Index reveals true state of HCM in UK organisations

Human capital management (HCM) will return to the top of the HR agenda next week when a common set of standards for rating how well an organisation is capitalising on the value of its staff is launched.

The ‘Newbury Index Rating’ (NIR) for human capital value, which is based on a similar system to Standard & Poor’s credit ratings, is the first universal framework for measuring the value of staff, according to its developers.

Research from Personnel Today and Deloitte has shown that more than a quarter of UK organisations do not do any human capital measurements at all, with doubts over what exactly should be measured cited as a major hindrance.

The ratings – the result of 14 years of research and development by HR consultant Paul Kearns – are designed to provide clarity on what organisations should measure.

They are based on how well an organisation performs in a series of areas, including demonstrating a value-added performance improvement from all employees and producing an acceptable rate of return on investment on all training expenditure.

The NIR, which currently has a ratings league table for 50 UK organisations, has been welcomed by many in the HR profession, although some have questioned the methodology behind it.

Greig Aitken, head of employee research and measurement at the Royal Bank of Scotland Group, said: “This new piece of research is a welcome addition to the human capital debate, and should serve to further raise the profile of this emerging topic in the board room.”

But Andrew Marston, personnel director at the Greater Manchester Police, said: “I am wholly unimpressed with the league table approach. What is it based on? How can he know enough about my organisation or any other without even talking to us to make a potentially very critical judgement?”

Kearns said the NIR is based on externally viewing organisations using a wide range of information, which is reduced to three key perspectives: ‘human capital maturity’, ‘human capital strategy that is directly influencing business strategy’, and ‘people measures linked to value measures’.

Where would you rate on the new HCM league table?

One-Stop Guide to Human Capital Management

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