Using Human Capital Metrics
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The document discusses using human capital metrics to assess workforce and HR strategies. It summarizes some key findings from a 2005 Conference Board study which found that while most firms track basic people measures like turnover and compensation, few have HR staff that understand strategic business metrics or can link people metrics to strategic targets. It then outlines an approach to developing scorecards to measure external differentiation, internal business performance, workforce performance, and HR performance in a way that aligns these metrics with business, workforce, and HR strategies.
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Using Human Capital Metrics
- 1. Using Human Capital Metrics to Assess Workforce and HR Strategy Dr. Bonalyn Nelsen School of Management Nazareth College [email_address]
- 2. “ You can’t manage what you can’t measure…” What are the key metrics/criteria your HR function uses to evaluate its effectiveness? What are the key metrics/criteria your business uses to evaluate its effectiveness? What is the connection between the two?
- 3. Human Capital Measurement State of Readiness Conference Board Research Findings (2005) Fully 78% of firms routinely track and report people measures (i.e., turnover, absenteeism, compensation, etc.). Only 31% of HR departments have anyone on the HR staff who understands the company’s strategic Key Performance Indicators (KPIs). Only 25% of HR departments have anyone on staff who can both understand the company’s KPIs and link them to people measures. Only 19% of HR departments deliver people measurement reports to all levels of the management team (business partners). Only 12% of firms use human capital measures to help the company meet its strategic targets of Key Performance Indicators (KPIs). Source: Gates, S. (2005) “Measuring more than efficiency.” Report # R-1356-04-RR, New York, NY: The Conference Board, Inc.
- 4. The Present State of HR Firms are demanding that HR demonstrate its value. HR functions are responding by trying to develop metrics. In most cases, these metrics have no demonstrated relationship—or even an articulated relationship—to important business outcomes. So…How do we use metrics to assess workforce and HR strategy?
- 5. Using Human Capital Metrics to Assess Workforce and HR Strategy External Differentiation Internal Business Scorecard Workforce Scorecard HR Scorecard Performance Index Dashboard Performance Index Dashboard Performance Index Dashboard Business Strategy Workforce Strategy HR Strategy
- 6. Sample Scorecards External Differentiation Internal Scorecard Metrics: Financial Success Customer Success Workforce Success Business Process Success Scorecard Metrics: Strategic “A” Positions Strategic Mindset Strategic Capabilities Strategic Behavior Investment Strategy (equity vs. equality) Scorecard Metrics: HR Practices (Selection, Rewards, Development, Performance Mgmt.) HR Function Success (Capabilities, Bench Strength, Systems, Policies) Business Strategy Workforce Strategy HR Strategy
- 7. Developing Workforce and HR Scorecards Business Scorecard or Strategy Map: Value Partitioning, Core Competency Analysis, Value Chain Analysis Workforce Scorecard: Human Capital Mapping, Competency Profiling, HC Investment Strategy HR Scorecard: HR Architecture Mapping, Linkage Analysis, HR Competency Profiling, Workforce Planning Applications Develop and Articulate Metrics Strategy. Identify and Assemble Scorecard Metrics, Indexes, Dashboards and integrate with HRIT system.