HR case study - Human Resources vs Human Capital

Human Resources versus
Human Capital1
A word and a world of differences!
!
Jas Chong, August 2014!
« We are sailors on an ocean of change and the organization we are part of are the ships
we sail. We cannot sail against the prevailing winds, but we can learn to work with the
winds and the waves and harness their energy to arrive at the destination we aspire to
reach. » Michael H. Hugos  2
See previous blog post of the same tile. It outlines the basic philosophy. http://thedignityofwork.com/1
2012/12/04/human-capital-vs-human-resources-a-word-and-a-world-of-difference.
Business Agility: Sustainable Prosperity in a Relentlessly Competitive World, Michael Hugos, 20092
Ascent Human Capital Consulting

Introduction!
Change is the only constant!
« As water has no constant form, there are in war no constant conditions.» Sun Tzu. "
Business priorities are constantly changing to meet market forces and developments.
Advancements in internet and mobile technologies has changed consumer behaviours
dramatically and thus forcing business to adapt or be obsolete. Not only do business have
to keep up with competitors, as entry to market with the help of technology becomes
easier, they also have to face up to non-traditional competitors. It is under these challenges
that the case study is based on. "
Digital transforming lives and business!
The case study is based on a global travel company that focus their activities in
package tours for families to sunny places from Europe. With non-traditional competitors
entering into market like google ﬂights and new competitors like on-line bookings, the
travel industry is due for an overhaul. The extensive overheads of travel agencies in shops
and selling packages is decreasing in beneﬁt will on-line selling becomes dominant. "
!
The change programme Digital Transformation spearheaded by group CIO is an
ambitious effort to overhaul the legacy technological platforms to create a more uniform
and modern front to catch up with consumer habits that had changed over the years. "
!
The impact is not only technological but largely in the people and the competences
of the company. This case study looks at how people is the heart of the change effort and
where good human resources practices advances the programme and bad practices
hinders and eventually stall any change desired. "
!
Leverage to Grow!
Focus on strengths!
The company had decided to embark on a large change programme to digitise their
customer journey. This large scale programme is largely IT led that would focus on
enhancing digitally the way they communicate and conduct commerce with their
customers. With fragmented systems and multiple non-connected platforms, the path to
2HUMAN RESOURCES VERSUS HUMAN CAPITAL

change was long and arduous. It could be years before beneﬁts are realised with
customers and by then, the market would have moved on and render change obsolete.
The result could be an endless game of catching up. "
!
Focusing on strengths within the company, they realised that there were huge
opportunities and pockets of knowledge. The plan was to create a domino system where
each country would focus on their strengths and create expertise to beneﬁt the rest of the
countries simultaneously. To do this, an ecosystem of centres of excellences were created
with focus on technical expertise in: web, mobile, customer relationship management
(CRM), big data, middleware, e-CRM and social. "
!
In addition to simultaneous change and delivery, time to market is key to retain
existing marketshare and acquire new clients. As most of the markets already practiced
agile , it was decided that agile development would be the dominant delivery3
methodology. Development would be deployed in a consistent rhythm across different
markets with continuous improvement. The result would be step change over a period of
5 years. "
The biggest change is people and not technology!
The success to change would be the willingness of teams to work in synch and
together. Firstly, all local CIO had to agree to the roadmap and to cede their control on
local budget to global governance and use. Secondly, the choices of technology would
have impact on existing competences and skills. Employees would have to embrace the
change and look beyond personal impact to overall company survival and growth.
Thirdly, change in technology would ultimately impact employees in sales, marketing and
shopfronts. "
!
The choice of where to set up centres of excellence (CoE) was not about existing
technical competence but about people competences and skills. They decided to set up a
web CoE that would service all web developments from Stockholm, Sweden. The team in
Stockholm had been delivering across the Nordics market (4 countries) and knew how to
manage the competing priorities in each countries. In addition, the proportion of e-
commerce sales to agency sales in Sweden was the highest in the company and the team
Agile is methodology based in software development. It’s goal is to keep development as close as the3
market as possible, to release in small and multiple cycles and thus ensuring relevance and sped to
market.

