The Ultimate Guide to Building Capability for Sustainable Organisational Success

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Building capability is the golden ticket to designing learning that drives performance improvement.

It’s easy to just launch learning in response to a business issue and leave it at that. It’s another thing entirely to create proactive learning programs that create a healthy and sustainable workforce.

This is why capability building is so important. Capabilities are the foundations of both learning and performance, linking them together to drive organisational success. Too many organisations apply learning without understanding the underlying business issue they’re trying to address, and just as many treat performance management as a way to measure past performance, rather than a way to move forward.

In this guide we’ll talk about how you can create an effective capability building process for your organisation to drive sustainable organisational success.

What does building capability mean?

Building capability refers to the process of developing the skills, knowledge, behaviours, tools and processes needed for an organisation to achieve its goals. Capability building initiatives can be focused on an individual, within a team or business function, or for the organisation as a whole.

It’s not just about skill building, but also nurturing a growth mindset to encourage a culture of continuous change and agility within the workforce.

The importance of building organisational capability

Let’s start with what capability is not.

It’s not capacity, which is your existing resources and infrastructure.
It’s not competency, which is a measure of how someone performs a capability.
It’s not skills, though it does encompass them.

A capability is a collection of skills, knowledge, behaviours, tools and processes required to perform a task or role effectively. The capability of resilience requires critical thinking (skill), a sense of purpose or direction (knowledge), flexibility (behaviour), data (tool), and networks and channels for communication (process) to be performed.

Developing key capabilities is crucial for your current and future business success. By developing your workforce with your core capabilities, you create a long-lasting competitive edge in the industry. Your company’s competitive advantage is enhanced by:

Building an agile and resilient workforce. Fortifying the workforce with the right capabilities enables employees to excel in their roles and adapt swiftly to industry trends and challenges, making them more agile (think faster decision-making, streamlined processes, and seizing opportunities), innovative, and adept at problem-solving. This creates a more resilient workforce as employees become confident in their capabilities.
Attracting, developing, and retaining talent. 94% of employees say they’re more likely to stay with their employer if given development opportunities, and 53% of Gen Z workers (the rising population of workers) value learning for career progress. And development should start from day one with, say, a first 90 days plan as part of the onboarding process and having employees continuously participate in training programs afterwards helps to build capability and reduce employee turnover (both voluntary and involuntary).
Building long-term success and sustainability. Building capability isn’t just about upskilling to match trends, it’s also about being able to maintain continuous change to drive organisational transformation. Capability building should inspire incremental changes that will overturn deeply embedded behaviours over time, and enable transformational change in the long-term. This is what allows organisations to become agile, resilient, and future-ready ahead of the competition.
Creating a future-proof strategy. Capability development creates a workforce fortified with the evolving knowledge, skills, processes, tools, and behaviours that businesses need to navigate uncertainties and inform capacity building. By cultivating a company culture of continuous learning, you create a workforce that is well-equipped to tackle any challenges that arise, before they’ve even arisen.

Overcoming common challenges to building capability

It goes without saying that initiatives so crucial to business success aren’t without their challenges. Using the wrong technology or processes, capability building programs are difficult to facilitate or even design.

But what does good look like when it comes to capability building? It’s easier if we start with the challenges businesses commonly face when trying to build capability. Specifically, we’ve identified five common barriers to building institutional capabilities:

Lack of buy-in from management and leaders
Lack of resources
Negative workforce perceptions
Poor business alignment
Organisational resistance to change.

Lack of manager and leadership buy-in

Leadership buy-in is essential for capability-building efforts, but actually getting it isn’t always so easy. The reason for this is simple: An organisation is large and comprised of many moving parts in the form of smaller departments and teams. Each of these teams—and the leaders that head them—have different goals, agendas, and KPIs they have to meet, which means different teams aren’t necessarily aligned with each other.

This is why buy-in from leaders and managers is so important. They need to be able to unite behind one vision to ensure effective capability building within your business. When you don’t engage leadership, the failure rate of change programs hovers around 70%. The best way to gain leadership buy-in is to effectively communicate your vision to leaders so they see your change strategy as a priority.

