with the necessary skills, knowledge and attributes (or capabilities) to deliver on high-performance in each metric.
This isn’t about a lean production model or six sigma for plant manufacturing. It’s about having a framework for capability building initiatives that ensures you do not succumb to poor strategy decision and execution, cash-flow issues and/or the wrong talent or a shortage of talent to deliver on priorities.
Do you need a strategy for building capability?
Capabilities are at the forefront of strategic business planning. However, newbies to the capability game may struggle with effectively measuring impact.
All good business planning should come with a strategy, not just new business practices. This means that not only are there accountabilities (aka arguments for what business leaders may see as “basic” training), but a plan of action for your capability framework.
When designing a capability building strategy, you want to have a focus. What criteria will capability development satisfy? What will move the needle on both organisational and employee performance?
We recommend narrowing your focus in two ways:
- Business or functional outcomes
- Performance or behavioural outcomes.
McKinsey puts it best:
Capability building goes well beyond traditional training of employees; it’s about fundamentally changing how the work gets done.
Capability development, while a strategy for L&D, looks to business transformation. It’s about changing mindsets, behaviours and processes that drive the momentum of your execution engine. This is what creates continuous and significant value. A business focus looks at the functional outcomes of capabilities, jobs to be done, and the tangible success they drive.
The capabilities you build here still have performance outcomes, but they’re more technical or functional in nature, such as:
- Demand planning
- Resource management
- Product strategy.
These may sound like technical skills and capabilities you already expect of employees. But if you don’t have the guardrails to accurately assess capability application or realisation, you’re likely not seeing the effects of a capability’s full potential. It could also be that new employees haven’t adapted to the tools and processes your organisation uses, and are still imitating those from their previous job. Which doesn’t benefit you, since it’s not how work is done to achieve your business objectives.
This is where you can take a more traditional look at capability development, and focus solely on the individual improvements employees need to make. While capabilities flagged here are likely to be behavioural, technical and functional counterparts may still filter in as they have their own performance outcomes.
Again, we defer to McKinsey. They take a three-pronged approach to capability-based L&D that revolves around the:
- Cognitive (knowledge acquisition, comprehension, critical thinking)
- Behavioural (performance of work practices, operations, techniques)
- Affective (feelings, attitudes, preferences).
Why a mind, body and soul approach? It breaks capability building programs into more nuanced training: Discussion and explanation, practice and coaching, and self-discovery and influence, respectively.
The training you design to affect behavioural change should be behavioural in nature. Employees emulate what they see leaders and peers do, which could mean having senior leaders role model key capabilities in the workplace. If employees see highly visible peers or leaders showcasing resilience strategies, change is 5.3x more likely to be successful because most employees are influenced by their environment.
Take resilience. This is both an organisational and individual capability. But it involves systems to handle stress, increase engagement and manage change that may need to be personalised for individuals, meaning it has to be developed in employees before it can impact the work environment and greater organisation.
You could then prioritise a leadership development program for top influencers who can then plant the seeds of change, tipping the scales towards a mature learning culture. Those influencers may then be able to share anecdotes that espouse the personal benefits of capability building, which act as compelling arguments for peers. You see the behavioural nature?
How to develop a framework for capability building
Strategy’s done, now the steps to actioning a capability building program. We love a capability framework, not least because it outlines the who, what, where, when and how.
- Who: Those accountable to business outcomes and for process management.
- What: The capabilities to be developed.
- Where: In person, online or a blend.
- When: The timeliness of development interventions.
- How: Modes of training.
These are all the factors that are meant to influence the outcome of capability building. They also help sculpt the process for formal capability building programs in your organisation, using the meaningful data inputs and outputs for employee and business performance. Consider it the infrastructure for strategic training and development.
Here’s one take on how to architect a framework for capability building. It’s not gospel, but you essentially want to map a training need to the capability building process.
For example: The objective of continuous professional development for individual employees is your starting point. It shapes what mode of training is necessary, how you can evaluate the efficacy of training and what the outcome will be.
At first glance this framework may seem basic, but it gives the right information for the who, what, where, when and why if you look closely. (Remember that capability frameworks are meant to be succinct, too.) We’d recommend starting at evaluation to understand when training is going to be most impactful and who may uncover that information.
