2014 measurement of human capital and benefits of ...€¦ · state of human capital 26 the third...
TRANSCRIPT
2014
Project and measurement tool
assumptions
Measurement of human capital and
benefits of investing in human
capital in companies - lessons from
a pilot project
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PROJECT
Human capital as an element of company’s
value
PRODUCT
Tool for the measurement of human capital in enterprises
PARTNERSHIP • Polish Agency of Enterprise Development
(Leader)
• Warsaw School of Economics (Partner)
About the project…
Key aim of the project is to change the perspective
of employers on the benefits of in-company human
capital investments through the creation of human
capital measurement tool (NKL), its’ testing and
implementation by the end of the project duration.
Specific objectives: Creation of NKL,
Test implementation in 20 enterprises,
Acquisition of the knowledge of NKL by persons covered by
dissemination activities,
Acquisition of practical knowledge on the use of NKL by HR
specialists and accountants.
3 Aims of the project
Main questions:
• Why employer still are unwilling to invest in different forms of
development of their workers?
• How can we change the perspective of employers and managers on the benefits of in-company human capital investments?
• Which elements of human capital we can measure, how to do it, to
get reliable measurements, on which one can build strategies and
develope company?
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• Method - CATI (computer assisted telephone interview).
• Sample size - 600 enterprises.
• Sampling - random-layerd.
• Layers:
1. Size of enterprise:
a) Micro and small enterprises – 1 to 49 employers,
b) Medium enterprises – 1 to 249 employers,
c) Big enterprises – minimum 250 employers.
2. Industry activity according to Polisch Classification.
3. Ownership
a) Private,
b) Public.
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Empirical study
Measurement of human
capital in enterprises
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Do you conduct analisys/measurement of human capital in your
company?
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Basic data about human capital collected by enterprises:
• Number of employees by type of work contract and working time – 79,5%
• Number of new employees and leaving employees (in a year) – 73,7%
• Number of years worked in company (for every employee) – 54,0%
• Number of trained employees during one year – 49,8%
• Number of employees by age, gender, education – 47,7%
• Results of evaluations of employees or number of awards, bonuses – 40,2%
Type of data collected
Regular surveys conducted by enterprises:
Employees opinions surveys
12,0%
Knoweldge sharing in company surveys
11,7%
Employees satisfaction and
engagement surveys
11,2%
Effectivness of HRM system surveys
10,5%
Interpersonal relations surveys
9,7%
Organizational culture surveys
9,5%
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Indicators
74,7
5%
60,2
5%
45,0
0%
32,7
5%
26,5
0%
23,2
5%
24,2
5%
84
,67
%
62,6
7%
63
,33
%
46
,67
%
37,3
3%
36
,37
%
32
,00
%
88
,00
%
76
,00
%
78
,00
%
62
,00
%
64
,00
%
62
,00
%
52
,00
%
78
,33
%
62
,17
%
52,3
3%
38
,67
%
32
,33
%
29,8
3%
28
,50
%
0,00%
10,00%
20,00%
30,00%
40,00%
50,00%
60,00%
70,00%
80,00%
90,00%
100,00%
Costconnectedwith salary
Absence Costconnected
withemploeeys
training
Rotation andtime toreplace
employee
Costsconnected
with rotationof employees
Percentage oftrained
employees
Time oftraining
employees
Micro, small Medium Large Total
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The most commonly used indicators of human capital:
Benefits in measeuring
human capital
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Question: Does measuring HC brings company benefits?
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Question: Does measuring of human capital give company benefits?
What are those benefits:
• Better control of staff costs?
• Planning and decision making proceses are easier?
• Information about areas which need improvement?
• More effective use of human resources?
• Prevention of churn among the most valuable employees?
• Facilitation of work for HR department?
• Growth of importance HR departement?
Benefits on measuring HC
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Condition for using NKL
Cheap – doesn’t need
additional cost
Easy to use – doesnt need
special courses
Adapted to the size of
company
For free
Applying for UE money = use of NKL
Design of NKL 13
The proposed logic of the design approach allowed for the
sequential generation of answers to the following research questions:
• What has been achieved so far in the measurement of the value of
intellectual capital (in particular - human capital)?