In other words: Demonstrate how capability-building will address leaders’ pain points, both at a business level and within individual business units.

Lack of resources

Another reason challenging the roll-out and effectiveness of capability-building is a lack of resources. Without the right resources to back up training programs and follow-up, capability-building fails to launch.

In general, failing to secure the necessary resources is usually an issue of prioritisation. Resources are always available to support organisational priorities—you just need to make your capability-building program one of them.

Of course, that’s easier said than done. Just like with securing buy-in from leaders, you need to make your case proving why your capability-building program is a priority for the business. Create a need for changing ways of work within your organisation, so that business leaders see it as a priority for organisational growth and treat it accordingly.

On the flip side, having the wrong resources can also be detrimental. Using spreadsheets for a whole of organisation development initiative is akin to throwing all your laundry onto the one chair. How can you find what you need, when you need it? Say you’ve borrowed a friend’s shirt; do you expect them to riffle through the pile to get their one item? People data is big data, and needs the right infrastructure to support it.

Negative workforce perceptions

Just because training and development is needed doesn’t necessarily mean that everyone within your organisation wants to do it. Maybe your last L&D program didn’t positively impact how things were run in the business, and your employees—and even leaders—felt it was a waste of time, effort, and money.

L&D is often still negatively perceived as a resource sink, and many don’t see the point of L&D programs at all. In other words, employees only do L&D activities because they were told to for compliance training, and once they tick training off their checklists, they don’t think about it again. There’re also scenarios where people crave paths to excellence, but they’re burdened by too much—too much learning content with too little time in their calendars to actually learn.

This is where you need to get dynamic. Pivot your training programs from simple compliance training to business-aligned KPIs that synchronise with your long-term organisational strategy. It also means getting your senior leaders to champion learning. When senior leaders model the importance and relevance of training, employees are more likely to understand the why behind participating.

Poor business alignment

Like we said, long-term strategy is important, and if your capability building programs aren’t aligned with business needs and strategy, they won’t be effective in building an agile or sustainable organisation. Not only will resources be allocated to the wrong initiatives, but employees will be stuck doing irrelevant training with no strategic value, leading to unengaged learners and dissatisfied employees.

Poor strategic alignment between business and training doesn’t have to be hard to overcome. Your core capabilities—i.e. business capabilities—provide your organisation with the direction you want your organisation to go in. At least, they do when they’re communicated and understood properly, which you can define with a business capability heat map. Not only can you use it for mapping business capabilities in terms of their relationships with each other, but you can also use it to identify each capability’s importance or risk to the organisation, ensuring that capabilities and training are tied to your business objectives.

Organisational resistance to change

Fear of change is pretty natural for all humans, so this isn’t something you can avoid. It’s just something you’ll have to learn to expect, manage, and overcome when it happens. Left to fester, resistance to change breeds discontent and blocks a learning culture from forming, which in turn hurts efforts to build organisational capability.

Generally, organisational resistance to change is rooted in emotion, which may be because:

There’s a lack of internal trust for the changemaker or who/what the changemaker represents 
Much of the labour needed for the change is being done by someone else  (i.e. your workforce)
Communication around the purpose and benefits of the change initiative is unclear.

And don’t think that resistance to change will manifest solely as employees refusing to do training at all. Plenty of employees will participate in training, but that doesn’t mean they will directly engage with the content, or that the learning will stick and overturn deeply embedded behaviours.

Employees are more likely to absorb change effectively if they understand why building capabilities needs to happen. Don’t stick with the high-level, here. While it’s true that the workforce needs to have a shared purpose to work towards, employees need to know how capability building will help them specifically. You need to answer two questions:

What’s in it for me? Demonstrate the benefit of capability-led programs for individuals.
What does it mean to me? Show the value add, not the potential loss, such as better or more accessible career progression based on personal competence.