understood the mechanism of digital practices include SEO , SEM and web analytics. In4 5
spite of a new technology platform, there was confidence that setting up the web CoE in
Stockholm would accelerate change. "
!
For accelerated growth, they had also decided to engage third party providers and
independent contractors with key competences and skills to complement internal
expertise where the initial heavy lifting of development work would be done. And to
ensure continuity, the goal was to pair internal teams with vendors to learn and gather
expertise to eventually manage all development internally. "
"
Implementing Change!
A tale of two HR!
The first stages of change was setting up the web CoE. Web was considered as prime
customer contact points and where benefits from initial deployment could fund further
changes. The challenges included, multiple sites and applications, various stages of
maturity and different platforms. In implementation, this was where HR was at the heart
of success. The next section on change reverted was a less successful example of HR. "
Starting without HR!
In the Web CoE, an external technology vendor was engaged to implement a new
web platform and solution. The vendor was also tasked to form the CoE and to work with
internal staff who were placed into the project. There was a 20 - 80 ratio of internal to
external staff and the difference in culture and language created misunderstandings. (the
CoE was based in Stockholm, Sweden and vendors were from UK and India). The lack of
team work and understanding started to endanger the delivery of technology. "
!
While the technology teams continued with the set up, management and board had
yet to approve nor released budget. In addition, without involvement of HR, there was no
dialogue with unions and caused further complications in the creation of teams. The
immediate impact to internal team members transferred to the project was a lack of job
SEO, search engine optimisation.4
SEM, search engine marketing5

security leaving their old job for a new position that were yet to be approved. Stalling in
budget approval also affected momentum and motivation of the team. "
HR late but presence counts!
As the web CoE teams and local IT teams grew increasingly restless, HR was called
in to assist with the process. As HR teams in Stockholm, Sweden had not been previously
informed of the programme, this could have easily turned into a political brick wall. But
HR quickly grasped the situation and the impact of the programme and stood behind the
programme team to help transition and set up the web CoE. This was to huge relief to the
change programme team. "
!
HR and change team focused on the immediate teams. Firstly, HR facilitated
coaching of staff to help them settle into the CoE. Secondly, we started drafting the
resource planning and set up in preparation to communicate with workers union. Thirdly,
we began working on long term build of competences. People considerations become
forefront in the set up the CoE and order was slowly put in placed. "
Focusing on competences and not skills!
The choice of technology in Web CoE was different from existing platform. The ﬁrst
thorny question was what to do with the existing teams and communicating while not
causing panic and that would impact productivity. If we were to focus on technical skillets
and programming language, most of the development team would have to be replaced
and we would have lost a great deal of company knowledge and people assets. "
!
To retain knowledge and people assets we decided to use this as an opportunity to
promote and realign roles. We outlined key business roles such as product owners, project
managers, integration for internal staff. These roles have lower dependency on direct
programming language skills and provided promotion or horizontal movements
possibilities for technical staff who can move into management and/or business positions.
As these roles needed strong company knowledge and inﬂuence, internal staff will work
better than vendors in scoping development requirements. "
!
Finally, we started designing up-skilling programme for developers who will need
to learn a new programming language. And we ensure that there is pair programming
with vendor teams so practical technical knowledge can be transferred. Not only were