• What is the need for measurement in modern Polish enterprises
(small, medium, large)?
• What should be the measured and reported?
• What metrics can and should be used for measurements?
• How to formally report the results of measurements?
• How to interpret the measurement results and use them in business
management?
Design of NKL
…
• What are the practical problems the companies wishing to test the
tool will meet and in the long run - to implement a measurement
tool?
• Whether and how you can get a broad consensus between the
various approaches and views on the measurement and reporting
of intellectual capital (between HR experts, accounting, finance –
value-based management)?
• How to customize the measurement tool (and the system) to the
specificity of companies of different sizes and with different levels
of expertise in the measurement?
• How to disseminate and implement mainstreaming of concepts
and measurement tools developed in the project?
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Design of NKL 15
The development of the tool for the measurement of organizational
human capital was based on:
• Expertise on the measurement of human capital from the
perspectives of: human capital management, intellectual capital
management, knowledge management, value-based management
and accounting
• Research conducted by the Polish Agency of Enterprise
Development on the information needs and tools used currently by
companies for the measurement of human capital,
• Study visits of project team in Denmark, Spain and the USA,
• Consultations of assumptions for the tools with end-users (within the
categories described above).
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Universal Possible to be used by small
medium and large enterprises
Publicly accessible Disseminated free of charge, with the use of a spreadsheet
Cheap and simple in implementation and use
Easy to customize to the specificity of the
enterprise / industry
NKL
assumptions
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Structure of the
NKL
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The NKL tool is composed of four parts, as follows:
Part 1: Key information about the company
Part 2: Measurement and valuation of human capital
Part 3: Report on the state of human capital
Part 4: Questionnaires
Part 1: Key information
about the company
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Part 1: Key information about the company
Human capital data Financial data Other data
Key personnel
data
Key human
resources
management
data
Key financial
data
Key financial
indicators
Key business
activity data
Kay resources
data
The first part (Part 1: Key information about the company) is designed to gather basic
company data, both of quantitative and qualitative character. This information includes:
• Key personnel data – e.g. number of employees in full-time equivalents, the number of
workers employed on temporary / permanent basis, etc.
• Key data on human resources management system – e.g. information on the areas of
human resources management, such as job analysis, planning, recruitment, evaluation,
remuneration, training and career management, etc.
• Key financial data – e.g. profit / loss, income, total costs, labor costs, depreciation and
amortization, etc.
• Key financial indicators – e.g. set of indicators for the analysis of the economic
performance of the company, etc.
• Key business activity data – e.g. description of the industry in which the company
operates, the economic situation, business strategy, etc.
• Key information about the resources – e.g. financial resources, property, market,
relations, organizational, etc.
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Part 2: Measurement and
valuation of human
capital
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The second part of the tool (Part 2: Measurement and valuation of human
capital) contains the indicators used to measure human capital and its valuation.
The indicators in the measurement and valuation are divided into two categories:
basic indicators and the advanced indicators. This division was dictated by the
potential use of these indicators for the construction of a report on the state of
human capital.
Core indicators of measurement and valuation of human capital are used in the
external reporting, while the measurement and valuation indicators of human
capital at the advanced level will be used to construct an internal report.
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Part 3: Report on the
state of human capital
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The third part of the tool (Part 3: Report on the state of human capital)
contains automatically created reports on the state of human capital.
When the two previous parts of the application are correctly fed with the
relevant data reports on the status of human capital with information on the
results of the measurement and valuation of human capital are generated
automatically. Reports can be generated in two versions: for internal use
(including information on advanced level) and external (with information on the
basic level).
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Part 4: Questionnaires 29
The last, fourth section of the NKL tool (Part 4: Questionnaires) contains links
to surveys implemented in the application.
Users are able to use them to measure the levels of employee satisfaction and
engagement, organizational culture, the level of staff competence, interpersonal
relations within the organization, knowledge management and human capital
management system’s functioning.
The results of the survey will be used to evaluate the key areas that affect the
level and quality of company’s human capital. Questionnaires are an inherent
part of the measurement tool in order to allow measuring the qualitative
characteristics of human capital in terms of organization.
