Organizations could be in store for more challenges as they work to navigate an uncertain economy, rapid and shifting globalization including “re-shoring,” and continued technological progress. In the midst of all of this change, it is more important than ever that business leaders drive growth and continuous innovation. To maintain a competitive edge, organizations must adapt and respond to volatile markets, increasing customer demand for customization, and emerging economic challenges. In addition, they must balance all of these efforts against the demands of an evolving workforce with changing work-style preferences.

Organizations that are successfully driving growth and innovation have three things in common:

  1. Strong leadership and organizational structure
  2. A culture that encourages the free flow of ideas and collaboration
  3. The right talent in the right roles

It is my conclusion that the organizations doing these things well will lead their peers in closing their organizations’ Capability Gap – defined as an organization’s ability to execute on the opportunities before it – and lead in their markets.

According to the 2012 PriceWaterhouseCoopers Annual Global CEO Survey, one-quarter of U.S. CEOs say they were unable to pursue a market opportunity and another fifth were unable to innovate effectively due to talent constraints.

Earlier this year, Boston Consulting Group developed a framework of capabilities that matter, and they boil down to the right people, operating with the right leadership in the right structure. Simple, right? But not at all easy! 

This should be the core of great HR leadership, but many HR departments are not aligning their talent strategies with their organization’s growth and innovation objectives. In quickly shifting markets, where windows of opportunity open and close faster than ever before, a lack of strategic alignment leaves organizations without the “capabilities” critical for success.

If Human Resources is truly going to the become a strategic function that helps solve pressing business challenges, HR leaders must do a better job of establishing a culture of innovation and promoting results-oriented behavior.

This means creating a fluid infrastructure that brings individuals into discussion, cuts across business functions and organizational hierarchies, and ultimately, sparks innovation within their organizations. It starts with Business Strategy and ends with Business Results, but success hinges on the pieces in between – a focus on your organization’s Human Capital.

HR's Role in Closing the Organization's "Capability Gap"

Several surveys have reported that improving talent acquisition and management is on the Board and CEO radar for 2013. Because of this, HR leaders have the opportunity to step up and prove they can be held accountable for driving innovation within their organization.

I suggest five steps HR leaders should take to drive growth and innovation:

  1. Intentionally and visibly fashion your organization’s People Strategy so that it underpins and accelerates its Business Strategy. Socialize it widely and communicate it robustly.

  2. Develop a talent attraction strategy that validates you’re acquiring the right kind of talent for the business both today and in preparation for tomorrow and report regularly via its own scorecard and its impact on business metrics.

  3. Design and implement training and development programs that promote business acumen and innovative behaviors at all levels within your organization. Ensure your organization fosters team dynamics that maintain a diversity of perspectives, actions and ideas.

  4. Incorporate and embrace technologies that enhance the free flow of information across work teams and promote organizational agility.

  5. Reward and recognize innovation, collaboration and deliverables.

Establishing and accomplishing growth and innovation strategies will no doubt be a significant challenge – and opportunity – for business leaders in the year ahead. For organizations to excel, CEOs must establish high expectations for their HR leaders, and those leaders need to take the steps necessary to rise to the challenge.

Creating the necessary Human Capital infrastructure to accelerate organizational effectiveness and close the organization’s “Capability Gap” needs to be the top priority for HR leaders.

Post contributed by Sue Marks, CEO.