A sales manager in a manufacturing company may notice that a business rep is consistently missing their target output. Discussion in their performance review reveals that the employee isn’t up to date on product knowledge, and they are unsure where to go for it, too. The manager could assign content within an eLearning solution, as well as arrange with an L&D professional for the rep to job shadow a product engineer. A three-month review could be scheduled in to look at the rep’s KPIs again, at which point you’ll know if they’ve realised the capability of product knowledge in full. It also shows if the workplace is fostering a supportive environment, which we know is an integral part of skills application.
Capability building model examples
Part of the development stage of capability building is the design of learning interventions. Let’s home in on professional development plans for a moment. These are usually the crux of development programs for many companies, which is why we think they need a bit of an update to meet today’s workforce climate.
Capability development plan
This isn’t so much a revamped learning pathway as it is a new way to look at organisational L&D. It has three distinct business benefits:
- Helps human resources (HR) and L&D keep track of what people want to do
- Centralises capability competencies
- Provides a basis for succession planning.
Rather than an L&D professional manually assigning content to a learner that might address a training need, a capability development plan maps content to a capability framework. This makes for a much for accurate and engaging learning experience.
Look at it like this: Learning content doesn’t need to be personalised (and it’s hard to do for a critical mass of employees). The mode of delivery, yes. Some people like to read and others prefer to listen, making traditional in-person programs not always viable. The frequency of training, definitely where possible. No two schedules are alike and you have to consider how learning fits into personal and professional lives.
But it’s not a good investment to create highly personalised learning content, like compliance and emotional intelligence programs, for every single employee in your organisation when, like compliance and emotional intelligence, you want all employees to have the same foundation of knowledge.
Rather, you want to contextualise content by capability. This makes it easier to tie job roles to learning opportunities, benchmark performance, assess competencies and prove the ROI of training—early on.
Say you’ve got a capability called Communicate Effectively. You could map that to learning resources on conflict resolution, assertiveness and accountability. This saves duplication of effort on L&D’s part and ensures that every employee who needs to be competent in effective communication will learn the same principles, making performance management easier for managers down the line.
A capability development plan puts ownership in employees’ hands, too. Acorn’s is structured to allow LMS users to choose capabilities they’re interested in developing alongside those necessary to their job role. Think of a software sales rep choosing an intro course to B2B marketing. That might not be training you’d think to assign to your sales team, but it can be practical and helpful for them in their roles.
Why it works for capability building
Many LMSs and learning experience platforms (LXPs) work on the idea of a skills taxonomy. This is a good starting point but at its core, a skills taxonomy is simply a dynamic list of relevant skills that may not include key behaviours or knowledge. It doesn’t enable skills application, strategic organisational development, or identification of emerging and new skills. A capability is a collection of specific skills that helps L&D professionals deliver more direct, timely training opportunities—through clear cut definitions of the key business drivers of an organisation.
Yes, we drew a line between capability and competency just a few paragraphs above. But like we said, competency is a measure of performance, which means it has its place in capability building.
The competency model assesses an employee’s performance against what performance should look like. Think of it like a capability assessment. A competency model:
- Sets the benchmark for performance, streamlining people management processes
- Provides HR, L&D and managers with a clear, united understanding of collective capabilities
- Empowers HR and L&D to design timely development interventions
- Gives employees ownership of their capabilities and progression
- Acts as a fair system for performance evaluation, and thereby succession planning and workforce decisions.
This may be an automated process in your learning management system, or one in which L&D utilise people and learning data to understand levels of proficiency. It is commonly derived from the KPIs attached to your capabilities, though there are other ways to segment and assess one’s proficiency in a given capability.
Let’s borrow from the ACT Public Service (ACTPS) capability framework. Competencies are attached to job roles, making performance evaluation for career planning the clearest application.
It’s important to note the ACTPS framework, like many public service frameworks, utilises only five core capabilities. Each is broken down into sub-capabilities, like the above (which belongs to Achieves Results with Integrity). How does this measure competency? The statements provided under each job role are cumulative. To truly be a manager, an individual must be able to achieve agreed upon outcomes and prioritise their own and others’ workloads by timeframes in order to establish performance expectations and build accountability.
Why it works for capability building
There has to be a measure of progress in capability development. Without guardrails like a competency model, you can’t be sure that impacts will be felt or that modes of training provided are effective.
