Monday 24 March 2008

HCM Room 101

I hope you've found my posts on measurement interesting. Before I move on, I want to refer to what I think are the two main myths concerning measurement in HCM.

As regular readers of this blog know, I think measurement has an important role in HCM, and that's why I devote so much attention to it. But it's only ONE important area, not THE important area. And you don't need to do much or I guess any measurement to achieve great improvements in human capital from better management of people.

So these three statements really annoy me:

1. What you measure is what you'll get.

Actually, you'll get (or are more likely to get) what you pay attention to. Measuring something helps you pay attention to it, but you don't need to measure it. Just talking about it, putting it as a regular agenda item in meetings, and taking action about it when necessary will work just fine.

Of course, in some organisations (particularly those with a strong financial focus), it is difficult to get things attended to unless they are measured. But then so many things in HCM can never be measured that well, that at some point, further improvements can only be made by educating the business to be more comfortable with ambiguity (this is part of encouraging the growth of language of people).

2. If you can't measure it (human capital), you can't manage it.

Why? Of course you can. Yes, the more intangible an element of human capital is (and probably the more important), the harder it is to both measure and manage. But measuring it (remembering that it is inherently unmeasurable) isn't necessarily going to help you manage it. And in fact, an increased focus on measurement in recent years doesn't seem to have resulted n many improvements in the way that people are being managed.

Much more than measurement, the strategic management of human capital depends on a strong people focus (around a clear organisational capability), best fit people management practices, competent and motivated managers etc. If you don't provide these, then you can't manage human capital.

3. ROI is the holy grail.

No, most often it's not, it's a distraction from what's important. Why?

  • Because more often return on expectations is a more appropriate measure

  • Because when the business asks for a ROI it mostly indicates they don't think there is one. HR would do much better to improve the strategic impact of their work, than bother calculating a ROI which will probably be dismissed anyway.

What are your pet hates you would like to put in HCM's room 101? (suggestions will be condemned to room 101 at your host's discretion).

1 comment:

  1. Well put Jon. Is this the argument?

    1. ROI is line management's responsibility.
    2. As functional managers it is important for us to have a basic understanding of ROI in the context of our business to be credible and to have a basic understanding of what the line managers' job is (after all we select them, appraise them, manage them, etc.)
    3. Our role in the management team is to add understanding of the people process in all its forms.
    The nature of people, and indeed the imprecision of employment contracts, means that we are dealing with ambiguity.

    So if other managers deal with risk and uncertainty, we deal with ambiguity and much of our value is helping other members of the management team factor that into their considerations as they chase ROI?


Please add your comment here (email me your comments if you have trouble and I will put them up for you)