"The Metrics Maze"
HR Magazine
December 2003, pp. 51-55
The author of this article states that many HR leaders have moved beyond HR department metrics (such as cost to hire a new individual) to explore "the exciting frontier of how their workforce, and each division or team of employees, contributes to their organization's financial goals."
The path to implementation of HR metrics that measure human capital is not easy however. Some companies have had partial success and other companies have invested large amount of money only to later pause and consider whether it is all worth it.
The article does provide several clear tips for getting started in measuring human capital:
- From the outset, don't be shy about seeking help from industrial/organizational psychologists and other experts, either in-house or from outside the organization.
- Identify precisely what you want to measure and why. It should be something that is appropriate for and important to your organization.
- Go beyond measures of how HR does its job. Focus on what drives people to generate business success.
- Make sure that senior management buys into your plans.
- Make sure that your results will be practical enough to drive action.
- Don't try to measure too much, especially at first.
- Make sure that you can find and collect the right data when you need it. Some operations are difficult to measure objectively, and different parts of the organization might measure the same factor differently.
- Interpret and present statistics in a way that will be easy for employees and managers to understand.
- If you get stuck or are not confident about the results, step back and reconsider your goals and how to reach them.
Five case studies illustrate how some companies have fared in their efforts to measure human capital contributions—Ford Motor Company; National City Corporation (financial services); ArvinMeritor (vehicle parts); Whirlpool Corporation; and Dow Chemical.
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