Workforce Capability by DESIGN: the capability system HR now needs to build

Organisational effectiveness will not come from adding AI to yesterday's operating model. It requires the redesign of work and evolution to a capability-based organisation. This requires a systems approach to workforce transformation, collaborative planning done well, agile/repeatable insight creation and, often mindset shifts.

In 2020 when I was a Workforce Transformation consultant at Capgemini Invent we helped clients develop 'Human-Digital' approaches to HR technology transformations. Six years later the balance between the contribution of humans vs technology has of course shifted again due to AI co-workers. The executive question from CEOs to HR leaders (which for some has always been a simple question but complex answer) is no longer just "What number and type of roles (or skills) do we need by strategy deadline X?"

It is now a far more existential and complex question to answer: "What value contribution to work will people do with AI tools? How many people are now required and what do they need to be able to do differently?" That gap matters because AI can improve a task without improving an organisation. It can accelerate output while weakening judgement, remove cost while damaging service, or eliminate junior work while quietly eroding the pipeline through which future experts learn. Organisational effectiveness comes from the choices made around the technology, not from the technology in isolation. A reflective CPO or Head of HR may therefore consider the following question:

"Do we have the human and digital capability to deliver the strategy - and can we keep redesigning that capability as the context changes?"

Most organisations cannot yet answer with confidence - it remains complex. Simply put, this is largely because a 'resource-based' view in organisations counts the wrong things, with HR teams planning and managing people within finance created structures. They can report headcount, vacancies, learning activity and technology adoption. Far fewer can explain which capabilities create value, where work is genuinely changing, what should remain human-led, what can be augmented or automated, what capacity has actually been released, and which expertise must be protected for the future. For this a 'Capability-based' operating system and mindset is required, and across all functions, not just in and for HR.

Indeed the issues and challenges associated with SWP adoption (a painful passion to quote David Edwards) and skills transformations are often as a cause of HR procuring the right technologies and setting up the right processes but falling short of creating the right system: leading the adoption of new, better business capability planning capabilities and governance. This creates issues such as:

• Planning called SWP but delivering operational workforce schedules or budget right-sizing
• SWP failing to align to and solve a specific business problem or risk
• SWP resource plans not enacted by HR teams
• Poor contribution to business and demand planning leading to data trust issues
• Decision making remains largely subjective and talent-based opportunities largely invisible

I could go on... Most in HR and SWP in particular don't have the remit or influence to implement a new operating system - this is strategic and needs timely insights for incremental business benefits to be realised incrementally (increasing adoption and mindset shifts) - it requires a systems approach to workforce transformation: workforce capability by design.

AI adoption is not the same thing as workforce transformation

We mustn't repeat the same mistakes we made in 2020. Building on Adam Gibson's recent challenge technology implementation and use (in this case AI) is not the same thing as transforming how work is done and value creation optimised. The emerging evidence should make leaders both ambitious and cautious. Brynjolfsson, Li and Raymond's study of 5,179 customer-support agents found that access to a generative-AI assistant increased the efficiency of issue resolution by 14% but this varied from 0-34% per hour with significant efficiency variance between lower-skilled and experienced workers. The effect was real, but it was not uniform.

Dell'Acqua found a similarly "jagged technological frontier" in knowledge work. Consultants using AI completed 12.2% more tasks and worked 25.1% faster on tasks within the technology's capabilities; on a task outside that frontier, AI users were 19% less likely to reach the correct answer. The implication is uncomfortable but useful: an organisation cannot infer workforce capacity, quality or risk from a generic AI-adoption figure.

Productivity may release capacity, but management must decide whether that capacity is removed, redeployed, invested, used to create new value or retained for resilience. A credible workforce decision therefore requires evidence of what work has or will change, how much capacity is released, what other drivers were 'in-play' and where the resulting value goes.

With a capability-based approach that designs and enables a bespoke approach to integrated business/capability planning, the mapping of tasks & skills to future work demand and with an 'SWP insight engine' an HR leader stands a chance to lead and shape EXCO decision making and answer these new complex questions in a way where the contribution to strategy execution is abundantly clear.

Without this discipline, AI can become a fashionable explanation for a conventional cost reduction. Headcount falls, but the organisation still cannot show whether the new system is more capable.

HR's mandate has expanded - but HR cannot deliver it alone

David Wilkins argues that HR is being asked to help redesign everybody else's work before redesigning its own. He is right about the urgency. HR now needs fluency in work decomposition, human-machine division of labour, a capability architecture, workforce economics and the governance of digital labour.

But the answer is not (and has never really been) for HR to claim sole ownership of work. Business leaders own outcomes and operational choices. Technology leaders understand what systems can do and how safely they can do it. Finance tests economics and investment. Employees and managers understand the real work, including exceptions invisible in process maps. HR's distinctive role is to connect those perspectives to roles, skills, capacity, organisation design and workforce strategy; designing the system. We need to 'create the climbing frame and invite our friends to play'!

That is orchestration, not empire-building, and where Cello Consulting plays.

Five mindset shifts for a human-digital capability system

I have considered for much of 2025-26 if there is a way to integrate Executive Coaching into the core Cello Consulting offer. On reflection, I discerned that a coaching approach could be beneficial but is not core business. It is however very relevant (because of the scale of complexity and volume of mindset shifts required across business functions and sub-cultures) if an integrated capability planning system is to be implemented. It is therefore an approach I adopt as a workforce strategy advisor for HR leaders. Here's just a few:

First, move from headcount to capability. Jobs remain important contractual and organisational units, but they are a poor starting point for redesign. Planning should begin with the outcomes the strategy requires, the work that produces them and the capabilities on which that work depends. This often feels like a tangible to intangible shift and uncomfortable.