How to develop a capability-building strategy

So you’ve discovered a gap in your workforce’s knowledge, or you’ve decided you need to build up a sales team, pronto. Your solution is to throw some sales training at some employees to prepare them to make much-needed sales calls. The problem is that this ad hoc approach to assigning learning is little more than slapping a band-aid on a gaping wound.

Developing a strong capability-building strategy is the only way to build successful change management. Without one, you’re not going to effectively build capability within your organisation, whether they’re business or role-specific (also known as human capabilities). We’ve identified five key steps to designing an effective capability strategy for your organisation.

Define a clear vision
Define capability requirements
Identify development opportunities
Select training methods
Track progress and measure success.

1. Define a clear vision

Your starting point should always be defining a clear vision—not just for your organisation’s objectives, but your core capabilities too. Why? Because business functions and core capabilities are derived from your organisation’s vision and objectives. So, to define that clear vision you need to ask three key questions:

What is the landscape?
What is the purpose?
What is the outcome?

It’s best not to look at it from an organisational standpoint alone. Instead, break it down into business functions and then capabilities—that way, you’re breaking it down into more manageable segments.

For example, when you’re defining the landscape, ask what the organisation’s greater mission, values, and purpose are. The specific business function or department should fit into that mission in some way, and generate value for the business. This can’t just be short-term value, either, because function-specific capabilities should be driving long-term strategic goals.

Defining the purpose is where you take a closer look at the capability itself and how it fits into the wider business context. That means looking at:

How well the capability feeds into business outcomes
Whether there is market demand for the capability
If the company has enough budget, people, or equipment to sustain the capability (now and moving forward)
Whether it competes with or complements current capabilities
What risks may arise (in terms of resourcing or reputation) from building the capability.

Once you have the purpose defined, you can get into understanding the outcome you actually want to see from the capability. In the spirit of creating a clear vision, the defined outcomes usually doubles as the capability’s name. So, your specific sales capability might be called account management and customer retention, or your marketing capability might be called marketing automation. This way, employees and leaders alike will be on the same page.

2. Define capability requirements

Once you have an understanding of what your specific capabilities are, you can create a capability framework, which outlines the capabilities that the organisation needs to achieve its goals. It maps capabilities as a way of visualising what is fundamentally important for employees to be successful in their roles. The idea is that by showing what capabilities and associated competencies are necessary for specific roles, a framework can be the foundation to recruit talent, manage performance, and create internal mobility.

Once you’ve built a capability framework, you need to establish clear key performance indicators (KPI). These will be clear, measurable objectives for capability development that provide a roadmap for what the organisation aims to achieve with its capability-building initiatives. These objectives should be specific, measurable, achievable, relevant, and time bound—in other words, they should be SMART goals. So, just like capabilities (which are named for desired outcomes), people should be able to look at a SMART goal and know instantly what it means.

It’s worth noting that these objectives and KPIs are what will help secure leadership buy-in. Leaders have specific pain points they want solved, and your SMART goals should address those pain points. The measurable objectives for capability development that you define are what leaders need to see to invest in your capability building initiatives. And if all your senior leaders model interest in capability development opportunities, you’re more likely to create a healthy learning environment for the workforce.

3. Identify development opportunities

When it comes to meeting your KPIs and goals, you need to look at developing capabilities for specific roles as well as the business as a whole.

To understand development opportunities for individuals, identify capability gaps.
To understand development opportunities for the overall business, measure capability maturity.

Evaluating capability gaps

Businesses will inevitably face changes in the market, technology, and industry standards, and that creates gaps between the specific skills, market knowledge, and behaviour your employees currently have, and what they will need further down the line.

Use a capability assessment to identify gaps in human capabilities. It will measure your current capabilities in terms of competency (or proficiency), the levelled scale indicating how capability is performed. Your competency levels should cover a range of proficiency from beginner through to advanced. Beginner competency generally indicates that development is needed to improve the capability, while advanced competency shows the employee is exceeding expectations in their performance. Intermediate sits in the middle, but just remember that simply “meeting expectations”, while good, may not always remain so.