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The target groups of the project are:
(1) recipients - entrepreneurs, business owners, senior
executives and
(2) users - HR, accountants, consultants, advisors,
representatives of public administration.
The preliminary version of NKL presented above was tested
with the use of qualitative research methods (IDI, active research).
In-depth testing was carried out on a sample of 20 companies,
broken down by micro (5 companies), small (4 companies),
medium (7) and large (4), as well as diversified by industries.
Testing phase of the
project
31 Testing phase of the
project – correlation
analysis
Statistical analysis of data from research surveys and data collected as
part of NKL implementation of the 20 companies included:
1. Analysis of data from statistical surveys and the preparation of their
results for individual companies,
2. Analysis of relationships between NKL indicators,
3. Statistical analysis of the survey data and development of summary
reports for micro, small, medium and large enterprises,
4. Analysis of the impact of demographic factors (gender, age,
education, work experience, occupational group), and the category
of enterprise for the development of the qualitative dimensions of
human capital.
32 Testing phase of the
project – correlation
analysis
Analysis of the relationships between the NKL indicators included:
a) selection of NKL indicators collected in 20 companies to correlation analysis:
for correlation analysis only those indices have been classified for which at least
10 companies provided data. Out of 107 indices in NKL 81 were selected for
further analysis,
b) calculating the correlation coefficients between all indicators and between
NKL indicators and average responses to questions from six questionnaires (a
total of 204 questions).
c) analysis of correlation coefficients calculated in the framework described
above based on selection coefficients values with ranges: 0,70-0,79; 0,80-0,89
and 0.90-1.00.
d) selected correlation coefficients were analysed in terms of substantive
information coming from the existence of a strong relationship and correlation
analysis for the validity of the relationship between the correlated variables to
eliminate accidental compounds.
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Testing phase of the project – correlation analysis
e) grouping of variables related strongly (at least 0.7) into a group correlated with
similar information content,
f) the following groups of variables were distinguished in the process: cost,
fluctuation, effectiveness and efficiency of HC, efficiency and profitability, positive
aspects of employee communication with supervisors, employees negative
aspects of communication with superiors, satisfaction and satisfaction with
interpersonal relations, interpersonal problems at work, determining the share of
employees in individual and team career goals, values and principles, vision and
objectives, flexibility and proactivity, competence matching.
34 Testing phase of the
project – correlation
analysis Correlation between NKL indicators – employee’ acquisition:
35 Testing phase of the
project – correlation
analysis
Correlation between NKL indicators and surveys – employees’ acquisition:
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Testing phase of the
project – correlation
analysis
Correlation between NKL indicators – employee’ fluctuation:
37 Testing phase of the
project – correlation
analysis
Correlation between NKL indicators and surveys – employees’ fluctuation:
38 Testing phase of the
project – correlation
analysis
Correlation between NKL indicators – HC effectiveness/efficiency:
39 Testing phase of the
project – correlation
analysis
Correlation between NKL indicators and surveys – HC
effectiveness/efficiency:
40 Testing phase of the
project – correlation
analysis
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Conclusions
• Importance and influence of intangible/qualitative
aspects of human capital utilisation in companies on
tangible/quantitave results,
• thus the need to include both in the analysis of
costs/benefits of apprenticeships (as the relation with
employers’ more resembling the long-term/employment
relationship due to extended duration as compared to
traineeships).
• Dissemination activities crucial for the positive in-take of
such tools, due to their complexity and corresponding
time/effort needed for implementation
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Way forward
Preparation of the final NKL by:
•Limiting the number of indicators – to those that prove the
most correlation with other indicators & questionnaire
items,
•Further elaboration of the interpretation of measurement
outcomes – „translation” into the business language,
•Preparation of the database version of the tool – as
spreadsheeds have significant limitations to data analysis
and presentation,
•Development of benchmarking tool for companies.
Thank you! Contact:
Justyna Nosko [email protected]
Polish Agency for Enterprise Development
Łukasz Sienkiewicz [email protected]
Warsaw School of Economic
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