When the Accounting for People Task Force instigated by UK Secretary of State Patricia Hewitt set out to explore the current capability of HR to report on human capital metrics and the capability needed to report in the future with 246 HR professionals and business leaders in the UK and Canada, it found 78 percent of managing directors acknowledged that human capital management was critical to the fundamental success of the business and that more than half believed measurement was key to the delivery of human capital management. Yet it also found HR professionals and business leaders simply were not focusing on the measures that count. "Today, metrics inform rather than drive strategy. Tomorrow, the metrics need to drive strategy. Our research concludes that human capital metrics and reporting need to align to the business strategy to be useful as a driver of business outcomes," the task force noted.
Managing directors want measures that are more strategic, primarily to enhance their ability to deliver customer satisfaction and operational effectiveness. Only 31 percent believe that the current HCM measures actually enable an evaluation against strategic objectives. Nevertheless, the majority believes that HCM has the potential to be critical to the fundamental success of the business.
High priority HCM measures executives want their organizations to report on in the future include leadership team capability, effective change programs, employee competency and motivation. Managing directors want HR professionals to give their top priority focus to strategic measures to drive the business as well as operational HCM metrics. Part of the current difficulty, as Deloitte found, is that most metrics look backwards at historical measures like headcount changes, hires and terminations and total compensation, rather than focusing on the HCM metrics that can inform strategic decisions and prove crucial to future success.
"Tomorrow, business leaders want to capture and focus on strategic measures that drive the business in addition to basic operational HCM metrics. Business leaders clearly understand the value of HCM metrics in managing people for performance. They want access to a broad range of people measures to help them assess current performance and support key decisions about the future of the business," Deloitte says.
"Both business leaders and HR professionals understand that they need to focus on different, more strategic metrics, if they are to realize the potential performance gains available from HCM information. The shift towards strategic HCM within this broad range of measures is dramatic. In the future, business leaders want internal reporting to reflect these changed priorities."
It also finds operational measures will remain relevant to managing directors in the future, but will fall down the reporting agenda relative to strategic measures. Business leaders will continue to see those metrics as important in the portfolio of information that HR professionals provide to them.
New Buzz on Skills
The latest buzz in HCM, according to Ed Cohen, chair of the Aviation Industry CBT (computer-based training) Committee (AICC) standards committee - one of the main standards bodies for learning management software (LMS) that ensures interoperability with legacy systems and new software installations - is around competency and skills management.
Competency management lets organizations track key skills, behaviours and knowledge needed to meet business goals throughout the enterprise. It lets organizations define competency models based on the organizations' objectives; map competencies to jobs, projects and groups within the organization; use industry-specific competency models via established competency content partners; and quickly identify employees with the skills needed for specialized projects and just as quickly identify and manage competency gaps and levels associated with the changing needs during mergers and acquisitions.
"We have an airline customer which has mechanics that work on the [Boeing] 737, the 747, all these different planes," Cohen says. "Traditionally you took a bunch of classes and you could work on a 747, but if you wanted to do something on a 737 you would take a bunch of different classes. And what's changing is they're saying that if you know how to perform this procedure, you have these skills and you've demonstrated it on a 747, you can do it on a 737."
Cohen says the US government is leading the way in competency and skills management, closely followed by major industries like pharmaceuticals, manufacturing and airlines. Growing numbers of Australian companies are also expressing keen interest.
He says the discipline can be crucial in helping organizations competing in the marketplace to maintain a competitive edge that can distinguish themselves from their competitors. Employees must have the ability to learn new skills quickly, acquire new product information and adapt to changing business environments. Competency management - already built into some off-the-shelf products - helps ensure they can, he says.
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