pair programming a method for developers, this method of pairing experts with rising
experts was also in integration roles and product roles to facilitate transfer in knowledge
and reduce reliance on vendors. "
Iterative organisation development!
As agile delivery focused on small releases and multiple release cycles, it made
sense to ramp up the team in sync with delivery. We started drafting organisation chart by
iterations. This meant that we started with a nucleus team and a resourcing plan to add
staff with adjustments every 3 months. There was no established structure of what a team
will look like 5 years, rather, it was a team ﬁt to the agile release cycles. This provides the
necessary scaling needed in resourcing and also leaves room for additions over time. It
also requires HR to remain in constant conversations with the team to keep up with
resource requirements as it moves closer to each release. "
!
The organisation chart also included roles held by vendors and when they would be
replaced by internal hires or new hires. This was key in creating a sustainable structure
and also called for constant communication with vendors for clarity. It was important that
the set of roles and organisation chart is not limited to internal staff but viewed as total
talent requirements. It also provided a pipeline of roles for HR to assess internal
competences and transition or external recruitment plans. "
!
Internal staff or potential staff who will be transitioning into web CoE were
consulted on both the organisation and the core job descriptions. Staff were involved in
reviewing the organisation and participated in creating the job description to ensure fair
process. (See next section on job description)."
!
Finally, the plan and up-skilling programme was presented to the union for
approval. HR led the discussion focusing promotional opportunities to existing staff;
training and development for developers; and creation of jobs. HR also explained the
iterative organisation to give time for local teams to join the new team or look for other
opportunities internally or externally while they continued to work on existing platform
over the next few years. HR was successful in convincing the union and the discussions
were smoother than expected when it was demonstrated that staff were consulted in the
process and had in principle agreed to the change. "
!

Lean and agile HR practices!
There were multiple newly created roles and skills where existing job descriptions
did not cover. The next stage of work included the creation for job descriptions for internal
transfers as well as new hires. But the focus was coaching teams into their roles and used
this as learnings for the formalisation of job descriptions. The job descriptions will service
2 purposes: recruitment of new hires and point of reference for internal transfers to their
new roles. "
!
We focused the recruitment and internal transfer efforts on 3 key areas: Principle
accountabilities, experience and competences. Principle accountabilities outlined the key
areas of success for the roles. In experience, we focused on similar environments and
cultures rather an exact match in previous job experience. And in competences, we
integrated a new set of technical competences. As such, we also provided possibilities to
qualify existing staff who would be eliminated if we had focused on programming or
exact technical skills. "
!
We challenged some standard parameters. Firstly, while education is required, it is
not key. Secondly, we integrated a new set of competencies that typically takes time and
approval. Rather than trying to implement IT competences across the whole IT
department, we also decided to use the web CoE as a pilot. And with each new role, we
would include competences for new hires or transitioned personnel. We also agree not to
create « superman » proﬁles but . emphasised on creating a balanced team where
members complement each other in experience and competences. Finally, we used a set of
interview questions focusing on situations and reactions in difﬁcult situations.  

Change Reverted!
The other HR story!
In the background, group HR was also working with group CIO on restructuring the
IT organisation. Group IT functions are fragmented in the organisation with staff spread
across various geographies and some taking partial group and partial local roles. There
was an overall lack of clarity in reporting lines and accountabilities. In addition, lines were
further blurred with the digital transformation programme and added the anxiety of staff
and their place in the light of changes ahead. To create focus and coordinated efforts with
local IT teams, group restructuring was long overdue. "
!
While web CoE set up was iterative and adapted over a period of time, group IT
reorganisation was in contrast a big bang effort. Organisation charts were redrawn and
HR and CIO communicated the change to heads of local IT as well as key group
personnel. 1 to 1 conversations with « key personnel » were held along side to
communicate the change while the rest of the group was largely ignorant or hear it from
top management through grapevine or their managers. There was no plan for transition
and the organisation was presented as it should be. Thus people started to scramble to
find a place for them in the structure. "
!
The biggest difference was that in Web CoE, there transition while work continues.
As the organisation was not defined, there was room for additional roles and the message
was clear in transition over time. In group IT functions, HR had presented the future state
and there was no mention of transition and evolution possible in the structure. This
immediately created anxiety and political pandering to find a place. "
Mismatched solutions!
As part of the reorganisation efforts, HR also thought it useful to introduce several
new elements at the same time. An external consulting company was hired and asked to
produce a « best in class » proposal on the structure, drawing examples from existing
companies. However, the examples were UK based companies and agile methods in IT
delivery were not considered. The « best in class » proposal also focused on future state
but did not provide iterative stages that could lead up to a future state. Finally, none of the
IT managers were consulted in the creation process and it was communicated in a