A competency model also gives capabilities their dynamism. Capabilities are meant to be relatively stable; it’s development that makes them the dynamic learning resource your organisation needs to succeed.
Why you should focus on continuous development initiatives
As with all things business planning, capability development should not be a one-off affair. There are three big reasons you want to cultivate a culture of continuous learning.
- High impact performance is only sustainable if you keep reviewing the goal line.
- Business performance depends on the supply of organisational capabilities you have at any given time.
- The preceding points hinge on employees buying into the mission behind capability building activities.
Sustainable high performance
The business horizon depends largely on your landscape, but this doesn’t mean you should only plan as far as you can see. There are ways to understand potential futures—both good and bad. It hinges on your people.
Capability development initiatives are one way to close the gap between where you are now and where you’d like to be in an ideal future. If you’re taking a more traditional workforce planning approach, the goal is to look for patterns in past and current performance (incorporating environmental concerns) that highlight weak spots in the workforce. That’s not flawed employees, necessarily, but a lack of certain key capabilities.
The more updated approach is to assess your capabilities as they stand. A capability map shows the highest priority capabilities by their impact on change compared to their availability in your workforce. These are your gaps. And once you know the gaps that could impact current and long-term performance, you can create capability development plans to bridge them.
Having a continuous supply chain of talent with your unique capabilities is pretty much the key to maintaining your competitive edge. And because people retire, change careers, go on maternity leave—you know, live their lives separate to your organisational needs—you want to be continually developing the organisational capabilities that power this supply.
Think about it like this. You spotlight a junior team leader to succeed their department head, who is preparing to take over from a retiring executive. But you don’t know the junior team leader has decided people management isn’t their forte and they want to make a lateral career move to focus on creative and strategy. That’s two out of three tiers of mission-critical knowledge that could potentially be lost because you don’t know the career aspirations and available capabilities of your workforce, and you don’t have other talent ready to fill those vacancies.
This is where capability development plans, competency models and LMSs really come in handy. They give HR clear oversight of:
- Organisational capabilities at full maturity, through current competencies
- Developing capabilities thanks to measures of competency
- Career interests that employees may not otherwise vocalise, by way of interest capabilities
- The rate at which capabilities needed in future can be developed, based on previous completion rates.
Organisational performance hinges on employee performance. But employee performance is determined by their capabilities. And building those capability hinges on widespread employee engagement. Whichever way you cut it, employees are at the centre of business success. Getting the workforce to invest in ongoing capability development is the big play here.
Professional development is proven to:
- Increase retention, particularly of the majority of today’s workforce: The stereotypically job-hopping millennial. They want a purpose, according to Gallup, and development opportunities provide that.
- Boost employee satisfaction. Offering individual development plans that clearly impact business outcomes gives employees a tangible link between their day-to-day work and the company mission.
- Establish healthy workplace patterns. When L&D is role modelled to them by leaders and influencers, employees will see the benefits and engage with a new learning environment. When they become tenured, they set the tone for upcoming employees. And so it goes on and on, meaning that HR can loosen the reigns on managing development plans over time.
Where capability building thrives long-term is in developing strengths rather than fixing weaknesses. Employees respond better to this, because aren’t made to feel like they’re lacking. Say you start an employee on a development plan with content aimed at developing a higher level of proficiency in capabilities the employee already possesses. This gives you equity to ask them to develop entirely new capabilities down the line, particularly if you also encourage employees to undertake courses as side passion projects.
The success of your organisation is dependent on the organisational capabilities your people possess and how they use them. Luckily, they’re not a finite resource, but one you can and should consistently develop based on your ideal future state.
A framework for capability building and strategy will help you sell the mission to employees, particularly if you employ company influencers to embed learning in the workplace culture and offer personalised capability development plans. The aim is to build intellectual capital through an iterative cycle of learning and development that is always directly aligned with future business objectives, not just current goals.
Related Reads on This Topic
The Importance of a Workforce Capability Framework
What it is, how to build one and why it’s your organisation’s best weapon is all included in this guide.
How to Measure Impact with the Kirkpatrick Evaluation Model
Are you sure that your L&D programs are actually hitting the business mark?
A Necessarily Deep Dive into Public Sector Capability Frameworks
There’s a lot private business can learn from how the global public sector create, use and revise their frameworks.