Most businesses recognise that the creation of sustainable wealth is now
created by intangible assets like knowledge, intellectual property,
relationships, brands and innovation. The measurement and management of these
intangible assets is difficult but provides people professionals for the first
time with the opportunity to be the creators of competitive advantage. The
question is can HR be bothered?
Tomorrow’s successful organisations will take an offensive approach to using
talent, creativity and people-led strategy development, not because it is a
good thing in itself, but because it will create clear space between them and
At Qtab we have felt this defensive mindset to be prevalent within the HR
community, so we undertook some research. The results are scathing. Less than
10 per cent of the organisations asked are measuring their human capital, with
only 25 per cent able to identify their organisation’s wealth creators. Only 20
per cent had a defined and well thought out employer brand.
Research being carried out by a number of academic institutions in the UK
into HR’s impact on organisation performance seems to indicate a relationship
between having an HR function and superior business performance.
The reason may be that the majority of HR activity is focused on improving
what Michael Porter calls "operational effectiveness" – doing things
better than competitors. In people terms this could include having better
performance management, more progressive reward systems, better people managers
and more effective internal communication.
When speaking at a recent conference on intellectual capital the audience
was made up of accountants, IT professionals and knowledge officers. The
financial professionals are looking at methods of measuring these
people-centric assets and how these non-physical assets make an impact on
future business performance.
Knowledge officers are developing new ways of enhancing organisational
learning. IT staff are developing ideas and processes around the capture and
sharing of knowledge. We can give up the development of people strategy to
these other professionals, or focus on assisting our organisations to think
The evidence seems to indicate that the thinking and the tools to help us
measure and develop these intangible assets exist but people professionals
don’t have the confidence, willingness or capability to use them.
Do we go outside our comfort zones, learn new skills, push ourselves to
develop new measurement frameworks and try, with our intellect and stamina, to
create people strategies altering how our business compete? I am not yet
convinced many in the profession can be bothered.