People metrics help HR show what it knows about business

New research released today by the Institute for Employment Studies provides a detailed guide to raising the HR function’s profile within organisations by closely aligning it with business strategy

The ‘Human Capital Measurement’ report reveals the most effective ways to measure a business’s people and skills.

Dilys Robinson, Principal Research Fellow at the Institute for Employment Studies, says:

“Measuring the value people bring to a business can be tricky but is vital to monitoring the health of your organisation. HR plays a crucial role in making the links between things such as employee engagement, turnover and vacancy rates, and customer satisfaction, and measuring their impact.”

Human Capital Measurement (HCM) is one of the terms used to describe the practice of measuring employees’ contribution.

However the Institute for Employment Studies’ research showed that this term is rarely used in practice within organisations. More common terms were ‘workforce data’ or ‘key people indicators’.

The research, based on action learning workshops involving 14 of the UK’s top private and public sector organisations including the Royal Bank of Scotland, BBC, and the NHS, took place over the course of a year and showed robust people metrics can pay dividends, but organisations should beware of a ‘one size fits all’ approach.

The workshops enabled participating organisations to share best practice and debate how to overcome common obstacles. They were supported by research findings.

Dilys Robinson says:

“Our participants all found great value in focusing their HCM strategy around how people ultimately were adding value to the organisation. This guide contains case studies of nine organisations that have successfully implemented measurement indicators. These have helped the organisation to understand the contribution people make to organisational performance.

“Although it may seem daunting, with the right planning and working closely with management, people metrics can do a lot to monitor business health.” 

General guidelines derived from the research include the following:

  • There is no ‘one size fits all’ approach to measuring the value of people.

  • Management buy-in is a crucial success factor.

  • Common issues faced included data quality, measuring intangibles, the status of HR and the best ways of presenting people data.

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