Friday, 9 November 2007

The new frontier of human capital measurement

InfoHRM have just launched a report on human capital measurement in Europe.

(Actually I would argue that the report is about HRM / HCM measurement, as it is the management of human resources / human capital, not just the human capital itself, ie all stages in my HCM value chain, that is being measured.)

European HR leaders emerge as agreeing strongly that HR measurement will increase in importance over the next 5 years. Against this, they are extremely concerned with the ability of current measurement systems to meet the increasing demands of HR reporting and analytics.

Over 75% of organisations still need to make the leap from measuring efficiency to effectiveness, and many have still to move from process-based metrics to human capital impact measures.

I think what InfoHRM are saying is that these organisations still largely to move from cell 2 to cell 8 in my HCM value matrix:

For true HCM, I'd suggest organisations really need to think about measuring human capital itself in cell 11. And although I have concerns about an increasingly heavy focus on measurement in taking organisations to HCM (creating value), I agree that it is a hugely important enabler in moving from Personnel, with its heavy focus on activity and efficiency (value for money) to Human Resources' focus on effectiveness (adding value).

So I think InfoHRM's report is a useful intervention to encourage organisations to make this journey.

I just don't think these organisations should confuse this with getting to HCM.