For example, an employee may meet expectations for their sales strategy and planning capability, but because the organisation is scaling, they’ll need to exceed expectations to meet the business’s strategic priority within the next year. So, when it comes to setting up a capability building program, you’ll know to focus it on developing sales strategy and planning capability.

It’s better to use multiple types of assessments at once to get a full picture of where competency is at.

Let employees self-evaluate competency with self-assessments.
Have managers assess employee competency and compare results.
Use one or both of the previous assessments alongside an assessment by subject matter experts when assessing for specialist capability sets.

Evaluating capability maturity

Capability maturity looks at the overall capability of the whole business, rather than individual employees. It gives you a clearer view of overall proficiency in the business, and highlights the areas that should be prioritised for development according to risk to the business.

Capability maturity is usually represented by a linear progression of five levels:

Reactive, where capabilities are unpredictable and ad hoc.
Managed, where capability performance is managed project to project.
Defined, where capabilities are managed through organisation-wide guidelines.
Qualitative, where capabilities are aligned with business processes and objectives.
Optimised, where capability is optimised through continuous improvement.

Just like with capability assessments, you should see your capability maturity slide up the scale as capability development progresses. You can use a maturity model or map to show where your capability maturity is sitting on the maturity curve.

4. Select training methods

You can’t just use the same training tricks and expect new results. Effective capability-building only works with the right training methods.

A training needs analysis will help you identify the most effective training methods to address your capability gaps. Sustainable capability building can only be done with proactive training needs analyses, which will ensure that capabilities are constantly monitored, measured, and developed with relevant, targeted training.

The best training method for building capability really depends on your organisation’s capability needs. If you’re trying to develop capabilities that require more autonomy, creativity, or collaboration, continuous training with ongoing feedback (like coaching or mentoring) will benefit employees more. If you’re looking to develop leadership capabilities, then offsite or collaborative training activities are best for developing leadership qualities like communication or problem-solving.

5. Track progress and measure success

This is where you can utilise L&D metrics to determine how effective organisational capability building has been. We don’t mean learner satisfaction or completion rates here, although they can be useful. We’re talking about tangible metrics with results that indicate the return on investment (ROI) of your capability-building program.

The KPIs and SMART goals that you set are crucial for tracking capability building progress. Training needs analyses also help here. Were goals met? Are KPIs being achieved? If the answer is yes, then that’s a sign you need to adjust your capability-building programs with more targeted training. You also want to consider what the new training needs (i.e. capability gaps) are after training is completed.

It ties into performance management because using capabilities and their competencies to measure how employees have improved performance is the same as evaluating whether capabilities have been developed. Capabilities are an outline of job roles and requirements, after all.

6 strategies for building capability in the workforce

The best way to go about capability building efforts will depend on your organisation, its workforce, and the certain key capabilities that are a strategic priority to develop. Think along the lines of personal learning pathways (PLPs). It’s the guided route taken by a learner through learning activities, empowering them to pursue their goals (which can be long- or short-term) and take responsibility for their own learning.

Within these pathways, there are 8 strategies you can use to build capabilities:

One-time training courses
Offsite training
On-the-job training
Cohorts
Embedding learning in performance management
Capability academies and certification.

One-time courses

One-time classroom-based learning, or traditional in-person programs are an easy way to train large groups of employees on certain key capabilities and knowledge required of them to perform their roles. It’s also a cost-effective way of training and improving time to proficiency for your employees.

You might be concerned about the “one-time” aspect, especially given knowledge retention occurs through repetition and reinforcement. A one-time internal course won’t be the only learning type you provide to your workforce, but the one-off aspect can be useful. Take a course for new leadership, for example. It’s important for your succession planning process that you deliver the ins and outs of leadership to new leaders. But rarely would you repeat the same training (as senior leaders will have completely different responsibilities).

