Deloitte Award for Innovation in Measuring Human Capital

This
award recognises the growing importance of quantifying the value of human
capital to enterprises. The judge looked for teams that have broken new ground
in measuring human capital return on investment in their organisations. Only
three teams have been shortlisted
for this category, which speaks volumes for the amount of work still to be done
in this arena.

Award sponsor: Deloitte

The
human capital practice of Deloitte is the largest fully integrated HR
consultancy in the UK,
with more than 700 consultants covering the complete spectrum of strategic
human resources, tax consulting, executive and employee compensation and
benefits, employment law and outsourcing. Globally, Deloitte is one of the
world’s largest HR consulting firms, with more than 6,000 staff in 140
locations.

Category judge: Denise Kingsmill, CBE

Denise
Kingsmill is a
non-executive director of the Homes Office, a trustee of the Cambridge
University Business
School and pro-Chancellor of Brunel. She has also held a
number of other non-executive directorships. In addition to setting up her own specialist employment law
firm and being deputy chair of the Competition Commission, her achievements
include heading two government inquiries, which focused on improving women’s
employment prospects and human capital management. In 2000, Kingsmill was awarded a CBE for services to
employment law and competition.

Editor’s note

It’s
just over a year since the Accounting for People Task-force reported its
recommendations for measuring human capital. Since then, new draft regulations
have been published based on the taskforce’s recommendations, which will mean
that from 2005, all public limited companies will have to provide information
on people management in annual reports and accounts.

With
the 2005 deadline looming, Personnel
Today
expected great things from our award for innovation in measuring
human capital. Sadly, this has not been the case, with only the three
organisations that are featured here truly showing the worth of effective
people reporting. Next year should be a different story, however, as companies
will be obliged to report on HCM as part of their operating and financial reviews.

Shortlisted teams

T-Mobile

The team: Human Resources Operations

No. in team: 10

No. in HR function: 170

No. of employees HR is responsible for:
7,500

About the organisation

T-Mobile
is one of the world’s leading companies in mobile communications. As one of
Deutsche Telecom’s four strategic divisions, T-Mobile concentrates on the
European and US markets. By the end of the first quarter 2004, more than 96
million people were using mobile communications services provided by companies
in which T-Mobile or Deutsche Telecom have a stake.

What the organisation did

In
less than 10 years, T-Mobile has increased its workforce by more than 6,000
employees. Implementing measures of human capital management has been
instrumental to this growth. The company made the following improvements:


Concerns over data were addressed through developing an ongoing improvement
plan and implementing a SAP Enterprise
solution, with Visual Basic front-end programming


Statistical analysis was used to enhance credibility of findings


A new costing model was developed


An HR Operational Review Pack was presented each month to key stakeholders


A real time tool for predicting the headcount in 90 days and at year-end was
developed.

Benefits and achievements


Attrition rates have fallen by 60 per cent in the past year


Data integrity has been improved


Resource utilisation has been balanced, combining external expertise with
internal talent


The attrition analysis created interest from the Institute
of Employment Studies and the CIPD.

Denise Kingsmill says: "The T-Mobile team has
clearly understood the importance of aligning HR metrics with the company’s
strategic objectives. This was a commendable entry."

Gallup

The team: Talent Resources

No. in team: 4

No. in HR function: 27 globally

No. of employees HR is responsible for:
2,179 globally

About the organisation

The
Gallup Organisation has studied human nature and behaviour for more than 70
years. The company has used this understanding to develop research-based
measurement tools, development programmes and strategic advisory services.

What the organisation did

Gallup’s
Talent Resources team has ensured each employee has full and ongoing
developmental feedback. This has been achieved by:


Measuring strengths using online instrument StrengthFinder


Using structured telephone interviews with prospective employees to see if
their talents and strengths match the role


Using specific structured interviews depending on the position being filled


Using a ‘talent-bank’ for candidates with particular skills and contacting them
when a suitable role comes up


Using the Q12 programme, which consists of
12 simple questions, to measure employee engagement

Benefits and achievements


Last year, 140,000 candidates applied globally for roles within Gallup
– 142 were hired


The Q12 programme has been shown to account for about 80 per cent of the
factors known to measurably impact employee engagement


Many of Gallup’s clients are using
its interviews for recruitment within their organisations


StrengthFinder has been
used as a developmental tool, both in partnership with many of Gallup’s
clients and with all internal employees.

Denise Kingsmill says: "Human capital management
is about more than HR, it is about developing people. If you develop individual
strengths, it will increase productivity. Gallup’s
talent spotting tool, StrengthFinder,
provides a simple, but highly effective, solution."

Nationwide Building Society

The team:  HR Planning, Systems and  Payroll

No. in team: 6

No. in HR function: 290

No. of employees HR is responsible for:
15,627

About the organisation

Nationwide
Building
Society is a mutual organisation and the world’s largest building society. It
has 11 million members, £100bn in assets and 700 branches across the UK.

What the organisation did

Nationwide
developed and deployed a statistical business application that measures the
value of its human capital. The new system was installed as a result of the
following actions:


Employee data was made available over several years by the HR planning unit on
a wide range of employee characteristics. This included age, training uptake,
competence and turnover


Data relationships were analysed and statistical models were built with the
ability to run ‘what if’ scenarios


The team checked the model’s validity by talking to retail branch colleagues
before communicating its findings


The project team went on to develop a colour-coded dashboard for HR managers to
identify areas for action

Benefits and achievements


Since 2001, employee satisfaction with pay has risen by 15 per cent and the
average length of service increased by 0.5 years in two years


Employee retention has increased, resulting in a decrease in turnover of 1.5
per cent. This has saved Nationwide £6m in recruitment advertising and
induction training costs


An increase in the average age of employees has resulted in an extra 56,000
satisfied customers, and increases in sales of both general insurance personal
loans

Denise Kingsmill says: "This entry provided an
interesting and valid conclusion that committed staff would contribute to
greater customer satisfaction."

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