presentation. Compared to 4 months of change conferences on technology decisions and
iterative outputs, a big bang change was less well received. "
!
When the new group IT organisation was introduced, there were newly created roles
where role proﬁles were not ready or non-existent. There was also not enough work in
gathering feedback and conversations for fair process. Instead of clarifying roles, it created
a vacuum left for interpretation and further political manoeuvre.While the web CoE roles
are open for application internally and externally, the group IT roles were rather assigned
through closed door discussions.It further created mistrust in the process. "
!
Secondly, the existing matrix reporting system were to replaced with local CIO
reporting directly to group CIO. On paper, it seemed like a straight forward practice that
exist in many companies. In practice, it slowed decision making process and act in
contradiction to an agile development process. This also removed local IT teams from
local management and thus a necessary layer of local governance and local decision
making process. While group wide technology decisions provided the framework, local
business were crucial in prioritising local needs. In this structure, group IT costs will be
larger as it now has to cover all teams across geographies and subjected to group cost
approval process for a larger sum. The overall impact is a longer approval process on all
decisions and disempower local teams. "
!
Thirdly, the new organisation would also include a « pooled resourcing » structure
that would replace dedicated teams approach. (A typical model in IT consulting ﬁrms) It
seemed like a good way to manage resources, but in practice not practical. In a CoE
scenario, the aim was to enhance expertise and accelerate delivery through multiple
release cycles. With iterative team growth, there would be no spare resources to « slot » to
another team when needed. Even in non-technical functions like product owners and
business analysts, understanding of product will grow with each release, switching team
members would only mean a steeper learning curve each time. And for technical roles, a
web developer is very different from a mobile developer to render « pooling » impossible. "
!
Much of the discussions in the reorganisation were greeted with silent disapprovals
and indifference. An attitude of « wait and see » grew and further created discontent and
distrust in the programme. Worst, in the absence of clarity, political pandering arises and
took centre stage. The vision of digital transformation had lost its sight. "
!

Human Resources vs Capital!
Context is key!
The intentions of reorganisation were well placed and change was necessary.
However, orchestrating change with mismatched solutions is like asking a jazz band to
play classical music. In this case, HR had bought the most beautiful classical score without
taking time to understand what the audience is looking for and the strengths of the
players."
!
Group HR were not close enough to the programme nor IT capabilities to provide
guidance. While the CIO was making the decisions on structural set up, HR was neither
providing right challenges nor useful directions. For political serenity, both decided to
take on board the plan of a consulting ﬁrm and left liabilities and accountability at the
hands of external parties. "
!
The main focus of reorganisation was cost cutting and removing duplication. This is
a depreciation driven view than appreciation driven. Rather than looking at where there is
wastage and cut, they should be looking at strengths and how to strengthen the team with
right reporting structure and leaders. To them pooling resources will mean less wastage
and lower cost. In effect, the programme will not have excess resources to rotate. Even if
there were incompatible skills, the short term solution will be using their understanding
of the context for knowledge transfer and development. "
!
Communication was command and control in waterfall style and communication is
mirrored in the same style. Especially with local CIOs, change of their reporting structure
is not just about a boss who approves vacation days. They had ben hired and built
relationship with their managers who are local CEOs, changing the structure requires
conversations and relationship building. As discussed earlier, this structure will not
accelerate their transformation but rather hamper it. "
!
Involvement of group HR could have been earlier to give time for considerations
and understanding. And to compensate for time lost, HR has stressed themselves into
ﬁnding perfect solutions rather than dialoging to create step change. It also felt like HR
just wants to be done with this problem then to see this as an opportunity to build a
stronger organisation. "