Another advantage is social learning. In group learning, participants can validate new concepts between one another, supporting team building and problem-solving between onboarding employees or new leadership teams. Group learning also offers real-time feedback from instructors, meaning you’ll see course corrections in the moment of need. Peers may also start to validate one another’s learning, sowing the seeds for a learning culture.

Offsite training

Offsite training is a kind of experiential learning that takes place outside the workplace, involving “sandbox” experiences and learning opportunities. In other words, it re-contextualises training, problems, and those problems’ solutions within a new learning environment that makes it easier for new concepts to stick. It’s easier to see how concepts and solutions can be applied in your day-to-day work when you can see its impact demonstrated in a real-world situation first.

Plus, a lot of offsite programs focus solely on collaboration and communication between teams, building a long-term learning culture (which is one of the essential elements of long-term growth) as well as boosting short-term capability building. The faster you create a cultural norm around learning, the faster you reach sustainability, or critical mass.

On-the-job-training

On-the-job teaching is practical training, equipping employees with the necessary knowledge, skills and behaviours directly in the working environment. These practical processes should allow for learning in the flow of work, including coaching, mentoring, job rotations, e-learning programs, and shadowing.

Coaching

Coaching is a form of development where a more experienced individual provides insight, guidance and advice to a less experienced employee. It differs from mentoring in that coaching is about driving performance by guiding the less experienced employee in the right direction through open-ended questioning. In other words, a coach holds a coachee accountable for obtaining answers and solutions.

There are two main types of coaching worth implementing.

Formal coaching involves the coach and coachee engaging in a structured relationship with dedicated learning outcomes. This type of coaching has a set period from beginning to end, with conversations and meetings usually occurring at scheduled times.  
Informal coaching is less structured. It has no scheduled appointment times or specific start and end dates, instead occurring in everyday conversations or interactions.

Mentoring

Mentoring is a mutually beneficial relationship between two people (a more skilled mentor and a less experienced mentee) that seeks to impart knowledge with the aim of professional and personal development. Unlike a coach, a mentor actively provides advice, guidance, and the knowledge required for a mentee to improve, rather than pushing the mentee to get to the performance destination on their own.

Job rotations

This is often used in graduate programs as a way of moving a new recruit through a variety of different roles to give them an array of experiences as well as train them in various capabilities. The goal is for employers and employees to identify where recruits’ strengths and abilities are best utilised.

E-learning programs

E-Learning pathways are a guided method of learning. The most effective learning and performance development plans match capabilities to learning content, to offer a truly contextual learning experience. This is the basis of a performance learning management system (PLMS), which is designed to link learners’ capabilities with targeted learning programs to improve individual and business performance and capabilities.

Shadowing

Shadowing is when an employee “understudies” or shadows a superior they are preparing to assume a role from, or take on. For example, a new recruit to a sales team may shadow a sales leader for a period of time to get across the company’s strategy and processes. After their shadowing period is over, they can start taking on sales calls solo, applying the knowledge and skills learned.

Group-based learning

Individual learning has its place, but sometimes group-based (or cohort) learning programs are better suited to developing certain key capabilities. We’re talking about group-based learning that reflects how work happens: In teams. This is especially useful for time-bound development because all learners are accountable to each other for completing and retaining learning, which means learning outcomes are more likely to be met.

Having group-based learning ensures that employees:

Learn to self-contextualise skills and knowledge application 
Develop the social and technical skill set needed in managers 
Have a risk-free environment to problem-solve 
Receive inclusive development for dispersed and remote workers 
Institutionalise best practice knowledge sharing for learning continuity.

Embedding performance management

Capability building doesn’t begin and end with learning programs. To create space for widespread change, you need to review and measure the effectiveness of your L&D initiatives. It’s through continuous review and adjustment that you will see long-term growth to ensure your business’s future needs are met. In other words, you need to embed performance management with learning to build capability.

The fact is that separating learning and performance management creates a disconnect between training programs and how employees actually perform their roles. If learning doesn’t drive performance, then its ROI is worthless. And if performance management isn’t identifying actionable learning opportunities for employees, then performance reviews are just an exercise in compliance, rather than an actual evaluation of how employees are working.

