Using Human Capital Metrics to Assess Workforce and HR Strategy

Dr. Bonalyn Nelsen

School of Management

Nazareth Collegebnelsen8@naz.edu

“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?

Human Capital Measurement State of ReadinessConference 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.

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?

Using Human Capital Metrics to Assess Workforce and HR Strategy

External Differentiation Internal

Business Strategy Workforce Strategy HR Strategy

Business Scorecard

Workforce Scorecard

HR Scorecard

Performance Index

Dashboard

Performance Index

Dashboard

Performance Index

Dashboard

Sample Scorecards

Business Strategy Workforce Strategy HR Strategy

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)

Developing Workforce and HR Scorecards

1. Business Scorecard or Strategy Map: Value Partitioning, Core Competency Analysis, Value Chain Analysis

2. Workforce Scorecard: Human Capital Mapping, Competency Profiling, HC Investment

Strategy

3. HR Scorecard: HR Architecture Mapping, Linkage Analysis, HR Competency

Profiling, Workforce Planning Applications

4. Develop and Articulate Metrics Strategy.

5. Identify and Assemble Scorecard Metrics, Indexes, Dashboards and integrate with HRIT system.