Second, move from people versus technology to human-digital design. The practical choices are more varied than replacement or retention: human-led, AI-augmented, agent-led with human oversight, automated, outsourced, redesigned or stopped. The criterion is not what can be automated, but which configuration creates sustainable value while protecting judgement, trust, accountability and learning. This requires really good intent-based and agile, systems leadership where employee voice, psychological safety and engagement is fully supported.

Third, move from annual planning to a living decision system. AI capability, labour markets and strategic assumptions will not wait for the next workforce-plan refresh. Organisations need agreed triggers, scenario updates, benefits tracking and forums that can change course when evidence changes. This is often scuppered where foresight processes are under-developed, strategy prioritisation is weak and leaders are busy hitting the closest crocodile! For insights on integrating the art of foresight into SWP, you can't go wrong by reading the excellent work of the OECD's Josh Polchar.

Fourth, move from data accumulation to a common language for work. Skills data is useful only when business outcomes, capabilities, processes, roles and skills can be connected across HR, Finance, Operations and Technology. A static taxonomy is not the answer; definitions need owners, governance and continuous maintenance. I call it a language for talent because everyone needs to learn and speak it.

Fifth, move from consultant dependency to internal capability. External expertise should accelerate difficult work, provide challenge and transfer a repeatable method. It should not leave the client with an elegant model that nobody can operate. Maturity is demonstrated when leaders run the next planning cycle, explain the choices and adapt the system themselves.

Support from Cello Consulting helps clients design the right bespoke system for their organisation and, like a driving instructor with a learner driver, develops your teams and leaders to succeed at workforce transformation and 'drive the car' yourself.

Measure the whole system, not six disconnected initiatives

This is why Cello Consulting works alongside CPOs and Heads of HR to assess People Capability Management maturity as an integrated system. As highlighted by David Epstein in his book Range, this work is multi-disciplinary in order to 'create the bigger picture' and takes development and practice. We help you design and deliver the right system for you, creating and executing workforce transformations. We are technology agnostic. We develop your teams and mature the following:

Capability Mapping translates strategy into the organisational capabilities, work and outcomes that matter. It prevents a skills exercise from becoming detached from value.

Capability Framework Design creates a usable (internal and external) common language for work: capabilities, roles and skills, with clear ownership and enough external reference to expose hidden strengths and genuine gaps.

SWP Implementation and Enablement turns analysis into an operating discipline: segmentation, demand and supply logic, scenarios, roles, routines, tools and practitioner confidence.

Integrated Business Planning Optimisation connects workforce choices to strategy, finance, operations and technology through shared assumptions, governance and decision cycles.

Criticality Exercises distinguish scarcity from true strategic criticality, considering value, vulnerability, time to competence, concentration risk, succession and the consequences of capability loss.

Workforce Strategy Design converts the evidence into explicit choices about building, buying, borrowing, redeploying, partnering, automating or redesigning capability - and explains the trade-offs to the Board.

Weakness in one area limits the others. A sophisticated skills framework without planning governance becomes a catalogue. SWP without capability mapping forecasts yesterday's organisation more accurately. Criticality without workforce strategy produces a risk list rather than action.

Integrated maturity matters because organisational effectiveness is an outcome of the system, not the sum of six projects.

In an earlier in-house workforce-planning role in a global engineering organisation of more than 30,000 employees, leaders described an acute shortage of specialist talent. Mapping capability across business units exposed expertise that inconsistent role language had hidden. It did not make every shortage disappear, but it changed the quality of the choices: internal deployment, development, external hiring and contingent labour could be considered against a clearer view of capability. Apparent scarcity was partly a visibility problem.

From diagnosis to internal insight and planning capabilities an organisation can repeat

Cello's Workforce by DESIGN method is named intentionally. It provides the transformation spine.

• Diagnose establishes the real problem, strategic context, evidence quality and maturity baseline.
• Envision defines the future capability, required maturity and success measures.
• Shape turns findings into choices, a business case and sequenced roadmap.
• Implement proves the design through a controlled pilot and a first operating cycle.
• Grow builds practitioner capability, leadership routines and client ownership.
• Navigate keeps decisions current through health checks, benefits tracking, scenario refresh and executive challenge.

The immediate next move is not a three-year programme or another platform purchase. Choose one material business outcome - and one HR workflow as HR's own proving ground. Establish CPO sponsorship and cross-functional decision rights. Baseline maturity across the six areas. Map the real work, including decisions, hand-offs and exceptions. Test human-digital options against value, service, risk, capacity and future capability. Then run a controlled planning cycle, measure what changes and codify what the organisation learns.

The most important measure will not be how much AI was deployed or people recruited. It will be whether leaders can make faster, better and more transparent workforce decisions.

The organisations that outperform will not be those that automate the most work. They will be those that adopt capability-based ways of working: that build the right structures, governance and mindsets as a team; that learn fastest how to combine the art of planning, decision making and digital leverage, turning that learning into an enduring organisational capability.

Selected sources

David Wilkins, "HR Is Being Asked to Redesign Everyone's Work. It Hasn't Redesigned Its Own", LinkedIn, 14 July 2026.

Adam Gibson, "When is an AI layoff actually an AI layoff?", LinkedIn, 4 August 2026.

Erik Brynjolfsson, Danielle Li and Lindsey R. Raymond, "Generative AI at Work", NBER Working Paper 31161, revised November 2023.

Fabrizio Dell'Acqua et al., "Navigating the Jagged Technological Frontier", Organization Science, published online 11 March 2026.