Multiplier effect is key!
In thinking of people in an organisation, 1 plus 1 is never 2. When HR considered
people as resources, we began to hear terms like « seat warmers », «benching people »,
« 1.5 resource ». This when we think of a position as an empty seat that needed to be
filled. Yet, « filling » an additional seat rarely has little or no impact to the rest. This
systemic impact is the multiplier effect. In some cases, it can be positive and in others,
negative. "
!
Consider teams rather than individuals. In the web CoE and mobility CoE
comparison, the web CoE evolved towards a stronger team together with external
vendors and independent contractors. The starting pace is slower but over time, the
increased in understanding and output is exponentially higher. In mobility CoE, various
vendors with different expertise were placed together. However, lack of understanding
and teamwork resulted in turnover in the project and increased further cost in
implementation. In addition, there was no transfer of knowledge and increase in internal
expertise. "
!
Consider potential than present strengths. In the digital world, evolution is fast and
situations will arise where there is no precedent. Equally, the last financial crisis also
taught us a lesson in reduced predictability and importance of adaptability. If the web CoE
had considered internal staff according to their current job and expertise, there would be
no retention of employees and resulted in a great loss of knowledge. Sometimes, it is well
to remember that capabilities could be hidden because the situation has not called for it.
People will also inspire each other to reach out to the best. "
!
Consider team results than individual results. With an ambitious programme to
change digital expertise, knowledge transfer is important. Pair programming and
mentoring to facilitate development calls for working in teams. If people were rewarded
and assigned individually, they will have no incentive to focus on group outcome and
limit the strength of a team. "
!
Conversations with HR in Stockholm, Sweden on web CoE had often been around
the potential of a person, how they can impact the team and delivery and where we can
develop them. Conversations with group HR had often been hair pulling about
regulations, following the right process and cutting down the numbers. There is truth in
the saying, we put our money where our mouth is.  

Closing Thoughts!
« Values are what govern the behaviour of people, but principles are what ultimately
determine the consequences. » Stephen Covey"
!
There are many articles written about organisation culture. The way I think about
culture is closer to anthropology where people evolved and learnt through experiences
and then to classify and represent experiences to repeat them and to act creatively and
imaginative in accordance to these. And the power of learning lies in repetition. Thus, if a
company wants to value respect, then the practicing principles will have to be congruent
to constant listening, considering points of view and repeated conversations repeatedly. "
!
When I consider this case study in hindsight, I marvel at how good HR practices can
propel things forward while bad ones can create so much negativity. And mostly, the
importance of this profession and the potential to do good and the inadequacy today."
!
Today’s HR reputation is not in a very good place in many places. The continual
decompensation of the profession will mean reduced representation of people and culture
in the boardroom. While finance, IT, legal and business all put forth their concerns,
people, the most important asset has no advocate and at best inadequate patchwork
representation by other functions. "
!
To continue this spiral, we will also lose future generations of talents in this
profession as they are attracted to more « flashy » functions like marketing, « better paid »
functions like finance and « futuristic » functions like IT. HR profession will be the choice
of last results for young people reviewing career choices and aspirations. The situation can
only be more dire. "
!
HR has to step up and step out. HR has to step up their game, innovate, integrate
new practices and implicate themselves in the business they represent. HR has to step out
of their office and talk to people, raise awareness, build trust and understand the drivers
of the marketplace. Begin by taking a small step, even baby steps. "
!
“My life amounts to no more than one drop in a limitless ocean. Yet what is any
ocean, but a multitude of drops? » David Mitchell, Cloud Atlas, 2004. "
!

About Me!
I am a change management consultant, Singaporean Chinese national based in Paris,
France. I intervene by crossing the lines between technology and human resources to
build understanding and construct solutions focusing on the people-side of change to
ensure change is adopted and sustained. "
!
In this case study, I intervene and mange change requirements and worked with HR
to implement all changes related to organisation and set up. In particular to the set up of
web CoE, I also act as a HR partner intervening on behalf of HR. "
Disclaimer!
The case study is based on actual events. Any views or opinions presented in this
article are solely those of the author and do not necessarily represent those of the
company represented in the case study."
!
Contact information!
For more information, please see:"
email: Jas.chong@ascenthcc.com"
website: www.ascenthcc.com"
blog: http://thedignityofwork.com"
twitter: @ascenthcc"
linkedin: https://www.linkedin.com/pub/jas-chong/1/1b7/293

HR case study - Human Resources vs Human Capital

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