Eskom: Human Capital Investments

Eskom, the South African Government's electrical utility, is in the process of evolving from an environment characterized by central government planning to one marked by more competition and expansion. The company knows it will have to become even more cost conscious, and streamline many current operations, yet it must do so while acknowledging the country's unique circumstances, and Eskom's historic social responsibility to citizens. At the same time, achieving high performance means Eskom must now compete more vigorously in the international energy marketplace. One important issue for the company, then, is how to streamline its human capital management processes and capabilities, while remaining true to its unique social mission.

To help Eskom gather the necessary data about the human capital investments that would be most conducive to high performance, executives teamed with Accenture to implement the Accenture Human Capital Development Framework. The framework is an assessment and analytic tool that draws on best practices and Accenture experience in the fields of human resource development, learning and knowledge management, along with state-of-the-art measurement techniques.

The Accenture framework—developed as part of Accenture's overall research program to determine the characteristics of high-performance businesses across industries and business functions—is unique in that it helps organizations do more than look at levels of spending to get a sense of their human capital development strengths. It also analyzes the effectiveness of the underlying practices and how aligned they are with the organization's competitive strategy and mission. With the framework, an organization can better assess its core human capital processes and capabilities, such as leadership and talent management, identify specific human capital needs and then prescribe the right interventions to improve financial outcomes and achieve overall high performance.

An Accenture team worked with Eskom for eight weeks to collect data within the four major areas of the Accenture framework: human capital processes, human capital capabilities, key performance drivers and business results. Business results were represented as Eskom's two-year average capital efficiency relative to industry peer groups. The comprehensive testing procedures included an examination of actual HR and other corporate data, employee and HR executive survey responses, and interviews with executives.

The Accenture project with Eskom was also significant because it was part of a larger analysis of the Accenture framework, conducted with 19 organizations from a variety of industries across the Americas, Europe, Asia Pacific and Africa. This analysis, co-sponsored by Accenture and SAP, showed that companies could focus their human capital investments in several key areas that are more likely than others to help achieve high performance. Specifically, the testing affirmed the importance of human capital strategy, supportive work environments, and employee development to the financial success of any organization.

Results from the interview portion of the data gathering indicated that company leaders were particularly interested in skills development as an area vital to their success. Technical and engineering skills were important to support expansion and the creation of new power plants. General business skills would be even more in demand as Eskom moved from a monopolistic environment to a competitive marketplace. Project management skills and leadership capabilities were also important, especially the ability to lead transformational change.

Company leadership was looking to HR for the change management skills that would enable the company to undergo the cultural transformation necessary to succeed in a more competitive environment. HR also needed improved ability to plan for and fill resource and skill needs aligned with Eskom's strategy. In general, although HR was viewed as effective, executives were looking for even more mature processes and capabilities to respond to change issues, as well as resource and skills needs. Financially, the company was in a strong position and was maximizing its current assets and people almost to their full capacity. However, capacity issues—both physical assets and human capital—could hinder the desired growth without the right investments.

Results from the other data gathering based on the Accenture framework indicated that basic human capital infrastructures were strong. However, to achieve high performance, more attention must now be paid to human capital strategy. Here again, HR is being asked to be more proactive and strategic around workforce planning, leadership development and workforce adaptability. As Eskom expands and experiences competition, HR will need to be more strategic about resource planning and will need to find creative ways to fulfill resource demands.

Human capital efficiency metrics coming out of the Accenture analysis also seemed to indicate that HR had a large number of employees that are generally focused on basic administrative tasks. Eskom is currently increasing its use of technology to reduce some administrative tasks, allowing HR professionals to focus on more strategic issues.

HR executives at the utility believe that the partnership with Accenture and SAP to analyze their human capital capabilities has proven to be vital—not just to the development of HR, but to the success of the company as a whole. The Accenture Human Capital Development Framework has highlighted the need for Eskom to focus on more strategic issues, such as workforce planning, leadership development and preparing the workforce for market competition. If Eskom is to achieve high performance, HR must focus less energy on mere tactical capabilities and become more of a strategic partner to the business. Eskom now has the data needed to engage executives and people at every level of the organization in order to energize the company as they move forward into a new, exciting era.