Capability academies

Institutionalised learning—like capability academies—is focused on building capabilities through processes, programs, events, and developmental assignments. It’s designed to give employees the exposure and experiences needed to grow professionally and develop their capabilities. They focus on the organisational capabilities needed to meet business goals, so they’re sponsored at the business level (which is essential for creating a culture of continuous learning within the workforce).

Capability academies incorporate:

Self, manager, subject matter expert, and even peer assessments as part of training needs analysis, training design, and career momentum.
End-to-end training, including internally created courses, simulations, industry speakers, workshops, assignments, and certifications.
Strategic workforce plans that can still be catered to a niche capability set in order to build critical capability at all levels of your organisation.

Best practices for sustainable capability building

The simple solution to sustainable capability building in the workforce is to create a learning culture that encourages continuous improvement and learning. to be clear, a learning culture is an environment that encourages individual and organisational learning, where knowledge sharing and collaboration are promoted, prioritised, and rewarded. Of course, creating that learning culture is easier said than done, which is why there are best practices for making your capability building sustainable.

Create co-ownership between HR and business units

Traditionally, capability-building has fallen on HR alone as part of L&D. It makes perfect sense, because HR’s job is to understand what the business needs, which means they’re perfectly placed to create learning programs that address that.

The only problem is that HR may not understand each individual business units’ priorities when they design L&D initiatives, leading to a disconnect between what the business needs and what individual departments or teams need. This is why it’s so important to create co-ownership between HR and business units.

You need HR and business units to approach building capability with a unified strategy. That means HR and business units need to be involved in collaborative goal setting, where they set goals addressing the specific needs and priorities of their business functions. These goals should be part of a shared vision for capability building that also aligns with the organisation’s overall strategic objectives.

Make sure that your metrics and KPIs are shared as well. It’s no use having shared goals if HR and business units aren’t measuring progress the same way. This is where it’s also useful to have a unified reporting system that can track and report on capability-building activities and outcomes accessible to both parties.

Perform continuous evaluation and improvement

Continuous improvement is the persistent endeavour to refine and enhance strategy execution, and the only way to do that is through continuously evaluating your capability-building processes. This is usually done through formal measures like training evaluation, training assessments, post-training enablement, and communities of practice (i.e. a group of people with a shared learning concern or interest).

You can continuously evaluate your capability-building initiatives by:

Conducting proactive training needs analyses to identify development needs and assign targeting learning to address them.
Providing ongoing feedback and training (particularly on-the-job training) to ensure that employees are constantly learning and applying knowledge and behaviours acquired in their day-to-day work.
Running continuous leadership development programs to create a healthy learning culture. Business leaders and managers are the role models who set workplace culture, and a learning culture is no different.

Leverage technology

Using technology to assist in building capability enhances the efficiency and effectiveness of your development initiatives. Used properly, technology helps streamline the entire process, doing all the time-consuming and manual tasks for you so L&D professionals can focus on more complex tasks.

A PLMS in particular improves the process by:

Identifying and assessing your organisation’s key capabilities and capability gaps, making it easier to determine where your capability risks lie
Assigning capabilities to specific job roles, which helps in individual performance management and creating development plans
Creating personalised learning pathways for employees based on employee needs, job roles, and set goals. This way learners can consume content that contributes value to their professional development as well as to the business
Keeping all your learning and performance data in one centralised location, enabling faster and more accurate data insights and analyses on learning and performance.

Key takeaways

Capability building is essential for creating meaningful learning and performance initiatives. Without capabilities to link the two, both become ineffective at solving the problems they were created to address. Learning that doesn’t improve performance has no strategic impact on the business, and performance that doesn’t drive tangible development plans is simply compliance.

The important thing to remember when it comes to building capabilities is that you can’t have sustainable capability building without being proactive about it. The business environment is constantly changing, and capability building needs to be adjusted to keep up. Done right, organisations can continuously develop capabilities to become truly competitive in the market.