HR held back by inability to measure human capital

HR is still struggling to measure the contribution made by staff to the
bottom-line performance of organisations, exclusive research reveals.

A groundbreaking survey of 420 HR professionals by Personnel Today and
Deloitte & Touche reveals that while 76 per cent of firms attempt to
measure human capital only a few believe the methods they use are effective.

The most popular approaches are HR benchmarking, HR metrics and the balanced
scorecard model, but more than four out of 10 users of these methods do not
believe they are effective.

Brett Walsh, head of human capital at Deloitte & Touche, believes the
study shows HR needs to do more to develop an effective approach to measuring
the value of employees. Metrics need to be clearer, simpler to understand and
based on data that is easy to collect and analyse.

"Measuring human capital is the holy grail for HR. HR needs to dispel
the myth that it’s the organisation’s policeman. It has the potential to
leverage significant bottom-line improvements in performance," he said.

More than 40 per cent of the 210 respondents that use HR benchmarking and HR
metrics – which compare HR policies and practices across organisations and
sectors – do not believe they are effective. Only 5 per cent rate them as
highly effective.

The picture is similar for the second most popular model, ‘balanced
scorecard methodologies’, adopted by a third of respondents. In all 43 per cent
view this approach as less than effective.

Only 39 per cent of those surveyed could identify ways management behaviour
had changed as a result of attempts to measure the impact of HR.

Walsh believes that in the current economic climate HR is under more
pressure to prove its value to the bottom line and will have to invest more in
measuring its performance.

For a free copy of Personnel Today’s and Deloitte & Touche’s
groundbreaking Measuring Human Capital Value report visit
http://www.deloitte.co.uk/humancapital

By Ben Willmott

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